15-1Copyright©2017McGraw-HillEducation.Allrightsreserved.NoreproductionordistributionwithoutthepriorwrittenconsentofMcGraw-HillEducation.Chapter15TestBank-StaticStudent:__________________________________________________________________________MultipleChoiceQuestions1.StructureofinterestratesisA.therelationshipbetweentheratesofinterestonallsecurities.B.therelationshipbetweentheinterestrateonasecurityanditstimetomaturity.C.therelationshipbetweentheyieldonabondanditsdefaultrate.D.Alloftheoptionsarecorrect.E.Noneoftheoptionsarecorrect.2.TreasurySTRIPSareA.securitiesissuedbytheTreasurywithverylongmaturities.B.extremelyriskysecurities.C.createdbysellingeachcouponorprincipalpaymentfromawholeTreasurybondasaseparatecashflow.D.createdbypoolingmortgagepaymentsmadetotheTreasury.3.ThevalueofaTreasurybondshouldA.beequaltothesumofthevalueofSTRIPScreatedfromit.B.belessthanthesumofthevalueofSTRIPScreatedfromit.C.begreaterthanthesumofthevalueofSTRIPScreatedfromit.D.Alloftheoptionsarecorrect.4.IfthevalueofaTreasurybondwashigherthanthevalueofthesumofitsparts(STRIPPEDcashflows),youcouldA.profitbybuyingthestrippedcashflowsandreconstitutingthebond.B.notprofitbybuyingthestrippedcashflowsandreconstitutingthebond.C.profitbybuyingthebondandcreatingSTRIPS.D.notprofitbybuyingthestrippedcashflowsandreconstitutingthebondandprofitbybuyingthebondandcreatingSTRIPS.E.Noneoftheoptionsarecorrect.5.IfthevalueofaTreasurybondwaslowerthanthevalueofthesumofitsparts(STRIPPEDcashflows),youcouldA.profitbybuyingthestrippedcashflowsandreconstitutingthebond.B.notprofitbybuyingthestrippedcashflowsandreconstitutingthebond.C.profitbybuyingthebondandcreatingSTRIPS.D.notprofitbybuyingthestrippedcashflowsandreconstitutingthebondandprofitbybuyingthebondandcreatingSTRIPS.E.Noneoftheoptionsarecorrect.6.IfthevalueofaTreasurybondwaslowerthanthevalueofthesumofitsparts(STRIPPEDcashflows),A.arbitragewouldprobablyoccur.B.arbitragewouldprobablynotoccur.C.theFEDwouldadjustinterestrates.D.Noneoftheoptionsarecorrect.7.Ifthevalu...
