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Question 1 of 10
1. Question
Bond returns are essentially dependant on which of the following?
I. Exchange rates
II. Inflation
III. Market prices
IV. v=Volatility of foreign currenciesCorrect
Bond returns depend upon inflation. In the long run, inflation affects the yield offered on bonds.
Incorrect
Bond returns depend upon inflation. In the long run, inflation affects the yield offered on bonds.
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Question 2 of 10
2. Question
The sharp downturn in inflation since the early 1980s has led to which of the following outcomes?
I. Diversified bond returns.
II. Inflated bond returns.
III. Slower bond returns.
IV. High real bond returns.Correct
The sharp downturn in inflation since the early 1980s has led to unusually high real bond returns.
Incorrect
The sharp downturn in inflation since the early 1980s has led to unusually high real bond returns.
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Question 3 of 10
3. Question
The introduction of which of the following bond(s) has(have) greatly expanded the scope of the U.S. bond market?
I. Mortgage-backed bonds in the 1970s
II. High-yield debt in the 1980s
III. Retirement fund debt in the 1990s
IV. Securitized debt in the 1980sCorrect
The introduction of mortgage-backed bonds in the 1970s, high-yield debt in the 1980s, and other securitized debt in the 1980s and 1990s has greatly expanded the scope of the U.S. bond market.
Incorrect
The introduction of mortgage-backed bonds in the 1970s, high-yield debt in the 1980s, and other securitized debt in the 1980s and 1990s has greatly expanded the scope of the U.S. bond market.
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Question 4 of 10
4. Question
The bonds of foreign industrial countries share many of the same characteristics as U.S. bonds, but their returns vary widely because of which of the following?
I. Their currency denomination.
II. Their high-yield debts.
III. Their diversified portfolios.
IV. Their exchange rate policy.Correct
The bonds of foreign industrial countries share many of the same characteristics as U.S. bonds, but their returns vary widely because of their (foreign) currency denomination.
Incorrect
The bonds of foreign industrial countries share many of the same characteristics as U.S. bonds, but their returns vary widely because of their (foreign) currency denomination.
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Question 5 of 10
5. Question
Which of the following serves as a benchmark for many interest rate contracts, including many floating rate mortgages in the United States>
I. U.S. Federal Reserve
II. SIFMA
III. EMS
IV. LIBORCorrect
The LIBOR rate serves as a benchmark for many interest rate contracts, including many floating rate mortgages in the United States.
Incorrect
The LIBOR rate serves as a benchmark for many interest rate contracts, including many floating rate mortgages in the United States.
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Question 6 of 10
6. Question
The real return is defined as which of the following?
I. (1 – nominal return)/(1 + inflation rate) − 1.
II. (1 + nominal return)/(1 – inflation rate) − 1.
III. (1 + nominal return)/(1 + inflation rate) + 1.
IV. (1 + nominal return)/(1 + inflation rate) − 1.Correct
The real return is defined as (1 + nominal return)/(1 + inflation rate) − 1.
Incorrect
The real return is defined as (1 + nominal return)/(1 + inflation rate) − 1.
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Question 7 of 10
7. Question
The European Monetary System (EMS), introduced in 1979, committed countries to maintaining their exchange rates within bands relative to fixed rates. But the EMS did not prevent countries from doing which of the following?
I. Realigning their fixed rates by devaluing their exchange rates with other partner countries.
II. Realigning their fixed rates by revaluing their exchange rates with other partner countries.
III. Increasing their fixed rates through inflation rate with other partner countries.
IV. Decreasing their fixed rates through inflation rate with other partner countries.Correct
The European Monetary System (EMS), introduced in 1979, committed countries to maintaining their exchange rates within bands relative to fixed rates. But the EMS did not prevent countries from occasionally realigning their fixed rates by devaluing or revaluing their exchange rates with other partner countries
Incorrect
The European Monetary System (EMS), introduced in 1979, committed countries to maintaining their exchange rates within bands relative to fixed rates. But the EMS did not prevent countries from occasionally realigning their fixed rates by devaluing or revaluing their exchange rates with other partner countries
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Question 8 of 10
8. Question
The Maastricht Treaty of 1991 set Europe on a path toward monetary union in 1999, that spurred the high-inflation countries like which of the following to reign in their monetary policies to qualify for the union?
I. Italy
II. Denmark
III. Greece
IV. SpainCorrect
the Maastricht Treaty of 1991, setting Europe on a path toward monetary union in 1999, that spurred the high-inflation countries like Italy and Spain to reign in their monetary policies to qualify for the union.
Incorrect
the Maastricht Treaty of 1991, setting Europe on a path toward monetary union in 1999, that spurred the high-inflation countries like Italy and Spain to reign in their monetary policies to qualify for the union.
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Question 9 of 10
9. Question
According to the U.S. Constitution, which of the following are exempt from state and local taxes?
I. U.S. Treasuries
II. U.S. Military
III. U.S. Stocks and Bonds
IV. U.S. Federal ReserveCorrect
According to the U.S. Constitution, U.S. Treasuries are exempt from state and local taxes. If the marginal investor in U.S. Treasuries is a taxable U.S. resident, then the interest yield on Treasuries reflects this tax advantage.
Incorrect
According to the U.S. Constitution, U.S. Treasuries are exempt from state and local taxes. If the marginal investor in U.S. Treasuries is a taxable U.S. resident, then the interest yield on Treasuries reflects this tax advantage.
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Question 10 of 10
10. Question
Which of the following was initially developed to allow U.S. and foreign companies to raise debt financing in foreign markets to fund their foreign operations?
I. The Non-U.S. Dollar Government Bond Index
II. The Luxenberg Bond
III. The international bond market
IV. The EurobondCorrect
The Eurobond or international bond market was initially developed to allow U.S. and foreign companies to raise debt financing in foreign markets to fund their foreign operations.
Incorrect
The Eurobond or international bond market was initially developed to allow U.S. and foreign companies to raise debt financing in foreign markets to fund their foreign operations.