QUESTION 1

1. The concept of Time Value of Money means ____.

   		you should only buy stocks and not bonds
   		bond prices typically fall in value over time
   		stock prices always increase in value over time
   		a dollar today is worth more than a dollar tomorrow

2 points

QUESTION 2

1. What is the feature of a corporate bond that protects the purchaser for the bond from moral hazard problems on the part of the borrower?

   		Call Provision
   		Coupon Payments
   		Conversion Option
   		Restrictive Covenants

2 points

QUESTION 3

1. Which of the following best explains why municipal bonds have lower interest rates than Treasury bonds?

   		the lower liquidity of municipal bonds
   		the lower liquidity of Treasury bonds
   		the lower tax rate associated with municipal bonds
   		the lower tax rate associated with Treasury bonds

2 points

QUESTION 4

1. Which of the following is the mission of the Securities & Exchange Commission?

   		To protect investors and maintain the integrity of the securities markets.
   		To maintain good order on the country's stock exchanges through the use of specialists.
   		To regulate mutual funds and hedge funds.
   		To seek out and evaluate all disclosures of public U.S. corporations for correctness.

2 points

QUESTION 5

1. Investors in mortgages, but not investors in other capital markets are subject to _____ risk.

   		default
   		interest-rate
   		prepayment
   		stock market

2 points

QUESTION 6

1. Mark purchased a house for $400,000. A bank will make him a 25 year loan at 4% annual interest, monthly payments, with 10% down. What is his expected monthly loan payment?

   		$1,718.60
   		$1,900.21
   		$1,927.67
   		$2,111.35

2 points

QUESTION 7

1. Which of the following illustrates Indirect Funds Transfer?

   		Lender <=> Borrower
   		User <=> Saver
   		Borrower <=> Financial Intermediary <=> Saver

2 points

QUESTION 8

1. The present value gives you the ______ price you would be willing to pay for an asset given ______.

   		minimum; the expected cash flow
   		minimum; the time period of the investment
   		maximum; the return you desire

2 points

QUESTION 9

1. An upward sloping yield curve is called a(n) _____.

   		inverse curve
   		normal curve
   		expected curve
   		liquidity curve

2 points

QUESTION 10

1. Default free or risk free securities are issued by _______.

   		United States government [Uncle Sugar]
   		state governments
   		municipal governments