pre class quizz #6

Holdings of government bonds are classified on a bank's balance sheet as Group of answer choices assets, because investing in government bonds represents a use of funds for investment. liabilities, because the bank must borrow in order to be able to invest in the government bonds. assets, because the markets for government bonds are the most liquid in the world. liabilities, because the government bonds must be pledged as collateral against borrowing.

B. Sovereign debt (issued bonds) are typically considered as proxies for risk free. Discuss the reasons why sovereign debt may not be risk free. Why might credit ratings agencies give different credit ratings to sovereign debt issued by the same country, depending on coupons denominated in domestic or foreign currency.

Securities that are registered at the U.S. Federal level are not subject to U.S. state governments requiring their own registration because of _____________________. A. The Financial Institution Modernization ActB. SEC Rule 144AC.         The Federal Reserve ActD.        SEC Rule 415E.         The National Securities Market Improvement Act

19- Which statement is correct? a. All U.S. debt issues, private and public, must be registered with the SEC.b. Rarely is debt issued privately in the U.S.c. It is easier to renegotiate a public issue than it is a private issue of debt.d. Private placements generally have shorter maturities than term loans.e. A direct placement of debt generally has more restrictive covenants than a publicissue.

A: B: Issuer Fee Freddie Mac; (2) Telecom, and The Underwriter B A The entity issuing the debt obligation is the borrower in the transaction. Some of the biggest issuers in the bond market are (1) which H Purchaser corporations such as the U.S. government and the government of U.K.; (2) government-related agencies, such as Fannie Mae and , such as British , such as the state of California, Sakai City, Japan; (3) such as the European Investment Bank and the World Bank. Why do entities municipal governments ebt obligations? Economies around supranational banks ering during 2012 after the 2008-2009 recession. Governments and central banks continued their efforts to facilitate economic recovery. The U.S. rederal Reserve Bank (the Fed) kept interest rates at record lows. This, along with several other reasons, found the bond markets flooded with new bond issues. The following article highlights some reasons why firms issued debt obligations to raise funds.

True or false I. Floating/ variable rate bonds is one in which the interest payment changes with the market conditions. II. Junk or low rated bonds are rated BB or below.III. Eurobonds are bonds payable or denominated in the borrower’s currency, but sold outside the country of the borrower, usually by an international syndicate of investment bankers. IV. Treasury bonds carry the “full-faith-and-credit” backing of the government and investors consider them among the safest fixed-income investments in the world.

Explain how the bond market facilitate government (fiscal) policies. How do you think the bond market could discipline a government & discourage the government from borrowing (& spending) excessively?

3) a. b. C. Which one of these is considered to be the safest investment? U.S. Treasury Bonds The S&P 500 U.S. Treasury Bills

The discount rate is the rate that the O Fed charges member banks. Fed charges the Treasury for sales of securities. O Fed charges on government securities. O Treasury pays on savings bonds

National governments issue debt securities known as sovereign bonds, which can be denominated in either local currency or global reserve currencies, like the U.S. dollar or euro. For this discussion question, first define what these bonds are.  Why are these issued?  Then discuss the issues that can arise when investors invest in these types of bonds.  What are the advantages and disadvantages of these bonds?  Are there unique issues that can arise only with this type of bond?  Would you invest in sovereign bonds?

Why are U.S. government securities viewed differently from state and local government securities in terms of default risk?

Match the following money market securities with their issuers.       Securities   Issuers  a. Treasury bills                      1. depository institutions b. negotiable CDs                   2. U.S. government c. commercial paper               3. banks  d. banker’s acceptances         4. business firms and institutions

Which of the following regulatory events in the 20th century potentially influenced the financial sector? Passing of the Glass-Steagall Act Establishment of the Securities and Exchange Commission (SEC) Establishment of the Federal Reserve Banking System Repeal of the Glass-Steagall Act Securities Investor Protection Act passed

National governments issue debt securities known as sovereign bonds, which can be denominated in either local currency or global reserve currencies, like the U.S. dollar or euro. (source (Links to an external site.)Links to an external site.). For this discussion question, first define what these bonds are.  Why are these issued?  Then discuss the issues that can arise when investors invest in these types of bonds.  What are the advantages and disadvantages of these bonds?  Are there unique issues that can arise only with this type of bond?  Would you invest in sovereign bonds?

Classify the following financial instruments as money market securities or capital market securities:  Banker’s acceptances Commercial paper Common stock Corporate bonds Mortgages Negotiable certificates of deposit Repurchase agreements U.S. Treasury bills U.S. Treasury notes Federal funds

Which of the following are money market securities?I. Jumbo CDsII. Short-term municipal debtIII. U.S. Treasury billsIV. Commercial paper   A.  I and IV only   B.  II and III only   C.  I, II, and IV only   D.  II, III, and IV only   E.  I, II, III, and IV

RITICAL THINKING AND CONCEPTS REVIEW L01 6.1 Treasury Bonds Is it true that a U.S. Treasury security is risk free?

US treasury bonds carry the full faith and credit of the us government, there fore they are considered to be investments that are almost risk free. True or false?

when are corporations likely they called the Bonds? A.  When the market interest rate is higher than the contract rate, b. When the contract rate is higher than the market rate. C. When their bonds at selling at par with market d. When standard and poor are bullish about treasury bills E. None of the above