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Economics Of Money Banking And Financial Markets 10th Edition by Mishkin - Test
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Economics Of Money Banking And Financial f f f f f f




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Economics Of Money Banking And Financial Markets 10th Edition by Mishkin – Test
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bank
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Economics of Money, Banking, and Fin. Markets, 10e (Mishkin)
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Chapter 6 The Risk and Term Structure of Interest Rates
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6.1 Risk Structure of Interest Rates
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1) The risk structure of interest rates is
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1. A) the structure of how interest rates move over time.
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2. B) the relationship among interest rates of different bonds with the same maturity.
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3. C) the relationship among the term to maturity of different bonds.
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4. D) the relationship among interest rates on bonds with different maturities.
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Answer: B f

,Economics Of Money Banking And Financial Markets 10th Edition by Mishkin - Test
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bank.
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Ques Status: Previous Edition
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AACSB: Reflective thinking skills
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2) The risk that interest payments will not be made, or that the face value of a bond is not repaid
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when a bond matures is
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1. A) interest rate risk.
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2. B) inflation risk.f f




3. C) moral hazard. f f




4. D) default risk. f f




Answer: D f




Ques Status: Previous Edition
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3) Bonds with no default risk are called
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1. A) flower bonds. f f




2. B) no-risk bonds. f f




3. C) default-free bonds.
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4. D) zero-risk bonds. f f




Answer: C f




Ques Status: Previous Edition
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4) Which of the following bonds are considered to be default-risk free?
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1. A) Municipal bondsf f




2. B) Investment-grade bonds
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3. C) U.S. Treasury bonds
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,Economics Of Money Banking And Financial Markets 10th Edition by Mishkin - Test
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bank.
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4. D) Junk bonds f f




Answer: C f




Ques Status: Previous Edition
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AACSB: Analytic skills
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5) U.S. government bonds have no default risk because
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1. A) they are backed by the full faith and credit of the federal government.
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2. B) the federal government can increase taxes to pay its obligations.
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3. C) they are backed with gold reserves.
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4. D) they can be exchanged for silver at any time.
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Answer: B f




Ques Status: Previous Edition
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AACSB: Reflective thinking skills
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6) The spread between the interest rates on bonds with default risk and default-free bonds is
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called the
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1. A) risk premium. f f




2. B) junk margin. f f




3. C) bond margin. f f




4. D) default premium. f f




Answer: A f




Ques Status: Previous Edition
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AACSB: Analytic skills
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, Economics Of Money Banking And Financial Markets 10th Edition by Mishkin - Test
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bank.
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7) If the probability of a bond default increases because corporations begin to suffer large losses,
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then the default risk on corporate bonds will
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will
f , everything else held constant. f f f f




1. A) decrease; increase f f




2. B) decrease; decrease f f




3. C) increase; increase f f




4. D) increase; decrease f f




Answer: D f




Ques Status: Previous Edition
f f f




AACSB: Reflective thinking skills
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8) Abond with default risk will always have a
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default risk will
f f the risk premium.
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1. A) positive; raise f f




2. B) positive; lower f f




3. C) negative; raise f f




4. D) negative; lower f f




Answer: A f




Ques Status: Previous Edition
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AACSB: Reflective thinking skills
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9) If a corporation begins to suffer large losses, then the default risk on the corporate bond will
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1. A) increase and the bond’s return will become more uncertain, meaning the expected return onthe
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corporate bond will fall.
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