Quiz chapter 9 - Bond Markets Flashcards Preview

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Flashcards in Quiz chapter 9 - Bond Markets Deck (18):
1

1. Capital-market instruments are defined as long-term financial instruments with an original maturity
of greater than one year.
a. True
b. False

T

2

2. Capital market securities have better liquidity than capital market securities.
a. True
b. False

F

3

3. Capital assets usually are not highly marketable.
a. True
b. False

F

4

4. Capital market interest rates tend to be higher than money market rates for any issuer.
a. True
b. False

T

5

5. The capital markets comprise of the equity and the short-term and long-term debt markets.
a. True
b. False

F

6

6. Investors may invest in capital market securities either directly or indirectly.
a. True
b. False

T

7

7. Both governments and businesses issue both debt and equity capital market securities.
a. True
b. False

F

8

8. Households owe more financially than they own.
a. True
b. False

F

9

9. Treasury Bonds are similar to Treasury Notes.
a. True
b. False

T

10

10. In the money markets, firms make short-term investments of surplus funds to earn interest rather
than leaving them idle.
a. True
b. False

T

11

11. Off-exchange transactions are conducted directly between two parties, or arranged through
broker who acts as an intermediary between two parties.
a. True
b. False

T

12

12. The clearing-house through which all wholesale electronic transactions of Commonwealth
Government Securities are settled in Australia is called Austraclear.
a. True
b. False

T

13

13. Dealer panels are stock brokers.
a. True
b. False

F

14

14. An unsecured note is a bond where no underlying security is attached as specified collateral in the
case of default.
a. True
b. False

T

15

15. The money market provides liquidity for deficit units; the capital market finances economic
growth.
a. True
b. False

T

16

16. Capital market borrowing by businesses is generally repaid from the cash flow generated by the
assets financed.
a. True
b. False

T

17

17. Commercial banks purchase more tax-exempt securities when loan losses increase.
a. True
b. False

F

18

18. The after-tax return on a 9 percent tax-exempt municipal bond to a commercial bank in the 34
percent tax bracket is 5.94 percent.
a. True
b. False

F