1) The zero-coupon bond is a bond that doesn't pay any coupons; investors gain from the price difference between what they pay and what they receive as par-value.

a. true

b. False

2) Assume a closed-end fund is established with $500 million and 50/50 invested in 2 stocks, A and B. The price of A is $100 and that of B is $200. If the fund issues 10 million shares of its own to represent the mutual fund, what should be its Net Asset Value (NAV) on the day the fund is established?

a) $500 million

b) $50

c) $150

d) $250 million

3) The case of trading on insider information and criminal persecution of the offenders is an indication and, hence, evidence that the________________________________of efficient market hypothesis does not hold in financial markets.

a) strong form

b) semi-strong form

c) weak from

4) Which of the following financial institutions have the highest amount of funds under management in the US?

a) Mutual Funds

b) Hedge Funds

c) Commercial Banks

d) Insurance Companies

5) Bonds can be either money market securities or capital market securities.

a) True

b) False