Which of these is a disadvantage of municipal bonds?

a. They have longer terms to maturity.

b. At least one study found a correlation between inflation and municipal bond default rates.

c. They are less liquid than US Treasury bonds.

d. As the economy slows, the level of defaults in municipal bonds increases.

During a flight to quality, the default risk premium spread between medium-quality and low-quality Baa bonds and high-quality T-bills will

a. widen.

b. diminish to zero.

c. narrow.

d. not change.

Stocks are riskier than bonds for which of the following reasons?

a. Unlike bonds, there is no buyback requirement, no requirement to make payments periodically, and the stock may lose a great deal of value.

b. Unlike bonds, stocks can lose a great deal of value.

c. Unlike bonds, stocks can be common or preferred.

d. Unlike bonds, there is no requirement that a corporation must buy back shares or pay dividends.

Which of these statements best describes the type of debt instruments and the level of risk in the money market?

a. The debt instruments are short-term and the risk is high.

b. The debt instruments are short-term and the risk is low.

c. The debt instruments are long-term and the risk is low.

d. The debt instruments are long-term and the risk is high.

Given the spotty performance of the bond-rating agencies in sounding the alarm of impending failure among many large borrowers, what action was taken in 2011 to ensure better performance?

a. The Dodd-Frank Act of 2011 gave enforcement power regarding rating agencies to a new agency within the SEC.

b. The Dodd-Frank Act of 2011 created an office within the SEC to oversee the bond-rating agencies.

c. The Dodd-Frank Act of 2011 gave enforcement power regarding rating agencies to the Fed.

d. The Dodd-Frank Act of 2011 created an office within the Treasury to oversee the bond-rating agencies.

After World War II, and through the 1970s, what was true of home ownership rates?

a. Home ownership rates increased steadily, in part due to an increase in wages combined with low interest rates.

b. Home ownership rates increased and then began to fall again in the late 1960s.

c. Home ownership rates increased for about ten years and then fell to pre-WWII levels.

d. Home ownership rates increased briefly and then remained steady at about 55%