Unit 12 Flashcards

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1
Q

The yield curve often inverts when interest rates are (high/low) but are expected to (fall/rise) in the near future.

A

high - fall

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2
Q

When a mutual fund share is redeemed, the fund must pay the investor within __ days of receipt of the redemption.

A

7

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3
Q

Which security is sold with a markup?

A

Fixed income securities i.e. bonds

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4
Q

Bonds with longer maturities have (more/less) interest rate risk than bonds with shorter maturities.

A

more

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5
Q

Do municipal bond transactions take place on an exchange?

A

No

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6
Q

Current yield is based on the bond’s _________________

A

current market price

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7
Q

Current yield calculation

A

Annual Interest ÷ Current Market Price

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8
Q

A _____________ bond is a U.S.-dollar denominated bond issued by an overseas company and held in a foreign institution outside both the U.S. and the issuer’s home country

A

Eurodollar

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9
Q

Which bond is more likely to be called:

A bond that is trading BELOW par value or a bond trading ABOVE par value

A

A bond trading above par value

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10
Q

If the Consumer Price Index (CPI) decreased by a greater rate than the yield on your investment, the purchasing power of your invested dollars would (increase/decrease)

A

increase

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11
Q

___________ are zero-coupon bonds (long-term). Interest is automatically reinvested and compounded at the same yield and reinvestment risk is avoided.

A

Treasury STRIPS

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12
Q

Bonds with high durations and _____ coupons will be more volatile in price as interest rates change.

A

small

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