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NEW QUESTION: 1
The Slippery Fund is a high-yield bond fund, which means it invests a substantial amount of its money in:
A. high-quality bonds.
B. investment-grade bonds.
C. junk bonds.
D. bonds with an AAA rating.
Answer: C
Explanation:
Explanation/Reference:
Explanation: As a high-yield bond fund, Slippery invests a substantial amount of its money in junk bonds.
High yield = high risk. Junk bonds have a rating below BBB.
NEW QUESTION: 2
Which of the following statements regarding collateralized debt obligations (CDOs) is correct?
I. CDOs typically have loans or bonds as underlying collateral.
II. CDOs generally less risky than CMOs.
III. There is a correlation among defaults in the CDO collateral which should be considered in valuation of
these complex instruments.
A. II and III
B. I, II, and III
C. I and III
D. I only
Answer: C
NEW QUESTION: 3
A. Option B
B. Option D
C. Option A
D. Option C
Answer: A
NEW QUESTION: 4
Which of the following is not a component of Porter's Five Force Model of industry competition?
A. Bargaining power of buyers.
B. Threat of substitute products.
C. Bargaining power of suppliers.
D. All of these are components of Porter's Five Force Model.
E. Threat of new entrants.
F. Threat of technological obsolescence.
Answer: F
Explanation:
Explanation/Reference:
Explanation:
Porter's Five Force Model of industry competition, named after its creator, famed Harvard professor Micheal Porter, is used to measure the amount of competition within industries. The five forces within this model are as follows:
Threat of new entrants
Threat of substitute products
Bargaining buyer of buyers
Bargaining power of suppliers
Rivalry of existing firms
A shift in any of these threats will lead to a change in industry competition. As you can see, "threat of technological obsolescence" is not named as an explicit threat within the Five Forces Model.
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