HS 328 - LESSON 1 QUESTIONS AND ANSWERS
Primary and secondary markets are an important link in the establishment of a sound
economy.
a. True
b. False
a. True
A firm that issues a fixed income security promises its investors that it will make regular
dividend payments.
a. True
b. False
b. False
Explanation: Firms that issue equity shares make dividend payments.
A hedge fund that invests in stocks, bonds, derivative securities, and diamonds can be
characterized as an alternative investment.
a. True
b. False
a. True
Commercial paper is issued with maturities of 270 days or less to avoid costly
registration requirements.
a. True
b. False
a. True
A guarantee of payment by a bank during an international transaction becomes a
banker's acceptance when sold in a secondary market.
a. True
b. False
a. True
A traditional CD is typically a deposit of at least $100,000.
, a. True
b. False
b. False
Explanation: That describes a negotiable CD or a jumbo CD.
TIPS are hedges against inflation.
a. True
b. False
a. True
Water bonds are repaid by user fees.
a. True
b. False
a. True
The interest received by investors from a municipal bond is always taxed at the state
level.
a. True
b. False
b. False
Explanation: Interest received by investors who live in a particular state is exempt from
income tax on that state's income.
Mortgage-backed securities have relatively low credit risk but high prepayment risk.
a. True
b. False
a. True
A municipal bond issued to construct a toll road between two large cities would be
classified as a general obligation bond.
a. True
b. False
b. False
Primary and secondary markets are an important link in the establishment of a sound
economy.
a. True
b. False
a. True
A firm that issues a fixed income security promises its investors that it will make regular
dividend payments.
a. True
b. False
b. False
Explanation: Firms that issue equity shares make dividend payments.
A hedge fund that invests in stocks, bonds, derivative securities, and diamonds can be
characterized as an alternative investment.
a. True
b. False
a. True
Commercial paper is issued with maturities of 270 days or less to avoid costly
registration requirements.
a. True
b. False
a. True
A guarantee of payment by a bank during an international transaction becomes a
banker's acceptance when sold in a secondary market.
a. True
b. False
a. True
A traditional CD is typically a deposit of at least $100,000.
, a. True
b. False
b. False
Explanation: That describes a negotiable CD or a jumbo CD.
TIPS are hedges against inflation.
a. True
b. False
a. True
Water bonds are repaid by user fees.
a. True
b. False
a. True
The interest received by investors from a municipal bond is always taxed at the state
level.
a. True
b. False
b. False
Explanation: Interest received by investors who live in a particular state is exempt from
income tax on that state's income.
Mortgage-backed securities have relatively low credit risk but high prepayment risk.
a. True
b. False
a. True
A municipal bond issued to construct a toll road between two large cities would be
classified as a general obligation bond.
a. True
b. False
b. False
