Study Guide Essay

6993 Words Jul 15th, 2013 28 Pages
HOMEWORK 1 - MONEY AND BANKING * uestion 1

4 out of 4 points Correct The periodic payments on equity securities are called Answer Selected Answer: dividends. Correct Answer: dividends. * Question 2

0 out of 4 points Incorrect In the United States, the biggest issuers of debt securities are Answer Selected Answer: households. Correct Answer: financial intermediaries. * Question 3

4 out of 4 points Correct In the United States, the biggest issuers of equity securities are Answer Selected Answer:
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Which investment provides the highest after-tax return?

Investment A: interest rate 10 percent, tax rate 40 percent of interest income. Investment B: interest rate 8 percent, tax rate 25 percent of interest income. Investment C: interest rate 6.5 percent, tax rate 0 percent. Answer Selected Answer: Investments A and B have the same after-tax return, which is greater than that of investment C. Correct Answer: Investment C. * Question 13

0 out of 4 points Incorrect Consider the following four debt securities, which are identical in every characteristic except as noted:

W: A corporate bond rated AAA X: A corporate bond rate BBB Y: A corporate bond rated AAA with a shorter time to maturity than bonds W and X Z: A corporate bond rated AAA with the same time to maturity as bond Y that trades in a more liquid market than bonds W, X, or Y

Which of the following is the most likely order of the interest rates (yields to maturity) of the bonds from highest to lowest? Answer Selected Answer: W, X, Z, Y Correct Answer: X, W, Y, Z * Question

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