14. Yield curves change daily to reflect:

A. Changing conditions in the money and capital markets.

B. New inflation expectations.

C. Changing conditions in the overall economy.

D. All of the above are true.

15. As the economy moves through a business cycle, which of the following term structure of interest rates theories dominate the shape of the yield curve?

A. The expectations theory.

B. The market segmentation theory.

C. The liquidity premium theory.

D. None of the above dominates the shape of the yield curve.

16. Some analysts believe that the term structure of interest rates is determined by the behavior of various types of financial institutions. This theory is called the:

A. Expectations hypothesis.

B. Segmentation theory.

C. Liquidity premium theory.

D. Theory of industry supplied and demand for bonds.

17. In managing cash and marketable securities, what should the managers primary concern be?

A. Maximization of profit.

B. Maximization of liquid assets.

C. Acceptable return on investment.

D. Safety and Liquidity

18. Float takes place because:

A. Reducing remittance time and delaying disbursement...

B. The level of cash on the firms books is equal to the level of cash in the bank.

C. A & B above

D. A customer writes hot checks.

19. Average daily remittances are $5 million, and extended disbursement float adds three (3) days to the disbursement schedule. How much is the firm making by playing the float if the firm earns 10% on excess funds?

A. $500,000

B. $1,500,000

C. $1,000,000

D. $0

20. Probably the safest and most marketable instrument for short-term investment is:

A.Commercial paper.

B.. Large denomination certificates.

C.. Treasury notes.

D. Treasury bills.