CFIN /
Chapter 4 & 5 Quiz With Correct Answers
/ // // // // // // //
Inflation //leads //to //increase //in //purchasing //power //of //investors. //(T/F) //- //verified //answer(s)-
✔✔False
As //
a/
/country /
/increases /
/its /
/borrowing /
/to /
/finance //its //foreign //trade //deficit, //interest //rates //are //driven //up. //(T/F) //- //verified //answer(s)-
✔✔True
The /
/higher /
/the //perceived //risk, //the //higher //the //required //rate //of //return. //(T/F) //- //verified //answer(s)-
✔✔True
Firms /
/with /
/the /
/most /
/profitable /
/investments /
/opportunities /
/are /
/willing /
/and /
/able /
, /to //pay //the //most //for //capital, //so //they //tend //to //attract //it //away //from //less //efficient //firms //or
//from //those //whose //products //are //not //in //demand. //(T/F) //- //verified //answer(s)-✔✔True
The /
/Federal //Reserve //purchases //U.S. //Treasury //securities //to:____________ //- //verified //answer(s)-
✔✔Loosen //the //money //supply
What //factors //will //lead //to //an //increase //in //interest //rates? //- //verified //answer(s)-
✔✔Federal //deficit
A //corporate //bond //yields //12% //includes //a //risk-
free /
/rate /
/of /
/7% /
/and //
a/
/default /
/premium //of //3%. //The //bond's //maturity //risk //premium //is________? //- //verified //answer(s)-
✔✔2%
Securities /
/that /
/can /
/be /
/easily /
/converted //to //cash //in //the //market //will //have //a //low:___________ //- //verified //answer(s)-
✔✔Liquidity //Premium
A //federal //deficit //occurs //when:__________ //- //verified //answer(s)-
✔✔a //government's //expenses //are //more //than //its //tax //return
Chapter 4 & 5 Quiz With Correct Answers
/ // // // // // // //
Inflation //leads //to //increase //in //purchasing //power //of //investors. //(T/F) //- //verified //answer(s)-
✔✔False
As //
a/
/country /
/increases /
/its /
/borrowing /
/to /
/finance //its //foreign //trade //deficit, //interest //rates //are //driven //up. //(T/F) //- //verified //answer(s)-
✔✔True
The /
/higher /
/the //perceived //risk, //the //higher //the //required //rate //of //return. //(T/F) //- //verified //answer(s)-
✔✔True
Firms /
/with /
/the /
/most /
/profitable /
/investments /
/opportunities /
/are /
/willing /
/and /
/able /
, /to //pay //the //most //for //capital, //so //they //tend //to //attract //it //away //from //less //efficient //firms //or
//from //those //whose //products //are //not //in //demand. //(T/F) //- //verified //answer(s)-✔✔True
The /
/Federal //Reserve //purchases //U.S. //Treasury //securities //to:____________ //- //verified //answer(s)-
✔✔Loosen //the //money //supply
What //factors //will //lead //to //an //increase //in //interest //rates? //- //verified //answer(s)-
✔✔Federal //deficit
A //corporate //bond //yields //12% //includes //a //risk-
free /
/rate /
/of /
/7% /
/and //
a/
/default /
/premium //of //3%. //The //bond's //maturity //risk //premium //is________? //- //verified //answer(s)-
✔✔2%
Securities /
/that /
/can /
/be /
/easily /
/converted //to //cash //in //the //market //will //have //a //low:___________ //- //verified //answer(s)-
✔✔Liquidity //Premium
A //federal //deficit //occurs //when:__________ //- //verified //answer(s)-
✔✔a //government's //expenses //are //more //than //its //tax //return
