1. Which of the following statements concerning bonds are correct?
I. Municipal bond interest is federally tax-free.
II. Bond yields are related to bond rating.
III. General obligation bonds yield more than revenue bonds.
IV. At the time of issue, callable bonds have higher yields than noncallable bonds.
A) I and III only
B) II and IV only
C) I, II and IV only
D) I, II and III only
2. Which of the following characteristics apply to collateralized mortgage obligations?
I. All bondholders receive a pro-rata share of all interest payments.
II. CMOs are derivative securities created from mortgage-backed bonds.
III. All principal payments are paid to the shortest remaining tranche.
IV. CMOs have definite maturity dates for each tranche.
A) I and II only. B) I and III only. C) I, II and III only. D) II, III and IV only.