22. The rate on which Eurodollar floating rate CDs was based for the second half of the 20^th Century:

a) the weighted average of European prime rates

b) the London Interbank Offer Rate (LIBOR)

c) the US Prime Rate

d) the weighted average of European discount rates

23. Which of the following is issued in the primary market by financial institutions?

a. NCDs b. commercial paper c. agency issue d. US Treasury issue

24. Flight to Quality (investors move to avoid risk shift to safer instruments) causes the risk differential between risky and risk-free securities:

a. to be eliminated b. to be reduced c. to be increased d. to be unchanged

25. Municipal general obligation bonds ______; municipal revenue bonds _____.

a) are typically zero-coupon bonds; are typically coupon bonds

b) both are supported by the municipal governments ability to tax

c) are supported by the municipal governments ability to tax; are supported by revenue generated from the project financed

d) are always subject to federal tax; are always exempt from state and local tax

26. A Bond conversion provision normally:

a) allows the firm to call bonds at par value

b) gives the firm the option to call bonds at market value

c) allows the firm to call bonds at a price below par value

d) requires the firm to exchange bonds for a specific number of firm shares.

27. Some bonds are stripped, which means that:

a) they have defaulted on promised payments;

b) the call provision has been eliminated;

c) they are transferred into principal-only and interest-only securities;

d) their maturities have been reduced.

28. Firms assume _____ risk when they issue preferred stock than when they issue bonds, since the payment of the dividends on preferred stock _____ be omitted without the firm being forced into bankruptcy.

a. more; can b. less; cannot c. more; cannot d. less; can

29. A new issuance of stock by a firm that does have stock outstanding already is referred to as:

a. ADR b. seasoned offering c. rights offering d. initial public offering

30. The Expectations Theory of Interest Rate Determination allows for estimates of which of the following:

a. Forward Rates b. future Inflation Rates c. current inflation rates d. each of these.