Investment Management Set 10
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This set of Investment Management Multiple Choice Questions & Answers (MCQs) focuses on Investment Management Set 10
Q1 | Which of the following is a money market security?
- Repurchase agreements.
- Municipal bonds.
- Mortgages.
- U.S. Treasury notes.
Q2 | Which of the following is a capital market security?
- Federal funds.
- Federal agency bonds.
- Eurodollars.
- Treasury bills.
Q3 | Which of the following provides income that is fully exempt from taxation for the individual investor?
- Preferred stocks.
- Municipal bonds.
- Treasury bills.
- Treasury notes.
Q4 | Bond prices decrease when inflation increases.
- True
- False
- none
- all
Q5 | Common stock is an example of a capital market security.
- True
- False
- none
- all
Q6 | Commercial paper is riskier than Treasury bills.
- True
- False
- none
- all
Q7 | The value of a bond and debenture is
- Present value of interest payments it gets
- Present value of contractual payments it gets till maturity
- Present value of redemption amount
- None of the above
Q8 | Required rate of return>Coupon rate, the bond will be valued at
- Premium
- Par value
- Discount
- None of the above.
Q9 | If the coupon rate is constant, the value of bond when close to maturity will be
- Issued value
- Par value
- Redemption value
- All of the above
Q10 | A bond is said to be issued at premium when
- Coupon rate>Required returns
- Coupon rate=Required returns
- Coupon rate
- None of the above
Q11 | Value of a bond just depends on the interest payment is offers.
- True
- False
- none
- all
Q12 | In a variable growth model, the dividend is believed to grow at a constant pace forever after an initial growth period.
- True
- False
- none
- all
Q13 | For a bond YTM is always equal to coupon rate.
- True
- False
- none
- all
Q14 | Long period of bond maturity leads to
- more price change
- stable prices
- standing prices
- mature prices
Q15 | If coupon rate is equal to going rate of interest then bond will be sold
- at par value
- below its par value
- more than its par value
- seasoned par value
Q16 | Falling interest rate leads change to bondholder income which is
- reduction in income
- increment in income
- matured income
- frequent income
Q17 | Bonds issued by corporations and exposed to default risk are classified as
- corporation bonds
- default bonds
- risk bonds
- zero risk bonds
Q18 | Which of the following might be found in a bond indenture?
- A dividend restriction clause.
- A subordination clause.
- A sinking fund clause.
- All of the above.
Q19 | The contract between a bond issuer and a bondholder is called:
- a debenture.
- a charter.
- a general obligation.
- an indenture.
Q20 | Which of the following would cause the required return on a bond to increase, everything else held equal?
- The bond’s rating changes from B to BB.
- The bond is senior to the issuer’s other bonds.
- The borrower is subject to dividend restrictions.
- The bond is callable
Q21 | “The yield curve will be downward sloping if the market believes that future short-term interest rates will be less than current short-term interest rate.” This statement about the term structure of interest rates is most consistent with the:
- forward rate hypothesis.
- market segmentations hypothesis.
- liquidity preference hypothesis.
- unbiased expectations hypothesis
Q22 | Which of the following is another name for an unsecured bond?
- Obligation trust bond
- Junk bond.
- Speculative bond.
- Debenture.
Q23 | Which of the following would cause a bond’s required return to increase?
- Bond is convertible.
- Rating changes from B to BB.
- Dividend restrictions.
- Call provision.
Q24 | Which of the following causes a lower required return on a bond?
- The bond is callable.
- The bond is convertible.
- The bond’s rating changes from AA to A.
- Both the first and third option.
Q25 | Which of the following causes a lower required return on a bond?
- Dividend restrictions are placed on the company.
- The bond is subordinated to other debt.
- The bond has no collateral.
- Both the first and second option.