Financial Institutions and Markets Quiz

Which of the following is not a major component of the financial system?

• Financial assets

• Financial institutions

• Financial regulators

• Fiscal policy makers

Which of the following is an example of a capital market instrument?

• Treasury Bills

• Certificate of Deposit (CD)

• Commercial Paper

• Corporate Bonds

The process of converting loans into tradable securities is known as:

• Monetization

• Securitization

• Capitalization

• Collateralization

In indirect finance, funds flow primarily through:

• Stock exchanges

• Financial intermediaries

• Government bonds

• Foreign exchange markets

A bond bought at a price below its face value and without periodic interest payments is called a:

• Coupon bond

• Fixed-payment loan

• Discount bond

• Perpetuity

The most accurate measure of interest rates according to economists is:

• Current yield

• Yield to maturity

• Prime rate

• Discount rate

Which type of unemployment is most affected by monetary policy?

• Frictional

• Structural

• Cyclical

• Seasonal

According to the Quantity Theory of Money, if the money supply grows faster than real GDP, the likely result is:

• Deflation

• Inflation

• Economic stagnation

• Higher unemployment

In the Fisher equation, the nominal interest rate equals:

• Real interest rate + Inflation rate

• Inflation rate – Real interest rate

• Inflation rate + Expected return

• Real GDP growth + Inflation rate

The most liquid asset that banks hold is:

• Loans

• Securities

• Reserves

• Certificates of deposit