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1 When A Firm Is Liquidated Who Are The Last In Line To Be Paid?A The Government B The Suppliers C

Question

1. When a firm is liquidated, who are the last in line to be paid?

A. The government. B. The suppliers. C.

The stock holders. D. The bond holders. E. Derivative contract counterparties.

2. If you own a stock of a firm, and if this firm is liquidated, what is the most you can you lose on this entire investment?

A. Nothing. B. Your original investment. C. Your entire investment, plus potentially more to cover unpaid bills of the company.

3. Of the following financial instruments, which one has the longest possible maturity?

A. Mortgage Backed Security B. A Treasury Bond C. Commercial Paper D. A Stock

4. Consider two investors who are identical, save for the marginal tax rate they face on investment income. Which one of the investors is likely to hold a larger share of their portfolio in Munis?

A. Both equally likely because they both want to be as diversified as possible. B. Investor with a high marginal tax rate. C. Investor with a low marginal tax rate.

5. Which has the longest maturity at issuance?

A. Treasury Bonds. B. Treasury Notes. C. Treasury Bills.

Finance