Economics Questions
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how many districts make up the federal reserve?
Energy is released from fossil fuels when they are
True or False: banks are required by law to borrow and lend to other banks at the interest rates specified by the Federal Reserve.
The interest rate that relates the promised cash flow of a bond to its current price is most commonly called the a. real interest rate. b. discount rate. c. simple interest rate. d. yield-to-maturity. e. IRR
A bank collects deposits that average $800 per account. The bank makes loans that average $250,000 per loan. This is an example of: a. Secondary market transactions b. Indirect money transfers c. Denomination intermediation d. Delegated monitoring
You are an investor in fixed income securities. You have a strong belief that interest rates are going to rise sharply. Given this belief, which of the following trades makes the LEAST financial sense? a. Buy long-term bonds. b. Buy gold. c. Buy money market securities. d. Buy risky bonds (low credit quality).
The Federal Reserve requires banks to maintain a reserve to a. meet liquidity shocks. b. to control the money supply. c. to reduce the riskiness of bank loans. d. All of the above. e. Only A and B above.
A securitized short-term, unsecured loan issued by a corporation is a. a Bankers acceptance. b. commercial paper. c. a negotiable CD. d. a repurchase agreement. e. asset-backed commercial paper.
A risk that is more pronounced for the finance industry than it is for other industries is: a. Operational risk b. Market risk c. Commodities risk d. Credit risk
Primary markets area. where securities are issued for the first time. b. where securities trade after they are initially issued. c. any market that serves as a primary source of funds for a given entity. d. safer than secondary markets.
Within the context of the Federal Reserve, the "discount rate" is: a. The rate at which banks charge each other for loans on excess reserves b. The rate that is used to discount cash flows in most finance applications c. The rates banks charge security dealers to finance their inventories d. The interest rate that the Fed charges on loans it makes to banks and other borrowers
Which of the following is true for repurchase agreements? a. The are generally under-collateralized to make the more attractive b. Sellers of the security (who later buy them back) are referred to as engaging in a "reverse repo" c. They are agreements to sell, and then repurchase, a security d. The were made illegal by the financial reform passed in 2010 because of the risk they pose to the economy
A decrease in the reserve requirements could lead to a. a decrease in bank lending. b. an increase in the Fed's discount rate. c. a decrease in the money supply. d. an increase in the money supply. e. deflation.
In the context of the Federal Reserve, the discount rate a. Is the rate used in finance to calculate the NPV. b. The rate the Fed charges on direct loans it makes. c. The target interest rate. d. The rate banks charge securities dealers to finance their inventory.
A bankers-acceptance is a. a non-tradable insurance policy issued by a bank. b. tradable in secondary markets. c. used to facilitate international trade. d. Only A and C are true. e. Only B and C are true.