Short Answer Questions: 1. What is the typical relationship among interest rates on three-month Treasury bills, long-term Treasury bonds, and Baa corporate bonds? 2. Why is a share of Microsoft common stock an asset for its owner and a liability for Microsoft? 3. If you suspect that a company will go bankrupt next year, which would you rather hold, bonds issued by the company or equities issued by the company? Why? 4. How can the adverse selection problem explain why you are more likely to make a loan to a family member than to a stranger? 5. Describe the two types of a secondary market. 6. Corporations receive funds when their stock is sold in the primary market. Why do corporations pay attention to what is happening to their stock in the secondary market? 7. Commercial banks, insurance companies, investment banks, and pension funds are all examples of financial intermediaries. For each of these, give an example of a source of their funds and an example of their use of funds