Homework Answers
Answer to Question 7 - Option (c)
Reasoning
Option a) : Treasury bills have lower risk compared to commercial paper as in case of treasury bill full backed by US Govt on the other hand commercial paper backed by company's assurance and chance of default.
So, this option is correct.
Option b) As market works on the logic of higher risk higher return; So, on commercial paper return would be higher compared to treasury bill considering same maturity.
So, this option is also correct.
Hence answer to this question will be (c) as both option (a) and (b) are correct.
Answer to Question no.8
(a) Incorrect - Yield on Treasury bill will be lower then bank acceptance, as risk is lower in case on treasury bills.
(b) Correct - Jumbo CD upto $ 2,50,000 insured by FDIC and minimum investment of $ 1,00,000.
(c) Incorrect - Commercial paper has fixed maturity of not more than 270 days, so the statement mentioned in contravention and so incorrect
(d) Correct - Repurchase agreement also known as repo has maturity of very short term from fortnight to few days.
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QUESTION 7 Which of the following statements about Treasury bills and commercial paper are correct? a....
Questions 1 to 10 are false statements. Please re-write each statement so that it is true....
Questions 1 to 10 are false statements. Please re-write each statement so that it is true. It may be as simple as one word change or more complex. 3. Money market security prices and yields are more sensitive to changes in interest rates than long-term corporate bonds. 4. The majority of money market securities are low denomination, low risk investments designed to appeal to individual investors with excess cash. 5. Most money market securities are initially sold to individual investors....
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Which statement is correct? Commercial paper is highly marketable. All T-bills are issued with 90-day maturities. A certificate of deposit is a short-term loan to the government. Any CD with a face amount of $10,000 or more is classified as a jumbo CD. Money market preferred securities have less price volatility than ordinary preferred. Which statement is correct? Disbursement float is the period of time between a firm making a bank deposit and the funds from that deposit being available...
Please verify if these answers are correct or incorrect! I think I may be missing something...
Please verify if these answers are correct or incorrect! I think
I may be missing something on the capital markets
question...
Identify the financial instruments based on the following descriptions Description Financial Instrument Issued by nonfederal government entities, these financialState and local government bonds instruments are debt securities that fund their capital expenditures. They are exempt from most taxes imposed in the area where the securities are issued Issued by money-centered financial firms, these short- orCertificates of deposit medium-term insured...
question 6-8 6) As shown in the text, the relationship described best by which of the...
question 6-8
6) As shown in the text, the relationship described best by which of the following statements? elationship between the Prime rate and the return on commercial paper can ally several percentage points higher than the return on commercial paper, and A) The Prime rate is usually severa both move up/down in a similar fashion. B) Because commercial paper is ris! usually by 2% or so. C) The Prime rate and the return on cor commercial paper slightly higher....
the low Managing in Financial Markets Money Market Portfolio Dilemma As the treasurer of a corporation,...
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14. If an investor buys a $50,000, 90-day T-bill for $49,2 annualized return on a simple...
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QUESTION 18 Match the different types of fixed income securities - Commercial Paper - TIPS A Short-term collaterali...
QUESTION 18 Match the different types of fixed income securities - Commercial Paper - TIPS A Short-term collateralized lending where the borrower offers financial securities as collateral and agrees to buy those securities back at a slightly greater value than the amount borrowed in (typically a few days. 3. Loans from one financial institution to another using money that is on deposit at a Federal Reserve Bank. - Repo or Repurchase Agreement • Bankers Acceptance - Revenue Bond . General...
Which one of these statements is correct? 7. o Treasury bills outperformed inflation every year during...
Which one of these statements is correct? 7. o Treasury bills outperformed inflation every year during the period 1926-2015. o Small-company stocks outperformed large-company stocks every year during the period 1926-2015 o On an annual basis, small company stocks had more consistent rates of return than did large-company stocks for the period 1926-2015. o The Inflation rate has been positive every year during the period 1926-2015. o During the 1930s (Great Depression), long-term government bonds produced a relatively stable rate...
Question 3 (1 point) Which of the following statements is correct? Subordinated debt has less default...
Question 3 (1 point) Which of the following statements is correct? Subordinated debt has less default risk than senior debt. Junk bonds typically have a higher yield to maturity relative to investment grade bonds. A debenture is a secured bond that is backed by some or all of the firm's fixed assets. None of the other statements is correct. Previous Page Next Page Page 3 of 26
Which of the following statements about the term structure of interest rates is incorrect? A. According...
Which of the following statements about the term structure of interest rates is incorrect? A. According to the Liquidity Preference Theory, long-term interest rates are usually higher than short-term interest rates. B. The Market Segmentation Theory posits that bonds of different maturities are traded by different investors and their prices/yields are determined separately. C. The Pure Expectations Theory asserts that the yield curve is explained solely by investors' interest rate expectations. D. According to the Pure Expectations Theory, an upward...
Please verify if these answers are correct or incorrect! I think
I may be missing something on the capital markets
question...
Identify the financial instruments based on the following descriptions Description Financial Instrument Issued by nonfederal government entities, these financialState and local government bonds instruments are debt securities that fund their capital expenditures. They are exempt from most taxes imposed in the area where the securities are issued Issued by money-centered financial firms, these short- orCertificates of deposit medium-term insured...
question 6-8
6) As shown in the text, the relationship described best by which of the following statements? elationship between the Prime rate and the return on commercial paper can ally several percentage points higher than the return on commercial paper, and A) The Prime rate is usually severa both move up/down in a similar fashion. B) Because commercial paper is ris! usually by 2% or so. C) The Prime rate and the return on cor commercial paper slightly higher....
the low Managing in Financial Markets Money Market Portfolio Dilemma As the treasurer of a corporation, one of your jobs is to maintain investments in liquid securities such as Treasury securities and commercial paper. Your goal i to earn as high a return as possible but without takin much of a risk a. The yield curve is currently upward sloping, such that 10-year Treasury bonds have an annualized yield 3 percentage points above the annualized yield of three-month T-bills. Should...
14. If an investor buys a $50,000, 90-day T-bill for $49,2 annualized return on a simple (arithmetic) basis is: n l( 50 and holds i ill maturity,the 15. A newly issued T-bill with a $10,000 par value that sells for $9,850 maturity has a discount return of c. at a discount from par value d, only through a financial intermediary 16. Both T-bills and paper are a, with a stated coupon rate b at a premium above par value 17....
QUESTION 18 Match the different types of fixed income securities - Commercial Paper - TIPS A Short-term collateralized lending where the borrower offers financial securities as collateral and agrees to buy those securities back at a slightly greater value than the amount borrowed in (typically a few days. 3. Loans from one financial institution to another using money that is on deposit at a Federal Reserve Bank. - Repo or Repurchase Agreement • Bankers Acceptance - Revenue Bond . General...
Which one of these statements is correct? 7. o Treasury bills outperformed inflation every year during the period 1926-2015. o Small-company stocks outperformed large-company stocks every year during the period 1926-2015 o On an annual basis, small company stocks had more consistent rates of return than did large-company stocks for the period 1926-2015. o The Inflation rate has been positive every year during the period 1926-2015. o During the 1930s (Great Depression), long-term government bonds produced a relatively stable rate...
Question 3 (1 point) Which of the following statements is correct? Subordinated debt has less default risk than senior debt. Junk bonds typically have a higher yield to maturity relative to investment grade bonds. A debenture is a secured bond that is backed by some or all of the firm's fixed assets. None of the other statements is correct. Previous Page Next Page Page 3 of 26
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