• Question 1
____ mortgages enabled more people with relatively lower income, or high existing debt, or a small down payment to purchase homes.
• Question 2
____ economic growth will probably ____ the risk premium on mortgages and ____ the price of
• Question 3
Rates for adjustable-rate mortgages are commonly tied to the
• Question 4
The interest rate on a second mortgage is ____ on a first mortgage created at the same time, because the second mortgage is ____ the existing first mortgage in priority claim against the property in the event of default.
• Question 5
Fannie Mae and Freddie Mac experienced financial problems during the credit crisis because they:
• Question 6
A financial institution has a higher degree of interest rate risk on a ____ than a ____.
• Question 7
Financial institutions that hold fixed-rate mortgages in their asset portfolios are exposed to ____ risk, because they commonly use funds obtained from short-term customer deposits to make long-term mortgage loans.
• Question 8
In a collateralized mortgage obligation (CMO), mortgages are segmented into ____ (or classes).
• Question 9
____ risk is the risk that a borrower may prepay the mortgage in response to a decline in interest rates.
• Question 10
For any given interest rate, the shorter the life of the mortgage, the ____ the monthly payment and the ____ the total payments over the life of the mortgage.
• Question 11
An institution that originates and holds a fixed-rate mortgage is adversely affected by ____ interest rates; the borrower who was provided the mortgage is adversely affected by ____ interest rates.
• Question 12
Which of the following is not true with respect to a growing-equity mortgage?
interest payments that result in full payment of the debt by maturity
• Question 13
From the perspective of the lending financial institution, interest rate risk is
Collateralized mortgage obligations (CMOs) are generally perceived to have
• Question 15
Which of the following will typically require homeowners to ultimately request a new mortgage?
• Question 16
“Pink sheets” are traded on the
• Question 17
____ are portfolios of international stocks created and managed by various financial institutions.
• Question 18
The largest organized exchange, listing the largest firms, is the
• Question 19
A ____ requires that dividends cannot be paid on common stock until all current and previously omitted dividends are paid on preferred stock.
• Question 20
Shareholders can most easily measure a firm’s performance by monitoring changes in its ____ over time.
• Question 21
Managers of firms may consider a stock repurchase or even a leveraged buyout when they believe their stock is ____ by the market, or a secondary stock offering when they believe their stock is ____ by the market.
• Question 22
The prevailing price per share divided by the firm’s earnings per share is known as the
• Question 23
The transaction costs to the issuing firm in an IPO is usually ____ percent of the funds raised.
• Question 24
____ sell shares to investors and use the proceeds to invest in portfolios of international stocks created and managed by portfolio managers.
• Question 25
The ____ is a value-weighted index of stock prices of 500 large U.S. firms.
• Question 26
A new stock issuance by a specific firm that already has stock outstanding is referred to as a(n)
• Question 27
Which of the following is not a part of the over-the-counter market?
• Question 28
____ are acquisitions that require substantial amounts of borrowed funds.
• Question 29
Initial public offerings (IPOs) perform ____ on the day following the IPO and ____ for periods of a year or longer after the IPO.
• Question 30
When a firm buys some of its shares that it had previously issued, this is referred to as a: