REE 4204 Exam UPDATED QUESTIONS
AND CORRECT ANSWERS
A yield curve shows the yields on bonds over time.
True
False
No answer text provided.
No answer text provided. - CORRECT ANSWER False
The market segmentation theory by its nature dictates that short-term rates must always be less than
long-term rates.
T/F - CORRECT ANSWER False
Since finance is concerned with the valuation of assets, it must explicitly consider the time value of
money.
T/F - CORRECT ANSWER True
A downward sloping yield curve shows that, at this point in time, long-term rates are higher than
short-term rates.
T/F - CORRECT ANSWER False
For most investments, cash flow and net profit can be used interchangeably in asset valuation.
T/F - CORRECT ANSWER False
The market segmentation theory suggests that there is more than one market for the same security.
, T/F - CORRECT ANSWER false
In general inflation is a monetary phenomenon resulting from an increase in the money supply as
opposed to resulting from an increase in general price levels.
T/F - CORRECT ANSWER True
The price of a bond, besides being determined by the market-required rate, also moves inversely to
this rate.
T/F - CORRECT ANSWER True
Commercial banks are overseen by the Office of Thrift Supervision.
T/F - CORRECT ANSWER False
The secondary mortgage market is the market where second (junior) mortgages are created.
T/F - CORRECT ANSWER false
Real estate investment trusts (REITs) specialize in investing in real property and mortgages on real
property.
T/F - CORRECT ANSWER True
The benefit to the investor of the call provision in a callable bond increases as the market interest rate
falls further below the rate offered on the bond.
T/F - CORRECT ANSWER False
Since the nominal interest rate can be observed in the market, a precise measure of future inflation can
be determined.
AND CORRECT ANSWERS
A yield curve shows the yields on bonds over time.
True
False
No answer text provided.
No answer text provided. - CORRECT ANSWER False
The market segmentation theory by its nature dictates that short-term rates must always be less than
long-term rates.
T/F - CORRECT ANSWER False
Since finance is concerned with the valuation of assets, it must explicitly consider the time value of
money.
T/F - CORRECT ANSWER True
A downward sloping yield curve shows that, at this point in time, long-term rates are higher than
short-term rates.
T/F - CORRECT ANSWER False
For most investments, cash flow and net profit can be used interchangeably in asset valuation.
T/F - CORRECT ANSWER False
The market segmentation theory suggests that there is more than one market for the same security.
, T/F - CORRECT ANSWER false
In general inflation is a monetary phenomenon resulting from an increase in the money supply as
opposed to resulting from an increase in general price levels.
T/F - CORRECT ANSWER True
The price of a bond, besides being determined by the market-required rate, also moves inversely to
this rate.
T/F - CORRECT ANSWER True
Commercial banks are overseen by the Office of Thrift Supervision.
T/F - CORRECT ANSWER False
The secondary mortgage market is the market where second (junior) mortgages are created.
T/F - CORRECT ANSWER false
Real estate investment trusts (REITs) specialize in investing in real property and mortgages on real
property.
T/F - CORRECT ANSWER True
The benefit to the investor of the call provision in a callable bond increases as the market interest rate
falls further below the rate offered on the bond.
T/F - CORRECT ANSWER False
Since the nominal interest rate can be observed in the market, a precise measure of future inflation can
be determined.
