which of the following financial intermediaries is not a depository institution?
financial intermediaries
which of the following is the primary source of external funds used by businesses to finance their activities?
which of the following statements about financial markets and securities are true?
bonds that are sold in a foreign country and are denominated in the country’s currency in which they are sold are known as
which of the following markets is sometimes organized as an over-the-counter market?
a corporation acquires new funds only when its securities are sold
1) secondary markets make financial instruments more
securities are _____ for the person who buys them, but are _____ for the inidual or firm that issues them.
currency includes
the difference between money and income is that
when people say, “bill gates sure is rich, he has a lot of money,” they probably mean that bill gates
an inidual’s annual salary is her
money is
which of the following assets can serve as a store of value?
if a security pays $110 next year and $121 the year after that, what is its yield to maturity if it sells for $200?
with an interest rate of 8 percent, the present value of $100 next year is approximately
which of the following are true of simple loans?
for a two-year simple loan of $1000 at 10 percent interest, the amount payable in two years is
if $1102.50 is the amount payable in two years for a $1000 simple loan made today, the interest rate is
which of the following are true for a coupon bond?
the interest rate on a consol
if a $20,000 coupon bond has a coupon rate of 4 percent, then the coupon payment every year is
which of the following $1,000 face-value securities has the highest yield to maturity?
a bond that is bought at a price below its face value and the face value is repaid at a maturity date is called a
if wealth increases, the demand for stocks _____ and that of long-term bonds ____
if the expect return on lm stock increases from 3 to 6 percent, and the return on op stock increases from 6 to 12 percent, the expected return of holding lm stock ________ relative to op stock and the demand for lm stock _________.
if interest rates on treasury bonds are suddenly expected to shoot up, then, other things equal, the demand for houses will _____ and that of treasury bonds will _____.
if the price of gold becomes less volatile, then, other things equal, the demand for stocks will _____ and the demand for antiques will _____
factors that increase the demand for bonds include
you would be less willing to purchase government bonds, other things equal, if
bonds with no default risk are called
the spread between the interest rates on bonds with default risk and default-free bonds is called the
an increase in the riskiness of corporate bonds will _____ the yield on corporate bonds and _____ the yield on treasury securities.
if the expected path of 1-year interest rates over the next five years is 1 percent, 2 percent, 3 percent, 4 percent, and 5 percent, the expectations theory predicts that the bond with the highest interest rate today is the one with a maturity of
if 1-year interest rates for the next three years are expected to be 4, 2, and 3 percent, and the 3-year term premium is 1 percent, than the 3-year bond rate will be
in the one-period valuation model, the current stock price increases if
using the one-period valuation model, assuming a year-end idend of $1.00, an expected sales price of $100, and a required rate of return of 10%, the current price of the stock would be
using the gordon growth formula, if d1 is $1.00, ke is 12% or 0.12, and g is 10% or 0.10, then the current stock price is
in the generalized idend model, if the expected sales price is in the distant future
the efficient markets hypothesis suggests that allocating your funds in the financial markets on the advice of a financial yst
in the one-period valuation model, the value of an investment depends upon
using the one-period valuation model, assuming a year-end idend of $0.50, an expected sales price of $50, and a required rate of return of 10%, the current price of the stock would be
in the generalized idend model, a future sales price far in the future does not affect the current stock price because
using the gordon growth model, a stock’s price will increase if
using the gordon growth formula, if the current stock price is $25, ke is 12% or 0.12, and g is 10% or 0.10, then d1 is
derivative instrument is a claim on the income of underlying assets
fra is a kind of nonbank loan.
future can not be used to
if you want to hege a rise of future price you can:
swap is usually otc
option is better than other derivatives.
forward can be traded in exchange.
usually financial institutions use swaps to exchange their currencies or cashflows.
which of the following statements concerning external sources of financing for nonfinancial businesses are true
the “lemons problem” exists because of
because of the adverse selection problem
because of the moral hazard problem,
moral hazard in equity contracts is known as the _____ problem because the manager of the firm has fewer incentives to maximize profits than the stockholders might ideally prefer
which of the following is the primary source of external funds used by american businesses to finance their activities?
poor people have difficulty getting loans because
which of the following is not one of the eight basic puzzles about financial structure?
because of the adverse selection problem,
because of the moral hazard problem
a bank’s balance sheet
which of the following statements is true?
which of the following are reported as liabilities on a bank’s balance sheet?
when you deposit a $50 bill in the abc bank
loans
a bank facing a reserve deficiency will first
borrow from central bank is the most costly way for bank liquility.
bank management interest rate risk for higher net interest income.
dgap= rsa-rsl
banks that engage in off-balance-sheet activities may
examples of off-balance–sheet activities include
if a bank has more rate-sensitive assets than liabilities, then a(n) _____ in interest rates will _____ bank profits
which of the following are reported as liabilities on a bank’s balance sheet?
bank capital is listed on the _____ side of the bank’s balance sheet because it represents a _____ of funds
which of the following are reported as assets on a bank’s balance sheet?
when you deposit $50 in currency at old national bank,
if a bank has $100,000 of deposits, a required reserve ratio of 20 percent, and it holds $30,000 in reserves, then it has enough reserves to support a deposit outflow of
banks that engage in off-balance-sheet activities may
state banks that are not members of the federal reserve system are most likely to be examined by the
fdic was created to prevent bank failures
people's bank of china is the only regulator of chinese financial system.
one problem of the too-big-to-fail policy is that it reduces the incentives for moral hazard by big banks
financial consolidation poses challenges to banking regulation.
which of the following are depository institutions?
the monetary base consists of
a bank has no excess reserves and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent. if the reserve ratio is raised to 25 percent, the bank’s excess reserves will now be
if reserves in the banking system increase by $100, then checkable deposits will increase by $100 in the simple model of deposit creation when the required reserve ratio is
if the required reserve ratio is 10 percent and the fed increases reserves by $100, checkable deposits can potentially expand by
of the players in the money supply process, most observers agree that the most important player is
both _____ and _____ are monetary liabilities of the central bank
when the central bank sells $100 worth of bonds to the first national bank, reserves in the banking system
if the central bank purchases securities from a bank, then
when the fed extends a $100 discount loan to the first national bank, reserves in the banking system
if the central bank extends a $100 discount loan to a bank that previously had no excess reserves, deposits in the banking system can potentially increase by
the condition of a continually rising price level is defined as
inflation occurs whenever
the monetarists’ proposition that inflation is always and everywhere a monetary phenomenon holds only if
evidence strongly supports the view that countries with high inflation also have
countries with the highest inflation rates are likely to have
factors other than money growth that can generate an inflation in monetarist ysis include:
the objectives of the federal reserve in its conduct of monetary policy include
the goals of monetary policy include
if the central bank increase required reserve ratio, the money supply will decrease
if the central bank want to decrease inflation rate, it can decrease discount rate.
if the central bank purchase securities, reserve will increase and inter bank rate will decrease.
open market purchase can decrease inflation rate.
open market sale can inrease employment rate.
central bank can increase required reserve ratio to promote economic growth.
if the central bank raise discount rates
increase required reserve ratio can
open market purchase can
the goals of monetary policy include:
rice stability is desirable because
which set of goals can, at times, conflict in the short run?
which of the following is a potential operating target for the central bank?
which of the following is not a requirement in selecting an intermediate target?
if the central bank wants to decrease inflation rate, it can
the interest rate charged on overnight loans of reserves between banks is the
the inter bank offered rate is the
discount policy affects the money supply by affecting the volume of _____ and the _____
slf is a kind of discount rate
disadvantages of discount policy include
open market purchases _____ reserves and the monetary base thereby _____ the _____
the quantity of reserves demanded rises when the
the opportunity cost of holding excess reserves is
open market sales _____ reserves and the monetary base thereby _____ the money supply
discount policy affects the money supply by affecting the volume of _____ and the _____
a _____ in reserve requirements _____ the money supply since it causes the money multiplier to _____
disadvantages of using reserve requirements to control the money supply and interest rates include
markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called ______
compared to interest rates on long-termu.s.government bonds, interest rates on _____ fluctuate more and are lower on average
because it is a store of value, money
an inidual’s annual salary is her
money reduces transaction costs, allowing people to specialize in what they do best. money, therefore, promotes
the narrowest measure of money that the fed reports is
which of the following is not included in the measure of m1?
f a security pays $110 next year and $121 the year after that, what is its yield to maturity if it sells for $200?
which of the following are not true of fixed payment loans?
the price of a consol
an $8,000 coupon bond with a $400 coupon payment every year has a coupon rate of
which of the following $1,000 face-value securities has the highest yield to maturity?
which of the following are true for the current yield?
if the expected return on abc stock is unchanged and the expected return on cbs stock falls from 10 to 5 percent, then the expected return of holding cbs stock _____ relative to abc stock and the demand for abc stock _____
when the interest rate is above the equilibrium interest rate, there is an excess _____ for (of) money and the interest rate will _____
the risk structure of interest rates is
if 1-year interest rates for the next three years are expected to be 4, 2, and 3 percent, and the 3-year term premium is 1 percent, than the 3-year bond rate will be
dividends are paid from
using the gordon growth formula, if d1 is $1.00, ke is 10% or 0.10, and g is 5% or 0.05, then the current stock price is
the presence of _____ in financial markets leads to adverse selection and moral hazard problems that interfere with the efficient functioning of financial markets
when you deposit $50 in currency at old national bank,
if a bank has excess reserves of $20,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has total reserves of
open market operations as a monetary policy tool have the advantages that