Question 1 Which of the following is correct? If estimated value > Market price,

Question

Question 1

Which of the following is correct?

If estimated value > Market price, you should buy.

If estimated value > Market price, you should sell.

If estimated value < Market price, you should sell.

If estimated value < Market price, you should buy.

Choices a and c.

Question 2

General obligation bonds are

U.S. Treasury bonds backed by the full faith and credit of the issuer.

U.S. Treasury bonds backed by income generated form specific projects.

Municipal bonds backed by the full faith and credit of the issuer.

Municipal bonds backed by income generated from specific projects.

A type of U.S. agency security.

Question 3

Revenue bonds are

U.S. Treasury bonds backed by the full faith and credit of the issuer.

U.S. Treasury bonds backed by income generated form specific projects.

Municipal bonds backed by the full faith and credit of the issuer.

Municipal bonds backed by income generated from specific projects.

A type of U.S. agency security.

Question 4

Collateralized Mortgage obligations are

Mortgage pass-through securities.

Mortgage pass-through securities with varying maturities.

Mortgage pass-through securities with no default risk.

Mortgage pass-through securities with variable coupon rates.

None of the above.

If estimated value > Market price, you should buy.

If estimated value > Market price, you should sell.

If estimated value < Market price, you should sell.

If estimated value < Market price, you should buy.

Choices a and c.

Explanation / Answer

Question 1)

If the estimated value is higher than market value, share is underpriced. So, we should buy the share and sell after price increase. This strategy will make capital gains to buyer.

Hence, correct option is (A)

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