Question
1. The risk that income from a bond portfolio will vary because cash flows must be reinvested at current market rates is called: a. market
1. The risk that income from a bond portfolio will vary because cash flows must be reinvested at current market rates is called:
a. | market yield risk. | |
b. | interest rate reinvestment risk. | |
c. | interest rate price risk. | |
d. | yield to maturity risk. | |
e. | capital gain yield risk. |
2. Which of the following indicates that the cost of money will increase?
a. | Increase in money supply in the market | |
b. | Increase in inflation of an economy | |
c. | Decrease in federal deficit of a country | |
d. | Increase in liquidity of an asset | |
e. | Decrease in tax rates for corporates |
3. If the U.S. runs a large foreign trade deficit, then the:
a. | tax revenue will decrease. | |
b. | sales of Treasury securities will decrease. | |
c. | money supply will increase. | |
d. | interest rates will increase. | |
e. | government subsidies will increase. |
4. For installment loans, the maturity date is:
a. | the date on which the market interest rate rises above the coupon rate. | |
b. | the date on which the coupon rate rises above the market interest rate. | |
c. | the date on which the last coupon interest payment is made to the bondholders. | |
d. | the date on which the first installment payment is due. | |
e. | the date on which the last installment payment is due. |
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