A: Which of the following is false?

a. payments on an amortized loan consist entirely of interest.

b. the term structure of interest rates shows the relationship between bond yields and maturities.

c. Two types of stock purchase orders are market orders and limit orders.

B: Which of the following statements is CORRECT?

a. The yield on a 2-year corporate bond should always exceed the yield on a 2-year Treasury bond.

b. The yield on a 3-year Treasury bond should always exceed the yield on a 3-year corporate bond.

c. If inflation is expected to increase each year for the next 3 years, then the yield on a 2-year bond should exceed the yield on a 3-year bond.

d. The risk-free rate is equal to the real rate plus the liquidity premium.

d. Treasury securities have essentially no default or liquidity risk. e. none of the above are false