Strayer FIN350 – Week 6 Quiz 5

• 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: