Economics Questions
Explore questions in the Economics category that you can ask Spark.E!
A par bond: a. Is one whose price is equal to its face. b. Is one whose coupon is different from its yield-to-maturity. c. Is a recently issued bond. d. Only A and B.
Relative to investment-grade bonds, which of the following is false for so-called junk bonds? a. They have higher yields-to-maturity. b. They are often purchased by pension funds. c. They have higher probabilities of default. d. They have higher coupon rates.
The safest municipal bond is a: a. General obligation bond b. Revenue bond c. Registered bond d. Fixed-rate bond
If the federal reserve were to sell its assets, the results would likely include a. a decrease in interest rates. b. an increase in interest rates. c. a general increase in non-debt asset prices. d. increased inflation.
When entities borrow money (either by issuing a bond or via a bank loan) they often post collateral. Why would a borrower be willing to do this? a. To help lower market volatility b. To receive a lower interest rate c. It reduces interest rate risk d. To reduce recovery rates
Which of the following is true for zero-coupon loans? a. They are also called "discount bonds." b. Money market instruments fall under this category. c. They make no coupon payments. d. All of the above. e. Only A and C above.
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.
Which of the following is false about money market securities? a. They are debt securities with an original maturity of a year or less b. They are often issued by low credit quality companies c. They generally don't pay coupons d. They have low default risk
The Federal Reserve is charged with a. regulating securities exchanges. b. conducting monetary policy. c. initiating loans between banks on the fed funds market. d. setting bank prime rates. e. Both A and C are correct.
True or False: a bond that has no collateral is called a debenture.
True or False: the federal funds market is very liquid and allows banks to get or make loans very quickly.
The benefits of financial institutions to users of funds include a. their making monitoring easier. b. an increase in transaction costs paid by fund users. c. their making funds available with a variety of terms. d. All of the above. e. None of the above.
True or False: the equilibrium interest rate is where the demand and supply curves meet.
Which of the following categories of financial institutions collectively own the largest amount of assets? a. Insurance companies b. Pension funds c. Depository institutions d. Hedge funds
True or False: the Federal Reserve primarily regulates state banks.
True or False: the markets in which users of funds raise cash by selling securities are called primary markets.
Derivatives are primarily used by investors to a. hedge risk. b. help companies raise money for investments. c. speculate on price movements. d. Only A and C above. e. None of the above.
A callable bond a. can be converted to stock by the investor at a preset rate. b. can be purchased for a pre-determined price by the issuing company. c. can be sold for a pre-determined price by the investor. d. is generally more expensive than the equivalent plain vanilla bond. e. is usually not backed by any kind of collateral.
True or False: the liquidity offered on secondary markets can affect the price of a security offered in primary markets.
True or False: maturity intermediation refers to the ability of financial institutions to connect suppliers of funds, who only want to lend out on a short-term basis, with users of funds who want long-term loans.