“� � � 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 mortgages. “� � � 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? � � � � � � “� � � Question 13 � � From the perspective of the lending financial institution, interest rate risk is � � � � � � � � “� � � Question 14 � � 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:
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