Question

22- Which of the following statements is most correct? a. A venants in mortgage bond is one that allows the same assets to be used as security in future bond issues. b. Covenants in a trust indenture restrict or limit the actions the firm c c. Retractable bonds can be redeemed prior to maturity by the firm. d. All of the above are correct. 23-Wh a. Setting reserve requirements b. Altering the discount rate, c. Through federal open market operations d. Setting bank profitability ratios ich of the following is not a method by which the Federal Reserve establishes monetary policy? e. None of the above banks were for many years prohibited from full-fledged investment banking by the: a. Glass-Steagall Act b. Garn-St. Germain Depository Institutions Act c. Securities Act of 1933 d. National Association of Securities Dealers 25- A bond that is an unsecured obligation of the issuer-in other words, there are no specific assets pledged as collateral in case the issuer cannot repay the bondholders, is called a. An equipment trust certificate b. An indenture. c. A first mortgage bond. d. A debenture. ihle for hanks to receive federal charters and provided a basis for national

Answer 1

22) b) Covenants in a trust indenture restrict or limit the actions the firm can take.

Reason : Closed ended mortgage bond is the bond that does not allow the same assets to be used as security in other bond issues.

Retractable bond can be redeemed prior to maturity only if demanded by the holder.

23) d) setting bank profitability ratio

Reason : Federal bank establishes monetary policy through four factors - setting reserve requirement, altering the discount rate, through federal open market operations and interest on reserves.

24) a) Glass-steagall Act

Reason : Glass steagall Act - 1933 prohibits commercial banks from full fledged investment banking.

25) d) A debenture

Reason : Debenture is the type of debt instrument unsecured by collateral. Debentures have no collateral backing, debentures must rely on credit worthiness and reputation of the issuer for support.

All other given options secured obligation of the issuer.