17. Which of the following statements is true about bonds in the US? A) State and local governments have no default risk on their bonds. B) Bonds issued by the state and local governments are referred to as municipal bonds. C) All bonds issued by state, local, and federal governments are exempt from federal income tax. D) Local government bond coupons are usually higher than Treasury bonds coupons. 18. Under normal economic conditions, the yield curve is A) gently upward sloping. B) mound shaped. C) flats. D) bowl-shaped. 19. The main assumption in the segmented market theory is that bonds have different maturities A) are not substitutes for each other. B) is a perfect substitution. C) is substitutes only if the investor is given a premium incentive. D) is substitutes but not a perfect substitution.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question
17. Which of the following statements is true about bonds in the US?
A) State and local governments have no default risk on their bonds.
B) Bonds issued by the state and local governments are referred to as municipal bonds.
C) All bonds issued by state, local, and federal governments are exempt from federal income tax.
D) Local government bond coupons are usually higher than Treasury bonds coupons.
18. Under normal economic conditions, the yield curve is
A) gently upward sloping.
B) mound shaped.
C) flats.
D) bowl-shaped.
19. The main assumption in the segmented market theory is that bonds have different maturities
A) are not substitutes for each other.
B) is a perfect substitution.
C) is substitutes only if the investor is given a premium incentive.
D) is substitutes but not a perfect substitution.
Transcribed Image Text:17. Which of the following statements is true about bonds in the US? A) State and local governments have no default risk on their bonds. B) Bonds issued by the state and local governments are referred to as municipal bonds. C) All bonds issued by state, local, and federal governments are exempt from federal income tax. D) Local government bond coupons are usually higher than Treasury bonds coupons. 18. Under normal economic conditions, the yield curve is A) gently upward sloping. B) mound shaped. C) flats. D) bowl-shaped. 19. The main assumption in the segmented market theory is that bonds have different maturities A) are not substitutes for each other. B) is a perfect substitution. C) is substitutes only if the investor is given a premium incentive. D) is substitutes but not a perfect substitution.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Types Of Bonds
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education