1/ When valuing a short-term security, we commonly use:

Select one:

a. compound interest formulas.

b. simple interest formulas.

c. perpetuity formulas.

d. annuity formulas.

2/ A 'surplus unit' is also known as a:

Select one:

a. borrower

b. demander of funds

c. lender

d. debtors

3/ If you believe the stock market may crash and would like to reduce your portfolio risk, what Beta should you aim for?

Select one:

a. Extremely high Beta shares

b. Low Beta shares

c. Beta values do not matter

d. Beta of 1-2

4/ Which of the following would be considered examples of a short-term discount security?

Select one:

a. Certificates of Deposit (CD)

b. Commercial paper/ Promissory Note

c. Both A and B

d. Treasury Bonds

5/ What is not an advantage of a Treasury (T) Note?

Select one:

a. Loss of potential purchasing power (inflation > yield).

b. Extremely liquid security.

c. Better returns than a bank savings account.

d. An investor's capital is secure.