If 1-year interest rates for the next five years are expected to be 4, 2, 5, 4, and 5 percent, and the 5-year term premium is 1 percent, than the 5-year bond rate will be A. 4%

If1-year interest rates for the next five years are expected to be 4,2, 5, 4, and 5 percent, and the 5-year term premium is 1 percent,than the 5-year bond rate will be

A. 4%

B. 3%

C. 2%

D. 5%

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Question2 of 111.0 Points

Inother words the risk premium on long term bonds relative to shortterm bond would be . We would be ___ accepting of theexpectations theory

A. low,less

B. low, more

C. high,more

D. zero,more

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Question3 of 113.0 Points

Stocksvs. Bonds

A.TRUE

B.FALSE

1.Stocks have 2 sources of cashflow, they include dividends and saleprice of the stock. A

2.Bonds have 3 sources of cashflow, they include coupon, yields andfinal maturity value. B

3.Stock cashflows are considered more risky because they are set uponthe first issuance. B

4.In our pricing models for stocks, if ke is large , the current pricePo would be low. A

5.In the Gordon growth model, g is assumed to be less than ke,otherwise price can be negative. A

6.The one period model for stock prices looks very similar to themultiple coupon bond pricing.B

Question4 of 111.0 Points

Usingthe Dividend Discount Model, find the P5 if dividends are $2.50 forthe next 5 years your required return is 7% and the price of thestock today P0 is $125

A. $101.42

B. $158.08

C. Not enough information

D. $125.00

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Question5 of 112.5 Points

StockBeta

A.TRUE

B.FALSE

1.BRK-A and BRK-B are less risky than the market. A

2.If you are risk taker and would like an investment that will move upwhen the market moves down, you will choose VGZ. A

3.VALE is the least risky stock. B

4.Visa is less risky than BHP. A

5.GS is less risky than JPM. B

Question6 of 111.0 Points

Marclay`sBank Capital is

A. 100M

B. -100M

C. 90M

D. greater than all assets

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Question7 of 112.0 Points

Marclay`sBank

A.TRUE

B.FALSE

1.the banks risk weighted capital ratio comply with the Basel Accord. A

2.the bank`s leverage ratio show the bank as undercapitalized? B

3.the risk weighted capital ratio is greater than the capital ratio. A

4.the higher the ratio the better the bank is capitalized. A

Question8 of 113.0 Points

BankingRegulation

A.FALSE

B.TRUE

1.Imposing bank capital requirements on banks helps limit risk taking.B

2.Eliminating or limiting the amount of deposit insurance would createmore moral hazard. A

3.Competition was a source of reasoning for risk taking leading toabandonment of Glass-Steagall. B

4.Basel 2 demands that banks hold more capital in good times and lesscapital in bad times. B

5.Dual Banking system in the US is composed of shadow banks andtraditional banks. A

6.Consumer protection is important to protect as well as the bankingindustry risks. B

Question9 of 110.75 Points

MoneyMarket Mutual Fund Assets

A.the answer is not here

B.1,967.5%

C.47.11%

1.Growth rate 1975-1980. B

2.Growth rate 1995-2000. A

3.Growth rate 2005-2008. A

Question10 of 110.5 Points

Thehighest growth rate years corresponds with

A. Savings and Loan Crisis

B. The Great Depression

C. 2008 Financial Crisis

D. European Debt Crisis

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Question11 of 111.25 Points

DanTarullo Article

A.FALSE

B.TRUE

1.He believes banks should be able to fail without hurting the bankingsystem. B

2.He thinks the bank capital requirements are the most importantbanking supervision in recent times. A

3.He stated that a run on shadow banking is similar to run ontraditional banks. A

4.He says credit should only be a concern for the largest banks andfinancial institution. A

5.He thinks community banks should follow same regulation regime aslargest banks. A

6.He believes most would like regulation to maintain durability andmoral hazard needs to be addressed for a functioning banking andcapital market system. B