pre class quizz #6

Holdings of government bonds are classified on a bank's balance sheet as Group of answer choices assets, because investing in government bonds represents a use of funds for investment. liabilities, because the bank must borrow in order to be able to invest in the government bonds. assets, because the markets for government bonds are the most liquid in the world. liabilities, because the government bonds must be pledged as collateral against borrowing.

Question 10 (1 point) Which of the following statements is true regarding STRIPS? a) They are issued by the Treasury. O b) They are created and sold by various financial institutions. Oc) They are not backed by the U.S. government. d) They have to be held until maturity. O e) All of the above are true regarding STRIPS.

B. Sovereign debt (issued bonds) are typically considered as proxies for risk free. Discuss the reasons why sovereign debt may not be risk free. Why might credit ratings agencies give different credit ratings to sovereign debt issued by the same country, depending on coupons denominated in domestic or foreign currency.

Which of the following statements is NOT true? A. Debt contracts tend to impose more restrictions on the actions of the borrower than the lender   B. Larger corporations have easier access to the securities market   C. The financial sector is one of the least regulated industries in the US economy   D. Collateral is used to secure debt contracts

A: B: Issuer Fee Freddie Mac; (2) Telecom, and The Underwriter B A The entity issuing the debt obligation is the borrower in the transaction. Some of the biggest issuers in the bond market are (1) which H Purchaser corporations such as the U.S. government and the government of U.K.; (2) government-related agencies, such as Fannie Mae and , such as British , such as the state of California, Sakai City, Japan; (3) such as the European Investment Bank and the World Bank. Why do entities municipal governments ebt obligations? Economies around supranational banks ering during 2012 after the 2008-2009 recession. Governments and central banks continued their efforts to facilitate economic recovery. The U.S. rederal Reserve Bank (the Fed) kept interest rates at record lows. This, along with several other reasons, found the bond markets flooded with new bond issues. The following article highlights some reasons why firms issued debt obligations to raise funds.

Explain how the bond market facilitate government (fiscal) policies. How do you think the bond market could discipline a government & discourage the government from borrowing (& spending) excessively?

Why are U.S. government securities viewed differently from state and local government securities in terms of default risk?

13. Which of the following powers or tools of Federal Reserve monetary policy has the greatestimpact on the money supply?a.discount rateb.Regulation Qc.open market operationsd.bank examinatione.All of the above have about the same impact   14. The asset of Federal Reserve banks associated with open market operations isa.Federal Reserve notes.b.U.S. government securities.c.loans to member banks.d.float.e.None of the above.

Match the following money market securities with their issuers.       Securities   Issuers  a. Treasury bills                      1. depository institutions b. negotiable CDs                   2. U.S. government c. commercial paper               3. banks  d. banker’s acceptances         4. business firms and institutions

Which of the following regulatory events in the 20th century potentially influenced the financial sector? Passing of the Glass-Steagall Act Establishment of the Securities and Exchange Commission (SEC) Establishment of the Federal Reserve Banking System Repeal of the Glass-Steagall Act Securities Investor Protection Act passed

Classify the following financial instruments as money market securities or capital market securities:  Banker’s acceptances Commercial paper Common stock Corporate bonds Mortgages Negotiable certificates of deposit Repurchase agreements U.S. Treasury bills U.S. Treasury notes Federal funds

Describe tools that the US Treasury and the Federal Reserve use to undertake restrictive monetary policy today (versus before the mortgage-debt crisis).

US treasury bonds carry the full faith and credit of the us government, there fore they are considered to be investments that are almost risk free. True or false?

When a government borrow money from the public on a long-term basis, it usually does so by issuing debt securities, typically referred to as government bonds. A bond that is issued in Europe or in the US by an Australian company and that pays interest and principal to the lender in Australian dollars would be considered as a Eurobond. Focusing on the topic from FINC20018 Managerial Finance, briefly discuss the innovations in bond market.

when are corporations likely they called the Bonds? A.  When the market interest rate is higher than the contract rate, b. When the contract rate is higher than the market rate. C. When their bonds at selling at par with market d. When standard and poor are bullish about treasury bills E. None of the above

Which two of the following are the largest categories of fixed-income securities in the U.S.? I. U.S. government debt II. corporate debt III. municipal government debt IV. real estate mortgage debt

QUESTION 9 Governments require some banks to conduct stress tests of their financial situation.  What type of financial regulation is this requirement?   A. Assessment of risk management   B. Restrictions on competition   C. Consumer protection   D. Disclosure requirements

1.How do term bonds differ from serial bonds? Which type of bonds have governments been more likely to issue in recent years? Why do you think this trend has occurred? 2. Under what circumstances might a government consider an advance refunding of general obligation bonds outstanding? provide any source