WorksheetsMoney and Banking
Total questions: 106
Worksheet time: 52mins
Which of the following is a function of money?
Unit of payment
Unit of transaction
Unit of account
Unit of value
Of the three functions of money, which is the most important?
Mean of payment
Store of value
Unit of account
None of above
Which of the followings is the most liquid?
Stock
Gold
Corporate bond
Real estate
Which of the following options do banks least likely to take to maintain liquidity when a significant withdrawal from clients is requested?
Refuse to renew a customer loan that has come due
Sell short-term securities
Use the excess reserve
Liquidate some of the loans
Too much money supply to the economy might drive … inflation:
higher
lower
neutral
constant
… is a measure of the ease with which an asset can be turned into a means of payment.
Capital
Means of Payment
Liquidity
Account
Which of the following bank assets is the most liquid?
Consumer loans
Reserves
Cash items in the process of collection
U.S. government securities
“In countries with low inflation, money growth is a poor forecaster of inflation.”
TRUE
FALSE
What is the function of money used to quote prices?
Means of payment
Unit of account
Store of value
Unit of value
The main functions of money include:
Store of value, Medium of exchange, and Unit of Account
Medium of exchange, property valuation
Store of Value, Unit of transaction
None of the answers are correct
What is the Barter economy?
A market where a good or service is exchanged directly for another good or service.
A market where a good or service is exchanged indirectly for another good or service.
A market where money is used widely.
All are correct
Which one is money?
Cash
Check
Draft
All of above
What effect does inflation have on the purchasing power of money?
Inflation makes money more valuable
Money loss value during inflation
The effect varies depending on the time and place
None of above
The ability to use an asset as a medium of exchange describes its...:
Portability
Scarcity
Durability
Liquidity
In the future, money will be used … as a means of payment.
more and more
temporary
less and less
… inflation rates are seen in the countries with … money growth rate.
high/high
high/low
low/high
B and C are correct
What are the Governments’ tool for inflation control?
Monetary Policy
Fiscal Policy
All are correct
None of above
During periods of inflation, money does not function well as?
Medium of exchange
Unit of account
Store of value
Commodity money
What kind of risk is this?
“The risk that a bank’s loans are not be repaid as commitment.”
Liquidity Risk
Credit Risk
Market Risk
Interest-rate Risk
Trading Risk is also called:
Capital Risk
Market Risk
Deposit Risk
Operational Risk
“If the price at which an instrument is purchased differs from the price at which it is sold, the risk is that the instrument may go down in value rather than up.” What is this type of risk?
Market Risk
Liquidity Risk
Credit Risk
Interest-rate Risk
The mismatch between the maturities of the two sides of the balance sheet is:
Liquidity risk
Credit risk
Interest-rate risk
Trading risk
Banks hold assets denominated in one currency and liabilities denominated in another can create:
Foreign exchange risk
Sovereign risk
Redenomination risk
Market risk
What should banks do to manage Credit risk?
Use derivatives such as interest rate swaps
Manage assets-sell securities or loans
Diversify to spread risk
Hold sufficient cash reserves to meet customer demand
Banks’ computer systems may fail or buildings burn down (or blow up). What kind of risk is this?
Operational risk
Liquidity risk
Credit risk
Interest-rate risk
If the price at which an instrument is purchased differs from the price at which it is sold, the risk is that the instrument may … in value rather than…. This type of risk is called trading risk.
go up/down
go down/up
change/stay the same
stay the same/change
When … rise, banks face the risk that the value of their assets will fall more than the value of their liabilities (reducing the bank’s capital).
Interest rate
Price of Bond
Required Reserve
Capital
What happens to the price of bonds when interest rates fall?
The price of bonds will fall
The price of bonds will stay the same
The price of bonds will rise
The price of bonds does not affect to the interest rates
The bond prices are negatively related to the interest rate. What does it mean?
The price of bonds will fall
The price of bonds will rise whenever the interest rate falls
The price of bonds will stay the same
The price of bonds does not affect to the interest rates
The shorter the term of the bond is, the greater the change in the bond’s price at any given change in the interest rate.
TRUE
FALSE
Which of the following tools banks use to manage their credit risk?
The bank examines the credit of the borrower's siblings to determine the appropriate interest rate to charge.
The bank ignores the customer’s credit history to determine the appropriate interest rate to charge.
The bank examines the borrower’s credit history to determine the appropriate interest rate to charge.
None of above are correct.
When banks face a liquidity crisis, what should banks do?
Borrowing from other sources of funds
Refusing to make new customer’s loan
None of above
A and B are correct
When banks face a liquidity crisis, what should be done?
Borrowing from other sources of funds
Attracting additional deposits
Auctioning their loans and assets
All of above are correct
Which of the following are consequences of the large number of customers who tend to transfer deposits significantly and suddenly?
Bank is going to deal with credit risk.
Bank is going to deal with liquidity risk.
Bank is going to deal with interest-rate risk.
Bank is going to deal with trading risk.
Which of the following are consequences if the large number of people tend to transfer deposits significantly and suddenly?
Bank is going to face a liquidity crisis.
Bank is going to deal with a liquidity crisis, then cash is an asset-side risk and an equity -side risk as well.
Bank is going to deal with liquidity risk, then a deposit loan is an asset-side risk and an equity-side risk as well.
Bank is going to deal with liquidity risk, then deposit withdrawal is a liability-side risk and an asset-side risk as well.
Which of the following statements is TRUE?
The poorer a borrower’s credit rating, the lower the interest rate they will charge
The poorer a borrower’s credit rating, the higher the interest rate they will charge
The poorer a borrower’s debit rating, the lower the interest rate they will charge
The poorer a borrower’s debit rating, the higher the interest rate they will charge
Which of the following statement is correct?
For the bank to make a profit, the interest rate on its asset must be lower than the interest rate on its liabilities.
For the bank to make a profit, the interest rate on its liabilities must be equal to the interest rate on its liabilities.
For the bank to make a profit, the interest rate on its liabilities must be lower than the interest rate on its assets.
For the bank to maximize the revenue, the interest rate on its asset must be lower than the interest rate on its liabilities.
Which one of the following is NOT a response for Liquidity risk?
Use statistical models to screen for creditworthy borrowers.
Manage assets: sell securities or loans (contracts the size of the balance sheet).
Hold sufficient cash reserves to meet customer demand.
Manage liabilities: attract more deposits (maintains the size of the balance sheet).
Which one of the following is the solution for Interest-rate risk?
Hold sufficient cash reserves to meet customer demand.
Closely monitor traders using risk management tools, including value at risk.
Use statistical models to screen for creditworthy borrowers.
Closely match the maturity of both sides of the balance sheet.
Which one of the following is NOT a response for Credit risk?
Diversify to spread risk.
Use derivatives such as interest-rate swaps.
Monitor to reduce moral hazard.
Use statistical models to screen for creditworthy borrowers.
The higher the risk inherent in the bank’s portfolio, the more ……the bank will need to hold to make sure the institution remains solvent.
Capital
Equity
Debt
Deposit
The important day-to-day jobs of the central bank LEAST likely include:
Oversee commercial banks and the financial system
Manage security markets
Provide loans during times of financial stress
Manage the payments system
Which of the following is NOT the reason why central bankers must make their priorities clear while pursuing an objective?
To make sure their decision maintains stable inflation and growth
Central bankers face the tradeoff between inflation and growth
To limits the discretionary authority of the central bankers
The public need to know the direction the central bank is heading
Central Banks regulate …, Governments regulate …:
fiscal policy; monetary policy
monetary policy; fiscal policy
monetary policy; monetary policy
fiscal policy; fiscal policy
Which is NOT an objective of the Central Banks?
Low and stable inflation
Stable interest rates
High and stable real growth, together with high employment
High and stable inflation
What is the primary objective of all Central Banks?
Stability money purchasing power
Cash holding
Hyperinflation
High deposit
Which of the following is NOT a way for the Central Bank to be successful?
Be independent of political pressure
Operate within an explicit framework that clearly states its goals and makes clear the tradeoffs among them
Make decisions by committee
Be ambiguous to the public and opaque in communicating its policy actions
The ability to … means that the central bank can control the availability of money and credit in a country’s economy:
oversee commercial banks and the financial system
provide loans during times of financial stress
print currency
manage the payments system
Which one of the following is the objective of central bank?
High and stable inflation
Low interest rate
High exchange rate
High and stable real growth
Which one is NOT a day-to-day job of the central bank?
Providing loans in times of financial stress
Payment system management
Print more money
Supervision of commercial banks and the financial system
Central banks use Fiscal policy tools to change interest rates.
True
False
Monetary policy is how a country’s central bank works to achieve the economic goals of price stability and full employment.
True
False
Central banks use … to stabilize economic growth and inflation.
monetary policy
fiscal policy
both fiscal policy and monetary policy
None of above
A … rate of money growth creates a … inflation rate.
high/low
low/high
high/high
low/stable
Which one of following statements is NOT true about Central Bank?
Central bank oversees commercial banks and the financial system.
Central bank operates a payments system for interbank payments.
Central bank does not control securities market.
Central bank controls the government’s budget.
What should be the primary objective of monetary policy?
Low, stable inflation.
High, stable real growth.
High, stable deflation.
Financial system stability.
What is an integral part of every modern central banker’s job?
High, stable real growth.
Low, stable inflation.
Financial system stability.
Stable interest-rate.
Fiscal policy can make the central bank’s job impossible because:
Responsible fiscal policy is a precondition for successful monetary policy.
In some cases, politicians are predisposed toward financing techniques that
will create inflation.
Central banks remain independent at the pleasure of politicians.
All are correct.
What is one of the Modern central bank’s functions?
Operate a payments system
Borrow commercial banks during time of stress.
Print money.
Increase the interest rate when deflation occurs.
What is not a task of a commercial bank?
Make loans and take deposits.
Provide financial advice.
Print money.
Invest in securities and other financial products.
What does a commercial bank do if there are no excess reserves?
Stop client's transactions.
Take back the loans from clients.
Borrow reserves either from another bank, or directly from the central bank.
Set a higher interest rate.
Which assets are generally purchased by central banks?
Gold bullion or other precious metals.
Foreign exchange reserves.
Loans to governments.
Real estate.
What must a central bank provide to set an interest rate?
The bank must be able to provide or withdraw liquidity in any amount needed.
The central bank is not allowed to fix the interest rate.
It must show convincing reasons to the government on why it wants to fix the interest rate.
The bank can set the interest rate in any case under any circumstance.
What happens when the central bank withdraws reserves from the market?
The interbank interest rate drops.
The interbank interest rate rises.
The interbank interest rate doesn't change.
None of above
The interest rate charged on overnight loans of reserves between banks is the:
Prime rate
Discount rate
Federal funds rate
Treasury bill rate
If the overnight rate falls below the rate paid on reserves, what will happen?
Banks stop lending to the central bank.
The central bank supplies any amount that banks want.
The central bank refuses to lend.
Banks increased their deposits at the central banks.
The opportunity cost of holding excess reserves is:
The discount rate
The prime rate
The treasury bills rate
The Federal Fund rate
The discount rate is:
The interest the Fed charges on loans to commercial banks.
The price the Fed pays for government securities.
The interest rate that banks charge their most preferred customers.
The price banks pay the Fed for government securities.
One of three policy tools that the Fed can use to change the money supply, that one that does not affect the monetary base is:
Open market operations.
Changes in the discount rate.
Changes in the federal funds rate.
Reserve requirement.
The primary responsibility of the Federal Reserve System is to:
Issue currency to member banks
Regulate the growth of the money supply
Serve as a fiscal agent for the U.S. government
Regulate and conduct bank examinations
The most used monetary policy instrument used by the Fed is:
Open market operations
Changing the discount rate
Changing the reserve requirement
None of the above
Which of the following is NOT a method by which the Federal Reserve establishes monetary policy?
Setting reserve requirements
Through federal open market operations
Setting bank profitability ratios
None of the above
What is the central bank for the countries that participate in the European Monetary Union—the euro area?
Federal Reserve System (FED).
European Central Bank (ECB).
European Reserve System (ERS).
European Economic and Monetary Union (EMU).
What is the central bank of US?
Federal Reserve System.
Federal Capital System.
Federal Central Bank.
American Central Bank.
What is the largest Federal Reserve Bank among 12 Federal Reserve Banks, accounting for about 1/5 of all Reserve Bank employment?
The Federal Reserve Bank of San Francisco.
The Federal Reserve Bank of Washington, D.C.
The Federal Reserve Bank of New York.
The Federal Reserve Bank of Ohio.
As the bank for the U.S. government, they:
Maintain the U.S. Treasury’s bank account and process electronic payments.
Hold deposits for the banks in their districts.
Operate and ensure the integrity of a payments network for transferring funds.
Supervise and regulate financial institutions in the district to ensure their safety and soundness, as well as evaluate proposed bank mergers and new operations.
The Federal Reserve Bank in New York where Treasury securities are auctioned, foreign currency is bought and sold, and the Federal Reserve’s own portfolio is managed through what are called…
investment market operations
financing market operations
closed market operations
open market operations
Who is the most powerful person in the Federal Reserve System, also chair of the FOMC?
Chair of the Board of Governors
President of the Federal Reserve Bank of New York
Presidents of the 11 other Federal Reserve Banks
Other members of the Board of Governors
Who runs the biggest and most important of the Reserve Banks, where monetary policy operations are carried out?
Chair of the Board of Governors.
President of the Federal Reserve Bank of New York.
Presidents of the 11 other Federal Reserve Banks.
Other members of the Board of Governors.
Three criteria for judging a central bank’s independence: budgetary independence, irreversible decisions, and ….
short terms in office
long terms in office
medium in office
temporary office
Three criteria for judging a central bank’s independence: budgetary independence, …, and long terms in office.
irreversible decisions
changeable decisions
fluctuating decisions
none of above
Three criteria for judging a central bank’s independence:____, irreversible decisions, and long terms in office.
budgetary dependence
budgetary constraints
budgetary independence
none of above
The Fed’s substantial … is a combination of interest on the government securities it holds and fees charged to banks.
capital
profit
deposit
revenue
The central authority, located in Frankfurt, Germany, which oversees monetary policy in the common currency area is:
The Federal Reserve
The European Central Bank
The State bank of Vietnam
None of above
By 2017, the euro had become the currency of … countries.
17
18
19
20
Under the European System of Central banks, the National Central banks have the same role as the … of the Federal Reserve System.
Board of Governors
Federal Open Market Committee
Federal Reserve Banks
Federal Advisory Council
Which of the following statements comparing the European System of Central Banks and Federal Reserve System is TRUE?
Just like the Fed, monetary operations are centralized in the European System of Central Banks with the European Central Bank.
The European Central Bank has similar power over the National Central Banks when compared to the level of power the Board of Governors has over the Fed.
C. The budgets of the Fed are controlled by the Board of Governors, while the National Central Banks control their own budgets and the budget of the European Central bank.
All are correct.
Central banks’ independence is the ability of … to set monetary policy ….
the central bank/goals
Congress/goals
Congress/instruments
the central bank/instruments
What institution is the euro area’s leading bank supervisor, directly supervises the large systemic banks?
Fed
ECB
FOMC
NCBs
What is the central banks of the countries that belong to the Europe Union?
European Central Bank
European System of Central Banks
Governing Council
National central banks
The currency used in the countries of the European Monetary Union is?
Euro
Pound
USD
VND
The ECB plus the NCBs of all the countries in the European Union, including those that do not participate in the monetary union is?
European Central Bank
European System of Central Banks
Governing Council
National central banks
Which of the following is the difference between FOMC and ECB’s Governing Council?
FOMC: Public speeches of members/ECB: Private speeches of members.
FOMC: Data collection and restriction/ECB: Data collection and dissemination.
FOMC: Transcripts released after 5 years/ECB: No transcripts.
FOMC: Twice-yearly reports to Congress/ ECB: Annually report to the European Parliament.
How many members does the Executive board have?
Six, one President, one vice president and four members
Six, one President, two vice presidents and three members
Three, one President and two members
Five, one President and four Vice-Presidents
Which of the following is an element of the Federal Reserve System?
The Federal Reserve banks
The Board of Governors
The FOMC
All of the above
Members of the Board of Governors are:
Chosen by the Federal Reserve Bank presidents.
Appointed by the newly elected president of the United States, as are cabinet positions.
Appointed by the president of the United States and confirmed by the Senate as members resign.
Never allowed to serve more than seven-year terms.
How is the cooperation between central banks in the eurozone called?
The Central Banks system
The ECB System
The Eurozone
The Eurosystem
The ECB’s primary objective is to … in the common currency area.
stabilize prices
stabilize reserves
maximize prices
maximize reserves
The predecessor of the State Bank of Vietnam was:
Central Bank of Vietnam
Government Bank of Vietnam
National Bank of Vietnam
State Bank of Vietnam
Headquarter of State Bank of Vietnam located in:
A. Hanoi
B. Ho Chi Minh city
Hai Phong city
Hue city
What department is the head of the State Bank of Vietnam?
Chief of State Bank
Chairman of the Board of Directors
Congress of Vietnam
Governor of State Bank of Vietnam
Which of the following statement is NOT true about State Bank of Vietnam?
SBV is a ministry-level body under the administration of the government
SBV is independence from the Government of Vietnam
The governor is nominated by the prime minister subject to the approval of the National Assembly
Both governor and vice governors serve a 5-year term
The currency used in Vietnam is?
Euro
Pound
USD
VND
What is the function of State Bank of Vietnam?
Promote monetary stability and formulate monetary policies.
Supervise all commercial banks’ activities in Vietnam.
Manage the country's foreign currencies reserves
All are correct
What are the functions of State Bank of Vietnam?
Print and issue banknotes.
Promote institutions’ stability and supervise financial institutions.
Be in charge of other roles in monetary management and foreign exchange rates.
All are correct.
Who is the governor taking office the State Bank of Vietnam currently?
Nguyễn Lương Bằng
Lê Minh Hưng
Nguyễn Thị Hồng
Nguyễn Tấn Dũng
