Reference no: EM132865258
1: How do marketplaces help discover the value of an asset?Group of answer choices
a) The amount buyers and sellers agree on provides a data point into how much any asset is worth
b)The amount buyers and sellers agree on provides a data point into how much only financial assets are worth
c)Every time a trade is completed, that price is considered the undisputed precise value of that asset
d)The market-maker sets the value of the asset for all buyers and sellers and does not adjust the purchase price
2: How does a marketplace make money?
Group of answer choices
a) The market maker takes money from the buyer and pays the seller a little less money than they received from the buyer
b) They essentially take a commission on each transaction
c)They make money off the spread
d)They buy low and sell high
e) All are correct
3: What is an example of the risk/reward premium?
Group of answer choices
a) You buy a bond with a lower credit rating and expect to get paid a higher interest rate from it
b) You buy a stock from a riskier company in hopes that you will make more money than a blue-chip stock
c)You make an investment in an early stage private company hoping that it will one day go public
d)You buy a bond that pays a higher interest rate but you could lose all your money
e) All are correct
4: What is liquidity risk?
Group of answer choices
a)The inability to sell an asset when you would like to get rid of it
b) The inability to purchase an asset in a liquid capital
c)Capital gains on a stock you have recently bought/sold that cannot be sent through a pass-through entity
d)All are correct
5: Which of the following is an example of arbitrage?
Group of answer choices
a)Taking advantage of the mispricing of an asset in the market
b)Returning an asset to the original bondholder
c)Buying a stock and holding onto it in your 401k to hope that it gains in value
d)Going long the same stock in two different markets
6: What are Treasury Notes?
Group of answer choices
a) Debt issued by the United States Government
b)Any debt issued by corporations in the United States
c)Bonds issued exclusively by city and state governments
d)Bail Bonds
e)All of the above
7: What are Treasury Bonds?
Group of answer choices
a)Debt issued by the United States Government
b)Any debt issued by corporations in the United States
c)Bonds issued exclusively by city and state governments
d)Bonds that are exclusively issued by foreign governments
8: What are the major credit ratings agencies for bonds?
Group of answer choices
a)S&P, Moody's, Fitch
b)Standard & Poor's, Marcus, Moody's & Rich
c)S&P, Nasdaq, Sallie Mae
d)Moody's, Fitch, FINRA
9: What are general guidelines for evaluating the creditworthiness of a bond?
a)Look at ratings agencies as a starting point
b)Go to established ratings agencies and use their analysis as definitive for assumptions in calculations
c)Conduct your own diligence on each individual bond in the market
d)Call 5 large investment banks and ask for their opinion for every bond
10: What are risks to holding bonds?
a)They are heavy assets
b)Default risk
c)Tranche reduction risk
d)Repatriation tax