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.
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
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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.
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