A bond issued for the purpose of building a tunnel between NewJersey and New York in which tolls are expected to pay the couponand principal payments to the bondholders is most likelycharacterized as a(n):
| | a. General obligation bond |
| | b. Treasury bond |
| | c. Industrial development bond |
| | d. Revenue bond |
The most likely reason an organization would issue commercialpaper is to:
| | a. Finance a budget deficit |
| | b. Manage working capital |
| | c. Invest in long-term projects |
| | d. Refinance a long-term bond issue |
Which of the following is (are) correct regarding averagereturns?
| | a. The geometric mean is equivalent to IRR |
| | b. The arithmetic mean is the average return for a series ofreturns and will always be greater than or equal to the geometricmean |
| | c. Both a and b |
| | d. Neither a nor b |
A mortgage-backed security can be characterized as having:
| | a. Prepayment risk |
| | b. Little price risk |
| | c. Extremely low default risk levels |
| | d. Annual coupon payments |
Which of the following statements concerning risk is notcorrect?
| | a. Country risk, or political risk, is the variability in asecurity’s returns resulting from the instability of a country’seconomy or government |
| | b. Financial risk is associated with the use of equity as partof a company’s capital structure |
| | c. Market risk is the variability in a security’s returnsresulting from fluctuations in the overall market |
| | d. Business risk is the risk associated with the industry orenvironment in which a business operate |
A financial institution hopes to form an equity mutual fund thatinvests solely in blue-chip stocks. The most likely piece oflegislation that dictates the law surrounding the fund is the:
| | a. Dodd Frank Act of 2010 |
| | b. Banking Act of 1933 |
| | c. Financial Services Modernization Act of 1999 |
| | d. Investment Company Act of 1940 The authority function of a self-regulatory organization is mostlikely characterized by: | | a. Creation and enforcement of its own policies | | | b. The effective management of conflicts of interest | | | c. Establishment of clear standards of conduct | | | d. Quick resolution of disputes |
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