To be truly marketable, a security must have three basic characteristics: a ready market, risk-free, and safety of principal. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Marketable securities are short-term, interest-earning, money market instruments that can easily be converted into cash. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Since Treasury bills are issued in bearer form, they are considered to be virtually risk-free. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The yields on Treasury bills are generally higher than those on any other marketable securities due to their virtually risk-free nature. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Federal agency issues are obligations of the U.S. Treasury and are readily accepted as low-risk securities. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Modern portfolio theory developed by William F. Sharpe is the foundation of ________. A) currency market parity models B) the balance sheet hedge C) the capital asset pricing model D) adjusted net present value model ANSWER Answer: C
Date: September 19th, 2020
Multinational corporations most often hedge their transaction exchange rate risk using currency ________. A) options B) futures C) spreads D) forward contracts ANSWER Answer: D
Date: September 19th, 2020
If investors ________, we would assume that do not make systematic mistakes when forecasting exchange rates. A) have rational expectations B) have complete knowledge of all possible bid and ask quotes C) know that interest rate differentials provide information about the intensity of devaluations D) anticipate events that occur ANSWER Answer: A
Date: September 19th, 2020
The ________ holds that it is the covariance of an asset’s return with that of the market portfolio that determines the asset’s risk premium. A) Law of One Price B) Law of Iterated Expectations C) Capital Asset Pricing Model D) Interest Rate Parity Model ANSWER Answer: C
Date: September 19th, 2020
Controlled disbursing involves the strategic use of mailing points and bank accounts to lengthen mail float and clearing float, respectively. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
