Problem 1: Compared to interest rates on long-term U.S. government bonds, interest rates on ____________ fluctuate more and are lower on average.
- high quality corporate bonds
- three-month Treasury bills
- low quality corporate bonds
- home mortgages
Problem 2: Statement (1) A bond is a debt security that promises to make payments periodically for a specified period of time. Statement (2) A stock is a security that is a claim on the earnings and assets of a corporation.
- Statement (1) is true; Statement (2) is false
- Statement (1) is false; Statement (2) is true
- Statement (1) and Statement (2) are both true
- Statement (1) and Statement (2) are both false
Problem 3. Statement (1) Debt markets are often referred to generically as the bond market. Statement (2) Bonds are routinely traded in capital markets.
- Statement (1) is true; Statement (2) is false
- Statement (1) is false; Statement (2) is true
- Statement (1) and (2) are both true
- Statement (1) and (2) are both false