1. Company X issues fixed income 30 year bonds with the following characteristics; If Company X is downgraded from AAA to A the coupon on the bond falls from 4% to 3%. Company X is shifting credit risk from its balance sheet to those of the investors who buy the bonds.

   True or False

2. Hedging is the process of offsetting current or future risk by entering into a market position that offsets the current of future position that is the source of the risk.

   True or False

3. One oat futures contract traded on theCMEis an obligation for the buyer to purchase5000bushels of oats at a fixed price on a fixed date.

   True or False

4. Securitization increases the liquidity of financial assets. This enables financial institutions to adjust their risk profiles more easily than if the assets had stayed in the illiquid unsecuritized form.

   True or False

5. A book publisher that publishes only spy novels would be more diversified than a publisher that publishes many genres.

   True or False