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LOS k: Explain liquidity risk and why it might be important to investors even if they expect to hold a security to the maturity date.
Q1. Which of the following assets is the least liquid?
A) Foreign exchange futures contract.
B) On-the-run Treasury security.
C) Limited Partnership.
Q2. Which of the following statements does NOT describe a characteristic of an illiquid asset or market?
A) Small trading volumes.
B) Wide bid-ask spreads.
C) Large block trades that do not materially affect prices.
Q3. Which of the following statements regarding liquidity risk is FALSE?
A) Emerging markets typically have more liquidity risk than established markets.
B) Liquidity risk is not important to an investor who intends to hold a security until maturity.
C) The bid-ask spread is one measurement of liquidity risk.
Q4. Which of the following investors is least likely to have liquidity risk concerns? A:
A) corporate bond investor who intends to hold securities until maturity.
B) trader who invests exclusively in Treasury bonds.
C) financial institution heavily involved in the repurchase market.
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发表于 2009-3-2 15:57
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