1. When a state borrows funds by issuing municipal bonds to finance a state university, it is most likely to issue which kind of bonds?

a) tax anticipation notes

b) general obligation bonds

c) revenue bonds

d) industrial development bonds

2. What was the most likely reason that Fannie Mae and Freddie Mac were encouraged to purchase subprime mortgages?

a) to compete with commercial providers

b) to make housing more affordable

c) to improve diversification

d) to generate higher returns

3. When a corporate bond has a specific collateral, it is most likely called..

a) a debenture

b) a subordinated debenture

c) a convertible bond

d) a secured bond

4. The capital gains on municipal bonds are exempt from federal income tax.

a) True

b) False