1. Which of the following statements is not true?

a. Companies get short-term financing in capital markets.

b. Indirect finance is when bond issuers do not receive the funds directly from investors.

c. Direct finance is when bond issuers received the funds directly from investors.

d. All of THESE are true

2. A 20-year bond with annual coupon payments is currently selling at $1,040. If the coupon rate is 6%, what is the current yield?

a. 4%

b. 6%

c. $60

d. 5.77%

3. Stock A has an expected return of 20%, and stock B has an expected return of 4%. However, the risk of stock A as measured by its variance is 2 times that of stock B. If the two stocks are combined equally in a portfolio, what is the portfolio's expected return?

a. None of THESE

b. 4%

c. Greater than 20%

d. 20%

e. 12%