During a "flight to quality"A) the spread between Treasury bonds and Baa bonds increases.B) the spread between Treasury bonds and Baa bonds decreases.C) the spread between Treasury bonds and Baa bonds is not affected.D) the change in the spread between Treasury bonds and Baa bonds cannot be predicted

1. Which of the following bonds would have the highest default risk?A) municipal bondsB) investment-grade bondsC) U.S. Treasury bondsD) junk bonds2. During a "flight to quality"A) the spread between Treasury bonds and Baa bonds increases.B) the spread between Treasury bonds and Baa bonds decreases.C) the spread between Treasury bonds and Baa bonds is not affected.D) the change in the spread between Treasury bonds and Baa bonds cannot be predicted.3. If 1-year interest rates for the next five years are expected to be 4, 2, 5, 4, and 5 percent,and the 5-year term premium is 1 percent, than the 5-year bond rate will beA) 2 percent.B) 3 percent.C) 4 percent.D) 5 percent.4. Risk premiums on corporate bonds tend to ________ during business cycle expansions and________ during recessions, everything else held constant.A) increase; increaseB) increase; decreaseC) decrease; increaseD) decrease; decrease5. If the expected path of 1-year interest rates over the next four years is 5 percent, 4 percent,2 percent, and 1 percent, then the expectations theory predicts that today's interest rate on thefour-year bond isA) 1 percent.B) 2 percent.C) 3 percent.D) 4 percent.6. An increase in the riskiness of corporate bonds will ________ the yield on corporate bondsand ________ the yield on Treasury securities, everything else held constant.A) increase; increaseB) reduce; reduceC) increase; reduceD) reduce; increase7. When the yield curve is flat or downward-sloping, it suggest that the economy is morelikely to enterA) a recession.B) an expansion.C) a boom time.D) a period of increasing output.8. A ________ yield curve predicts a future increase in inflation.A) steeply upward slopingB) slight upward slopingC) flatD) downward sloping9. The typical shape for a yield curve isA) gently upward sloping.B) mound shaped.C) flat.D) bowl shaped.10. Everything else held constant, the interest rate on municipal bonds rises relative to theinterest rate on Treasury securities whenA) income tax rates are lowered.B) income tax rates are raised.C) municipal bonds become more widely traded.D) corporate bonds become riskier

An increase in the riskiness of corporate bonds will ________ the yield on corporate bondsand ________ the yield on Treasury securities, everything else held constant.A) increase; increaseB) reduce; reduceC) increase; reduceD) reduce; increase

In the figure above, a factor that could cause the supply of bonds to shift to the right isA) a decrease in government budget deficits.B) a decrease in expected inflation.C) a recession.D) a business cycle expansion.

Which of the following statement is true?Group of answer choicesThe spread of junk bond yields over that of Australian Government Bond is generally lower than the spread of investment-grade bonds over that of the Australian Government Bond.Once a bond defaults, bondholders can no longer receive any residual payment from the bond.Corporate bond yields are generally lower than government bond yields for bonds having the same coupon rate and maturity.Two bonds have the same maturity, risk rating, and face value, but have different coupon rates. The bond with a lower coupon rate carries greater risks.

What would you expect to have happened to the spread between yields on commercial paper and Treasury bills immediately after September 11, 2001?Question 8Select one:a.no change, as both yields will remain the sameb.increase, as the spread usually increases in response to a crisisc.decrease, as the spread usually decreases in response to a crisisd.no change, as both yields will move in the same direction