Finance HW

7. A call provision allows an issuer to retire a bond prior to its maturity (TRUE or FALSE) Chapter 6

Jake D'Ercole

3/21/2018

Fin 315 Exam 1

True/false

1. True or False: The real interest rate is determined in the absence of inflation and, as a result, it more accurately reflects the true cost of borrowing.

a. Answer — True

b. Reference - Textbook CH4 Pg. 117

c. Explanation — The real interest rate is different than the nominal interest rate because as stated, it does not account for inflation. Inflation is the amount that aggregate price levels rise over time and is not a determined or known value at any given point making the real interest rate the better of the two for current purpose.

2. True or False: Systemic risk and systematic risk, by definition, refer to the same risk.

a. Answer — False

b. Reference — Textbook CH2 Pg. 52

c. Explanation — Systemic risk is the risk of the failure of the entire financial system resulting from the interdependences among financial institutions) while systematic risk is risk associated to the market and is known as non-diversifiable risk meaning no matter how many securities are in a portfolio; it is difficult to eradicate systematic risk because it is the risk that affects the entire market.

3. True or False: American Depository Receipts are dollar denominated claims issued by foreign banks to represent ownership in an American stock/company.

— False

b. Reference — Ch10 Pg. 315

c. Explanation — ADR's are dollar denominated claims by US Banks representing ownership of shares of a foreign company's stock held on deposit by the US bank in the issuing firms home country. Question is on a vice versa basis.

4. True or False: Shelf registration requires an issuing corporation to issue all shares at once, as opposed to registering them with the SEC and then issuing them over time afterward.

a. Answer— False

b. Reference CHIO Pg. 307

c. Explanation — Shelf registration allows a corporation to register shares as opposed to offering them all at once in hopes to sell them over time when they may be more in demand.

5. True or False: Commercial paper is a short-term promissory note historically issued by large corporations to finance short-term working capital needs.

a. Answer — True

b. Reference— CH 7 Pg. 221

c. Explanation — Commercial paper is an effective and alternative way to raise capital in the short term. It is highly regarded and has low default risk based off the fact only well established and accredited firms are allowed to do so.

6. True or Common stockholders do not have voting rights, but get paid first in the event of bankruptcy, while preferred stockholders do have voting rights, but get paid last in the event of bankruptcy.

a. Answer — False

b. Reference —CH 1 Pg. 16

c. Explanation — The exact opposite is true.

7. True or False: A bond that sells below its face value, is a bond known as a par value bond.

a. Answer — False

b. Reference Ch 5 Pg. 143

c. Explanation — If a bond sold at its face value, it would be considered at par value but since it is sold below its face value, it is known as a discount bond.

Mika Storozuk

QI. True or Municipal bonds are attractive to individuals and companies in the lower income tax brackets.

Al. False. Municipal bonds are attractive to individuals and companies in the higher income tax bracket. The coupon income is exempt from federal income taxes. (CH 1 HW questions 16, and pg. 17)

Q2. True or False. If you have $1,650,000 in demand deposits, $80,000 in cash, $110,000 in deposits at the Federal Reserve, and the current reserve requirement is 6 percent, then the excess reserves for the bank are $91,000.

A2: True. The total reserves would be $80,000 + $110,000 which would total $190,000. The amount of required reserves would be $1,650,000 * 6% which would be $99,000. To get the amount of excess reserves, you take the total reserves ($190,000) and subtract the required reserves ($99,000) to get excess reserves of $91,000. (CH 2 HW #11, and pg. 62)

Q3: True or False. The nominal rate of interest is adjusted for expected inflation while the real rate of interest are interest rates observed in the marketplace.

A3: False. Nominal interest rates are the interest rates observed in the market place while the real rate of interest is the nominal rate of interest adjusted for the expected rate of inflation. (CH 4 HW #11)

Q4: True or False. The key characterstics of money market instruments are low interest rates, low price risk, high marketability, and are sold in large denominations.

A4: True. Investors want little risk as possible when investing in money market instruments. (CH 7 p. 237)

Q5: True or False. You hold a bond that is convertible to a company's stock. Stock prices are falling and interest rates are also falling. It would not be a good idea to exercise this conversion. (CH 6 p.193)

A5: True. If you were to exercise the conversion, you would earn a fixed interest rate causing you to not have the potential to have capital gain.

Q6: True or False. The gross profit an underwriter makes if they sold a $10 million worth of bonds at par and paid the firm that sold the bonds 99.25 percent of par is $75,000.

A6: True. *.9925) = 75,000. (CH 8 HW # 1)

Q7: True or The difference between systematic risk and unsystematic risk is that systematic risk is diversifiable while unsystematic is not.

A7: False. Unsystematic risk is diversifiable while systematic risk is not. Unsystematic is security-specific risk so different securities tend to offset one another in the portfolio. (CH 10 pg. 322-323)

False:

False:

False:

Mateo Ibarcena

FIN 315

True of False Questions

1. If interest rates are expected to increase in the future, you would expect to see an upward sloping yield curve

a. True

b. False

Ref. Page 170, 6.1 THE TERM STRUCTURE OF INTEREST RATES

Exp: The shape and level of yield curves do not remain constant over time. As the general level of interest rates rises and falls, yield curves correspondingly shift up and down and have different slopes.

2. Callable bonds have higher market yields than non-callable bonds.

a. True

b. False

Ref. Page 192, 6.5 OPTIONS ON DEBT SECURITIES

Exp: Bonds that contain a call option sell at a higher market yield than otherwise comparable non-callable bonds. The reason for the penalty yield on callable bonds is that the call option works to the benefit of the issuer (borrower) and to the detriment of investors.

3. Default risk premiums are usually smaller during periods of high economic growth.

a. True

b. False

Ref. Page 182, 6.2 DEFAULT RISK

Exp: During periods of economic prosperity, investors are willing to hold bonds with low credit ratings in their portfolios because there is little chance of default and these bonds normally have higher yields. During such times, investors tend to seek out the highest-yielding investments

4. The Fisher Effect holds that nominal interest rates include an expected inflation rate.

a. True

b. False

Ref. Page 124, 4.4 PRICE EXPECTATIONS AND INTEREST RATES

Exp: According to the Fisher effect, expected inflation, ex ante, is embodied in nominal interest rates.

5. An increase in rates of return on real capital investment will increase real interest rates.

a. True

b. False

Ref. Page 117, 4.2 THE REAL RATE OF INTEREST

Exp: The expected return on investment projects sets an upper limit on the interest rate firms are willing to pay on borrowed funds. Unless a project earns more than the firm's cost of capital (i.e., the interest rate), it will be rejected.

6. Restrictive monetary policy in Australia may slow down net exports and GNP.

a. True

b. False

Ref. Page 83, 3.2 THE FED'S INFLUENCE ON INTEREST RATES

Exp: Restrictive monetary policy reduces money supply and growth rate in the country. This increases interest rates. Increased interest rates increase the value of the dollar relative to the other currencies. Increased dollar exchange rates encourage imports; discourage exports.

7. Commercial banks are important indirect guarantors of commercial paper

a. True

b. False

Ref. Page 221, 7.7 OTHER MAJOR MONEY MARKET INSTRUMENTS

Exp: Commercial banks are by far the most important class of buyers and sellers of money market instruments. They are continuously in the process of adjusting their liquidity because of the short-term nature of their liabilities, wide variations in loan demand, and their desire to keep liquid assets on hand to overcome any unexpected shortfalls.

8. Commercial banks are the major issuer and investor of money market securities.

a. True

b. False

Ref. Page 228 7.8 MONEY MARKET PARTICIPANTS

Exp: Commercial banks are by far the most important class of buyers and sellers of money market instruments. Banks engage actively in almost all the money markets. They are continuously in the process of adjusting their liquidity because of the short-term nature of their liabilities, wide variations in loan demand, and their desire to keep liquid assets on hand to overcome any unexpected shortfalls.

9. Dividend reinvestment schemes allow shareholders to substitute dividends for extra shares.

a. True

b. False

Ref. Page 304, 10.1 WHAT ARE EQUITY SECURITIES?

Exp: Dividend reinvestment schemes allow shareholders to increase their shareholdings gradually by automatically reinvesting their dividends in extra shares as each dividend is 'paid'. The issued shares are normally issued at either the market price averaged over several days' trading (often just after the record date for the dividend is declared) or at a slight discount to this price.

Girvan 1

Allison Girvan

Professor McCarthy

FIN 315-FE

3/7/2018

1. The price volatility of a long-term bond is greater than that of a short-term bond, holding the coupon rate constant. Answer: True

Page Reference: #155

Explanation: This is true because longer bonds have more time and go through more fluctuations than if it was a shorter term bond.

2. The duration of a 5 year zero coupon bond is 1. Answer: False

Page Number Reference: #157

Explanation: The duration of a 5 year zero coupon bond is 5.

3. Investing in zero coupon bonds eliminates reinvestment risk.

Answer: True

Page reference: #161

Explanation: Zero coupon have no coupon payments therefore they cannot be reinvested.

4. There is a formal organization for money markets, called the New York Stock Exchange.

Answer: False

Page Reference: #205

Explanation: There is no formal organization for money markets. The New York Stock Exchange is for the equity markets.

5. Investment banks are firms that specialize in helping businesses sell old debt and equity in the financial markets.

Answer: False

Page Reference: #8

Explanation: Investment banks are firms that specialize in helping businesses sell NEW debt and equity in the financial markets.

6. Brokers help bring buyers and sellers together. Answer: True

Page Reference: #10

Explanation: Brokers act as matchmakers, if a sale takes place they receive a commission for their services.

7. Dealers make markets for securities. Answer: True

Page reference: #10

Explanation: Dealers do "make markets" for securities by carrying an inventory of securities from which they stand ready to either buy or sell at a quoted price.

Stephanie Sarza

FIN 315 Section FE

& T/F Questions

1. Bonds that are sold in a foreign country and are denominated in a currency other than that of the country in which they are sold are known as foreign bonds. False.

Eurobonds are bonds denominated in a currency different form the currency of the country where it is issued. Book, Page 264

2. As the market rate of interest (or yield) rises, a bond's market price declines. True.

Bond prices and yields vary inversely meaning that price and yield move in opposite directions. Book, Page 151

3. Open-market operations are the primary tool used by the Federal Reserve to conduct monetary policy on a day-to-day basis. True.

Open-market operations can be done easily, almost instantaneously, and with no announcement effect making them the best means to conduct monetary policy. Book, Page 73

4. A growing budget deficit should lead to higher interest rates. True.

The increase in government expenditures should cause an increase in aggregate demand in the economy, thus increasing interest rates. Book, Page 87

5. The nominal rate of interest is the pure time value of money in the absence of inflation and risk.

False.

The real rate of interest in the pure time value of money in the absence of inflation and risk.

Lecture, 2/7/2018

6. A market order is an order to buy or sell at a designated price or at any better price. False. A market order is an order to buy or sell at the best price available at the time the order reaches the exchange, while a limit order is an order to buy or sell at a designated price or at any better price. Book, Page 316

7. When the coupon bond is priced as its face value, the yield to maturity equals the coupon rate.

True.

The coupon rate is the amount of coupon payments received in a year stated as a percentage of the face value (FV). An example would be if FV=$IOOO, and the coupon rate =2% then PMT=(2%)($1000)=$20 making the PV=$IOOO no matter how many years. Book, Page 141

Jesse Calder

1. Convertible securities typically start as bonds

a. True. They start as bonds that can be converted to common stock under the right circumstances

b. Ch. 10 notes

2. If a company misses a preferred dividend, it can still pay out common stock dividends

a. False. Preferred dividends get priority. Companies can withhold dividends at will, but if they miss a preferred dividend payment, they cannot pay any of the common stock dividends

b. Ch. 10 notes

3. 12 stocks selected at random will limit 90-95% of unsystematic risk.

a. True. Diversifying a portfolio to this extent will eliminate virtually all risk.

b. Ch. 10 notes

4. One function of Federal Reserve is to create and maintain interest rate stability.

a. True. The Fed can control interest rates by introducing more money into the banking system or taking some money out of circulation.

b. Ch. 2 notes

5. The Fed does not pay interest on Fed deposits that are excess

a. False. The Fed has paid interest on excess deposits since 2008

b. Ch. 2 notes

6. Bonds that are ranked BBB or higher are seen as unsafe investments and are typically avoided.

a. False. Bonds that are ranked BBB are higher are seen as quality investments, and they are typically safe.

b. Ch. 6 notes

7. Bond ratings that bond agencies come up with are often qualitative.

a. True. This is so that the rating process cannot be replicated by any other agency. They are the only ones who know which qualities rank a bond higher and which hurt a bonds' rankings.

b. Ch. 6 Notes

Will Hamernick

Professor McCarthy

FIN315

3.21.2018

1. The Expectations Theory states that investors have strong preferences for securities of a particular maturity, and that they buy and sell securities consistent with their maturity preferences.

a. False, this is the definition of the Market-Segmentation theory (Ch 6, pg 177)

2. General Obligation bonds are state and local government bonds back by the t'full faith and credit" of the issuing political entity and there are no assets pledged in the event of default.

a. True, Full faith and credit means that in the event of default, the bankruptcy court requires the city or local government to raise taxes to pay coupon or principal payments (Ch 8, pg 249)

3. Bond prices and yields have a direct relationship.

a. False, bond prices and yields are inversely related. When market interest rates rise, the only way to increase a bond's yield to be equal to the market rate of interest is to reduce the bond's price because the coupon rate is fixed for the life of the bond (Ch 5, pg 151)

4. Fiscal policy is when the government spends money to increase purchasing power in the economy or increases taxes to withdraw purchasing power from the economy.

a. True, fiscal policy is government spending or taxing to regulate the economy (Ch 3, pg

86)

5. The most important money market instrument used to finance the operations of the federal government are federal funds which are issued by the U.S. Treasury department.

a. False, treasury bills are the most important (Ch 7, pg 207)

6. A fixed rate mortgage is when the lender takes on real property and the borrower agrees to make periodic repayments of the principal amount plus interest on the unpaid balance of debt for a predetermined period of time.

a. True, adjustable-rate mortgages have an interest rate that will adjust (Ch 9, pg 272)

7. Interest rate changes cause the market value of a bond to rise or fall, resulting in capital gains or losses to the investor. This is called reinvestment risk.

a. False, this is the definition of price risk (Ch 5, pg 146)

Kevin Quigley

FIN-315 True/False Midterm Questions

1. Bond prices and yields have a direct relationship.

False — they are inversely related. When market interest rates rise, the only way to increase a bond's yield to be equal to the market rate of interest is to reduce the bond's price because the coupon rate is fixed for the life of the bond (Chapter 5)

2. The typical business is considered a DSU because they usually invest MORE in assets than they receive in current cash flow.

False-Businesses are typically considered a DSU because they usually invest MORE in assets than they receive in current cash flow (Chapter 1)

3. Ml consists of currency in circulation, checking deposits, and money market deposit accounts. False — Ml consists of just currency in circulation and checking deposits. Money market deposits accounts are part of M2 (Chapter 3)

4. Samurai/Yankee bonds are considered Eurobonds.

False — They are not considered Eurobonds because they are not issued in a different currency then the country they are located in (Chapter 8)

5. Default risk is the chance that companies or individuals will be able to pay the requited payments on their debt obligations.

False — Default risk is the chance that they would be unable to pay the required payments (Chapter 6)

6. Investors in high tax brackets generally prefer corporate bonds over municipal bonds False — Investors in high tax brackets generally prefer municipal bonds because the after tax yield on a corporate bond is generally lower than that of municipal bonds. (Chapter 8)

7. All other factors held constant, the higher the market rate of interest, the shorter the duration of the bond.

True-The higher the market rate of interest, the faster coupon reinvestment income accumulates. (Chapter 5)

O/Yu5(€Y

True/ False Questions

l. If IBM is priced at $164 and you want to buy it a $150, you would put in a limit buy order

Answer: True

A buy limit order is an order to purchase a security at or below a specified price, allowing traders and investors to specify the price they are willing to pay for a security Class Notes 1/3 1

2. The FOMC consists of 5 members of the Board of Governors of the Federal Reserve System plus 7 presidents of Federal Reserve Banks

· False

· There are 7 members of the Board of Governors and 5 Presidents of the FOMC Page 47

3. One of the Fed's major tools to either increase or decrease the the money supply is changing the discount rate

· True

· When the discount rate is low, financial institutions have an inexpensive source of funds for reserve requirement obligations Page 66

4. Interest Rate Is penalty paid in consuming income before it was paid? True

· When payments are not paid, interest charges them more Class notes 2/7

5. Arithmetic average gives more accurate rates ofreturn thane geometric average False

· This is because through compounding each successive term is dependent on the previous outcome

· Class Notes 2/14

6. The basic reason firms issue commercial papers is to increase spending for banks False

The basic reason firms issue commercial papers is to achieve interest rate savings as an alternative to bank borrowing Pg. 221

7. In straight voting, if you own 51% of the stock in the company, you control 51% of the board in your votes?

True

· In straight voting I share I vote, so 51% of the shares would give you 51% of the vote Class Notes 2/28

Alex Loparto

3/7/18

7 True or False Questions for Exam 1

1. A stock with a beta of .9 is more volatile than a stock with a beta of 1.3. // False // Beta is a measure of systematic risk of a stock in comparison to the best-fitting index. A stock with a beta of 1 would be in line with the index. Those under 1.0 are considered less volatile than the index and those above are considered more volatile. // Chapter 10 under Measuring Systematic Risk: Beta.

2. If a stock is expected to rise in price and a bondholder possesses a convertible bond, it would be in the holder's best interest to utilize the convertible option and exchange their bonds for stock. // True // This feature permits the bondholder to share in the good fortune of the firm if the stock price rises above a certain level. That is, if the market value of the stock the bondholder receives at conversion exceeds the market value of the bond's future expected cash flows, it is to the bondholder's advantage to exchange the bonds for stock. thus making a profit. // Chapter 8 under Corporate Bonds.

3. Commercial paper is a promissory note used to finance long-term needs. // False // Commercial paper is a short-term promissory note historically issued by large corporations to finance short-term working capital needs. // Chapter 7 under "Commercial Paper".

4. Modified duration is used when there are small changes in interest rate to see the impact on bond price. // True // The modified duration formula does not work correctly when there are large changes in an interest rate. // Class notes from 2/14/18.

5. Preferred stock is a form of debt security. // False // Prefen•ed stock is legally considered equ9ity, but behaves like debt because of their fixed payments. // Class notes from 2/28/18.

6. Financial Intermediaries are a vital part of direct financing. // False // In direct financing, the funds flow directly through the markets. Financial intermediaries are vital to indirect financing, where funds flow indirectly through financial institutions in the financial intermediation market. // Chapter 1 under "How Funds Flow through the Financial System".

7. If the U.S. were to go into recession, you would expect banks to decrease their holdings of excess reserves. // False // Banks would increase their excess reserves because they'd need additional funds to repair the economy. // Chapter 2 under "Origins of the Federal Reserve Svstem".

Alexander Martins

Professor McCarthy

F315 Financial Institutions and Markets

1.) Mortgage backed securities are designed to transfer risk from financial institutions to investors; T; Chapter 9 Mortgage Markets Class Notes

2.) Major issuers of debt come from publically held companies; F; major issues of debt come from the federal government, federal agencies, state and local governments; Chapter 8 Bond Markets Class Notes

3.) The greater the convexity, the less the pricing error; F; using convexity formula, pricing errors are greater with convexity; Chapter 5 Bond Pricing and Interest Rate Risk Class Notes

4.) call provisions are designed to protect corporations from falling interest rates; T; Chapter 5 Bond Pricing and Interest Rate Risk Class Notes

5.) Ml consists of currency and money market accounts; F; Ml consists of currency and demand deposits (transactional); Chapter 3 Class Notes

6.) The Federal Reserve is free to act without oversight; T; the Federal Reserve is its own private entity free from government control; Chapter 3 Class Notes

7.) Bonds do not have a fixed return; F; no matter the financial status of the company, bond holders will not receive one penny more than obligated. There is a fixed return.; Chapter 3 Class Notes

Matthew Bowker

True/False Questions

1.) If discount rates decrease, the present value of a future amount decreases?

Answer- False, present value would increase as discount rates decrease. Chapter 2

2.) In a given nominal interest rate, the more compounding periods there are, there would be less effective annual interest rate?

Answer- False, the amount of compounding periods increases annual interest rate. Chapter 2

3.) Is the Statement of Cash flows divided into these three categories? Operating, investing, and financing activities?

Answer- True, those are the three categories of the statement of cash flows. Chapter 2

4.) Derivation instruments are options risky.

Answer- True Chapter 3

5.) The Fractional Reserve Banking system is for banks to keep reserves as backings of deposits

Answer- True Chapter 4

6.) Fed funds cannot be loaned from bank to bank. Chapter 4

Answer- False, federal funds may be loaned from one bank to another.

7.) Bond prices selling at a discount rate are more vulnerable to call risk. Chapter 4

Answer- False, bonds selling at a discount rate are less vulnerable to call risk. Chapter 6

Questions

1. With higher levels of inflation in the economy, it becomes harder for businesses to adjust to price levels, so those who underestimate inflation lose purchasing power. (True/False)

2. Real rate of interest is the rate we observe within the market at any given time, and its value reflects the nominal rate of interest plus the market rate of inflation. (True/False)

3. Ml is money that focusses on money as a medium of change, including financial assets + demand deposits. Whereas, M2 emphasizes money as a stored value, including Ml + savings accounts + money markets accounts + small time deposits + small ovemight money loans. (True/False)

4. Keynesian's policy for economic groȀh states that when there is a shortfall in demand, you can increase economic output by increased government spending. (True/False)

5. Due to the long duration of bonds, lower coupon bonds are going to have a lower interest rate risk, and zero coupon bonds would have the least interest rate risk. (True/False)

6. Securities with call provisions hold more risk to the investor, and give more protect the issuer. (True/False)

7. Although ADR's (American Depository Receipts) give investors the opportunity to diversify investments into international corporations, they are still subject to U.S. securities laws. (True/False)

Answers and chapter references

1. True. With higher levels of inflation, it becomes harder for businesses to adjust price levels so those who underestimated the effects of inflation lose purchasing power as their money becomes less valuable. Chapter 3.

2. False. Nominal rate is the rate we observe in the market at any given time. Its value reflects the real rate of interest plus the market rate of inflation. Chapter 4.

3. True. Ml is money that focuses on money as a medium of exchange. M2 emphasizes money as a stored value. Ml=currency + demand deposits (checking accounts). Ml is primarily transactional. M2= Ml + savings deposits, money market, repos, small time deposits. Chapter 3.

4. Keynesian policy to fostering economic growth: if there is a shortfall in demand, you can increase economic output by increasing government spending. Where is this money coming from? Raising taxes would just transfer money from consumer and businesses to the government. If you do it just by printing money, then you are paying for the expansion to happen with the rise in price levels. Chapter 3.

5. False. Because bonds are issued at such a long period of time, lower coupon bonds are going to have a higher interest rate risk. Zero coupon bonds would have the most interest rate risk. With high coupon bonds, you are getting more of your money back sooner which makes them less risky in terms of interest rate, but with a high coupon bond, you have more reinvestment risk. Chapter 5.

6. A call provision allows an issuer to retire a security before its maturity date. Because the exercise of call options can injure investors, bonds with call options must offer higher interest rates than similar no callable bonds. Call provisions only hurt the investor. Corporations can call bonds back when interest rates fall since the bonds increase in value during times of decreasing rates. Investors realize these risks, so if they go to buy a corporate bond with a call provisions, they are going to want a higher rate. Chapter 6.

7. True. Since ADR's are issued in dollars by a U.S. bank to U.S. investors, and pay dividends in dollars, they are subject to U.S. securities laws. Chapter 10.

Raveena Goyal

True and False Questions for the Midterm

· Bond ratings measure the worth of a company o Answer: False, they measure risk

· Zero coupon bonds have the lowest interest rate risk o Answer: False, they have the highest

· Cyclical behavior of interest rates depends on three economic forces: changes in the money supply, the demand for funds, and inflationary expectations o Answer: True

· Callable bonds have higher market yields than non-callable bonds o Answer: True

· The expectation theory states that investors have strong preferences for securities of a particular maturity, and that they buy and sell securities consistent with their maturity preferences o Answer: False, this is the market segmentation theory

· The most important money market instrument used to finance the operations of the fed gov are federal funds which are issued by the U.S. treasury department o Answer: False, t-bills are the most important

· If the reserve rate went down and banks were required to keep less in their reserves, they would lend more o Answer: True

True and False Questions

Ryan Brown

1. A zero coupon bond's duration is equal to maturity.

Answer-True

2. Bond prices and yields have a direct relationship

Answer= False

3. An auction market is facilitated by a dealer, while secondary markets are facilitated by a specialist.

Answer= False

4. Bonds sell at a premium when the yield to maturity is greater than the coupon rate Answer= False

5. The flow of funds in the financial system goes from SSU's to DSU's.

Answer= True

6. Call loans were fair to borrowers in times of recession.

Answer= False

7. Banks are allowed to carry junk bonds in their investment portfolios. Answer= False