52. Bonds with relatively high risk of default are often called A. Brady bonds.

    B. junk bonds. C. zero coupon bonds. D. lazy bonds.

53. Holding everything else the same, if a corporation's earnings rise, then the default risk on its bonds will ________ and the expected return on those bonds will _______. A. Increase | decrease B. Decrease | decrease

    C. Increase | increase D. Decrease | increase

54. Of the securities below, which one has the lowest priority of legal claim on a firms assets in bankruptcy? A. Secured Debt B. Sub Debt

    C. Preferred StockD. Senior Debt

55. In general, the ex-ante risk-return tradeoff (with return on the x-axis and risk on the y- axis)

    1. slopes downward.

    2. is flat.

    3. is impossible to determine.

    4. slopes upward.

56. Which of the following long-term bonds usually trades at the highest market interest rate?

    1. 10 year U.S. Treasury bonds

    2. 10 year Corporate Aaa bonds

    3. 10 year Corporate Baa bonds

    4. 10 year Exempt Municipal bonds

57. The risk structure of interest rates is A. the structure of how interest rates move over time. B. the relationship among interest rates of different bonds, in terms such as credit,

58. but with the same maturity. C. the relationship among the terms to maturity of different bonds. D. the relationship among interest rates on bonds with different maturities.

59. ________ bonds are the most liquid of the following long-term bonds. A. Callable Agency B. Municipal C. Corporate Aaa

    D. U.S. Treasury

60. Interest Rate Risk is A. the potential impact of economic stress on principal received. B. the potential impact of rate changes on market values. C. The potential impact of a flight to quality on principal received. D. The potential impact of call options on market values.

61. The term ________________ would be similar to saying the markets are experiencing a flight to quality.

    A. Risk-On B. Risk-Off C. Riskless D. Riskiness

62. Bonds categorized between BBB and AAA are often called A. Junk Bonds.

    B. High Class Bonds. C. Speculative Bonds. D. Investment Grade Bonds. E. None of the above.

63. Which of the following bond issuers are not currently rated AAA? A. Johnson & Johnson B. Apple C. Microsoft

    D. All of the above are AAA rated

64. Because BB rated bonds have _______________ default risk than AA rated bonds, a BB rated bonds should have a _________ price than a AA rated bond with similar coupon and maturity structures. A. Higher | Lower

64. B. Higher | Higher C. Lower | Lower D. Lower | Higher

65. The duration of a zero coupon bond is always __________ years to maturity. A. Greater than

    B. Less than C. The same as