Question 1 � Mortgage-backed securities are assigned ratings by: Question 2 � Mortgage companies specialize in Question 3 � 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 4 � ____ are backed by conventional mortgages. Question 5 � ____ economic growth will probably ____ the risk premium on mortgages and ____ the price of mortgages. Question 6 � Fannie Mae and Freddie Mac experienced financial problems during the credit crisis because they: Question 7 � Collateralized mortgage obligations (CMOs) are generally perceived to have Question 8 � Which of the following is not a common type of mortgage-backed security according to your text? Question 9 � A mortgage with low initial payments that increase over time without ever leveling off is a Question 10 � Which of the following will typically require homeowners to ultimately request a new mortgage? Question 11 � Rates for adjustable-rate mortgages are commonly tied to the Question 12 � A ____ mortgage allows borrowers to initially make small payments on the mortgage, which are then increased on a graduated basis over the first five to ten years; payments then level off from there on. Question 13 � 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 14 � 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 15 � From the perspective of the lending financial institution, interest rate risk is Question 16 � The ____ is a value-weighted index of stock prices of 500 large U.S. firms. Question 17 � The ____ is a value-weighted average of stock prices of 30 large U.S. firms. Question 18 � ____ are employed by brokerage firms and execute orders for clients on the floor of the NYSE. Question 19 � A firm can best avoid the time lag between registering new securities with the SEC and actually selling them by Question 20 � When a firm buys some of its shares that it had previously issued, this is referred to as a: Question 21 � The first-time issuance of shares by a specific firm to the public is referred to as a(n) Question 22 � The prevailing price per share divided by the firm’s earnings per share is known as the Question 23 � American Depository Receipts (ADRs) are similar to 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 � Initial public offerings (IPOs) perform ____ on the day following the IPO and ____ for periods of a year or longer after the IPO. Question 26 � “Pink sheets” are traded on the Question 27 � The process by which the lead underwriter solicits indications of interest by institutional investors in an IPO at various possible ____ prices is referred to as ____. Question 28 � ____ are portfolios of international stocks created and managed by various financial institutions. Question 29 � A firm will typically attempt to sell shares from a secondary offering Question 30 � A new stock issuance by a specific firm that already has stock outstanding is referred to as a(n)
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