ANSWERS
Assume0that0a0large0corporation,0needs0to0borrow0money0in0the0short-
term.0Which0one0of0the0following0securities0is0that0corporation0most0likely0to0issue0to0
meet0this0need?0-0ans✔Commercial0Paper
AT&T0Stadium0in0Arlington,0Texas0is0an0example0of0a0municipal0bond0that0is0secured0
by0both0the0revenues0from0a0project0and0also0by0the0taxing0authority0of0the0municipali
ty?0This0is0also0known0as0a0_____________.0-0ans✔Hybrid0Bond
What0key0rate0of0interest0has0the0most0influence0on0the0yield0offered0on0money0mark
et0securities?0-0ans✔Federal0Funds0Rate
The0entire0formal0contract0between0a0bond0issuer0and0the0bondholders0is0found0in0wh
ich0one0of0the0following0documents?0-0ans✔Indenture0Agreement
A0pension0fund0manager0has0to0pay0out0$100M0in070years.0The0pension0fund0manage
r0wants0to0buy0fixed0income0securities0to0fund0this0liability.0A0bond0manager0can0____
_______0itself0from0price0risk0and0reinvestment0risk0by0creating0a0portfolio0with0a0dura
tion0of0__________.0-0ans✔immunize;070years
Which0one0of0the0following0provisions0grants0the0bondholder0the0option0of0selling0the0
bond0back0to0the0issuer0at0a0pre-specified0price0on0pre-specified0dates?0-0ans✔Put
Which0one0of0the0following0is0the0method0used0to0quote0interest0rates0on0money0mark
et0instruments?0-0ans✔Bank0Discount0Basis
Which0one0of0the0following0provisions0grants0the0bondholder0the0option0of0exchanging
0a0bond0for0a0pre-specified0number0of0shares0of0stock0of0the0same0issuer?0-
0ans✔Conversion
Which0one0of0the0following0risks0is0associated0with0investing0a0coupon0payment0at0a0r
ate0that0is0different0than0the0bond's0yield-to-maturity?0-0ans✔Reinvestment0Risk
When0the0yield-to-
maturity(YTM)0is0equal0to0the0coupon0rate0the0bond0is0a0_____________0bond.0When
0the0YTM0is0less0than0the0coupon0rate0the0bond0is0a0_____________0bond.0Finally,0if0