1. Which one of the following is the most liquid asset investors can buy

a. Treasury bonds.

b. U.S. savings bonds.

c. Treasury bills.

d. Short term municipal bonds that mature in three years.

2. If the price of a bond when it is bought is less than the price of that bond when it is bought that bond is a

a. Treasury note.

b. Variable coupon bond.

c. Mortgage - backed security.

d. Zero coupon bond.

3. Bonds with longer terms to maturity

a. Normally have higher interest rates than shorter maturity bonds.

b. Normally have lower interest rates than shorter maturity bonds.

c. Are normally discount bonds.

d. Are always junk bonds.

4. Junk bonds are bonds

a. With the least risk to investors.

b. With higher risk to investors than investment grade bonds.

c. With lower risk to investors than investment grade bonds.

d. That are always sold at a discount

5. The coupon rate on a bond

a. Is the annual coupon payment divided by the bond's price.

b. Is the yield to maturity on the bond.

c. Is the price of the divided by the par value of the bond.

d. Is the annual coupon payment on the bond divided by the bond's face value.

Select an answer for each multiple choice