Podcast
Questions and Answers
Which of the following is a key difference between bonds and loans?
Which of the following is a key difference between bonds and loans?
- Bonds can be issued by anyone, while loans are restricted to certain institutions
- Bonds have a fixed interest rate, while loan interest rates can vary
- Bonds are traded in a secondary market, while loans are not (correct)
- Bonds have a fixed maturity date, while loans can be open-ended
Which of the following is a characteristic of short-term financing using loans?
Which of the following is a characteristic of short-term financing using loans?
- Financing the purchase of new machinery and equipment
- Financing the purchase of furniture and household appliances (correct)
- Financing the purchase of a car
- Financing the purchase of a house
What is the main purpose of a mortgage agreement in the context of financing the purchase of a house?
What is the main purpose of a mortgage agreement in the context of financing the purchase of a house?
- To ensure that the borrower can sell the home at any time
- To give the borrower ownership of the home
- To guarantee that the borrower will make all payments on time
- To give the lender ownership of the home in case the borrower fails to make payments (correct)
Which of the following is a characteristic of long-term financing using loans?
Which of the following is a characteristic of long-term financing using loans?
Which of the following is a key difference between bonds and loans in terms of price changes?
Which of the following is a key difference between bonds and loans in terms of price changes?
Which of the following is a key characteristic of bonds?
Which of the following is a key characteristic of bonds?
What type of financial instrument allows the bond holder to earn income from a package of mortgages?
What type of financial instrument allows the bond holder to earn income from a package of mortgages?
In the context of mortgage-backed securities, who is entitled to receive payments?
In the context of mortgage-backed securities, who is entitled to receive payments?
Why are mortgage-backed securities considered risky?
Why are mortgage-backed securities considered risky?
Which financial market experienced a collapse due to mortgage-backed securities in 2007-2008?
Which financial market experienced a collapse due to mortgage-backed securities in 2007-2008?
What is the key premise behind generating a rate of return from mortgage bonds?
What is the key premise behind generating a rate of return from mortgage bonds?
Which of the following is NOT a well-known stock market mentioned in the text?
Which of the following is NOT a well-known stock market mentioned in the text?
What is the key difference between bonds and loans?
What is the key difference between bonds and loans?
How do short term bonds facilitate payments for goods?
How do short term bonds facilitate payments for goods?
What role does a bank or financial institution play in bond markets?
What role does a bank or financial institution play in bond markets?
Why does a buyer issue a bond to a bank or financial institution?
Why does a buyer issue a bond to a bank or financial institution?
How do banks make money in facilitating short term bond transactions?
How do banks make money in facilitating short term bond transactions?
Why is it beneficial for governments to issue Treasury bills?
Why is it beneficial for governments to issue Treasury bills?
