Tuesday, November 12, 2019

A Treasury yield curve plots Treasury interest rates relative to which one of the following?

A Treasury yield curve plots Treasury interest rates relative to which one of the following? 
 
A. 
market rates

B. 
comparable corporate bond rates

C. 
the risk-free rate

D. 
inflation

E. 
maturity
Refer to section 7.7


31.
Which one of the following risk premiums compensates for the possibility of nonpayment by the bond issuer? 
 
A. 
default risk

B. 
taxability

C. 
liquidity

D. 
inflation

E. 
interest rate risk
Refer to section 7.7


32.
The taxability risk premium compensates bond holders for which one of the following? 
 
A. 
yield decreases in response to market changes

B. 
lack of coupon payments

C. 
possibility of default

D. 
a bond's unfavorable tax status

E. 
decrease in a municipality's credit rating
Refer to section 7.7


33.
The liquidity premium is compensation to investors for: 
 
A. 
purchasing a bond in the secondary market.

B. 
the lack of an active market wherein a bond can be sold for its actual value.

C. 
acquiring a bond with an unfavorable tax status.

D. 
redeeming a bond prior to maturity.

E. 
purchasing a bond that has defaulted on its coupon payments.
Refer to section 7.7

No comments:

Post a Comment