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25.   Which of the following statements is most correct?

a.While the distinctions are blurring, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties.

b.Money market mutual funds usually invest their money in a well-diversified portfolio of liquid common stocks.

c.The NYSE operates as an auction market, whereas NASDAQ is an example of a dealer market.  

d.Statements b and c are correct.

26.Which of the following is an example of a capital market instrument?

a.Commercial paper.

b.Preferred stock.   *

c.U.S. Treasury bills.

d.Banker’s acceptances.

27.Money markets are markets for

a.Foreign currency exchange.

b.Consumer automobile loans.

c.Corporate stocks.

d.Short-term debt securities.  *

28.Which of the following statements is most correct?

a.Semistrong-form market efficiency means that stock prices reflect all public information.  *

b.An individual who has information about past stock prices should be able to profit from this information in a weak-form efficient market.

c.An individual who has inside information about a publicly traded company should be able to profit from this information in a strong-form efficient market.

d.Statements a and c are correct.

29.    Which of the following statements is most correct?

a.If the stock market is semistrong-form efficient, all stocks should have the same expected return.

b.An individual who has information about past stock prices should be able to profit from this information in a weak-form efficient market.

c.An individual who has inside information about a publicly traded company should be able to profit from this information in a strong-form efficient market.

d.Semistrong-form market efficiency means that stock prices reflect all public information.  *

Chapter 6

30.   If the yield curve is downward sloping, what is the yield to maturity on a 10-year Treasury coupon bond, relative to that on a 1-year T-bond?

a.The yield on the 10-year bond is less than the yield on a 1-year bond.   *

b.The yield on a 10-year bond will always be higher than the yield on a 1-year bond because of maturity risk premiums.

c.It is impossible to tell without knowing the coupon rates of the bonds.

d.The yields on the two bonds are equal.

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