1. Issuer: Borrower; Investor: ________

a. Regulator

b. Lender

c. Market

d. Intermediary

2. Which of the following statements about credit ratings is/are true? Statement I. Speculative Grade bonds (aka High Yield bonds) are those rated BB+ and below by Standard & Poor's (S&P) or Fitch, and Ba1 and below by Moody's. Statement II. Investment grade securities typically carry a higher risk of default compared to speculative grade securities. Statement III. Large companies with strong and stable cash flows are likely to be rated higher than small companies with more volatile cash flows.

a. II only

b. III only

c. I and III

d. II and III

3. This theory includes that there are other factors that affect the term structure of the loans as well as the interest to be perceived moving forward. The forward rates will be affected or will be adjusted if the liquidity of the borrower will be weaker or stronger in the future.

a. Pure Expectation

b. Biased Expectation

c. Liquidity preference

d. Market Expectation

4. Money market securities have fundamental characteristics, except:

a. Usually sold in large denominations

b. Low default risk

c. Mature in one year or less from original issue date.

d. Money market securities commonly have an active secondary market.

5.

Statement 1: Everything else equal, an effective annual rate will be greater than the bond equivalent yield on the same security. Statement 2: Money markets exist to help reduce the opportunity cost of holding cash balances.

a. Both statements are true

b. Statement 1 is true; Statement 2 is false

c. Statement 1 is false; statement 2 is true

d. Both statements are false

6. These are securities issued by SEC-registered Philippine corporations typically to fund short-term financial obligations such as payroll and purchase of inventory, among others. With tenors ranging from 30 days to 1 year, these are fundamentally unsecured promissory notes.

a. Treasury Bills

b. Repurchase agreements

c. Short-term commercial papers

d. Banker's acceptances