Question 40

TRUE or FALSE. Explain your answer with NO MORE THAN THREE SENTENCES.

The Treasury accepts noncompetitive bids in ascending order of yield until the accepted bids reach the offering amount.

Question 41

TRUE or FALSE. Explain your answer with NO MORE THAN THREE SENTENCES.

The efficient market hypothesis does not have to imply that financial markets are efficient.

Question 42

TRUE or FALSE. Explain your answer with NO MORE THAN THREE SENTENCES.

An increase in tariffs and quotas on imports causes a country's currency to appreciate.

Question 43

TRUE or FALSE. Explain your answer with NO MORE THAN THREE SENTENCES.

The default risk of a bond with sinking fund is lower and hence a lower yield is given.

Question 44

TRUE or FALSE. *Each question requires explanations (Max 3 sentences)*.

All else being equal, the greater the interest rate the greater the duration is.

Question 45

TRUE or FALSE. *Each question requires explanations (Max 3 sentences)*

A negative liquidity premium indicates that investors prefer long-term bonds over short-term bonds.