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WorksheetsLý thuyết Tài chính Tiền tệ
Total questions: 64
Worksheet time: 32mins
Pieces of property that serve as a store of value are called
assets.
units of account.
borrowings.
liabilities.
An $8,000 coupon bond with a $400 coupon payment every year has a coupon rate of
40%
5%
8%
10%
Factors that can cause the supply curve for bonds to shift to the right include
a business cycle recession.
a decrease in expected inflation.
an expansion in overall economic activity.
a decrease in government deficits.
If a security pays $55 in one year and $133 in three years, its present value is $150 if the interest rate is
15%
12%
10%
5%
Federal funds are
funds raised by the federal government in the bond market.
loans made by the Federal Reserve System to banks.
loans made by banks to the Federal Reserve System.
loans made by banks to each other.
The primary assets of a pension fund are
consumer and business loans.
money market instruments.
mortgages.
corporate bonds and stock.
Which of the following statements best explains how the use of money in an economy increases economic efficiency?
Money increases economic efficiency because it discourages specialization.
Money increases economic efficiency because it is costless to produce.
Money cannot have an effect on economic efficiency.
Money increases economic efficiency because it decreases transactions costs.
A financial market in which only short-term debt instruments are traded is called the __________ market.
bond
money
stock
capital
A discount bond
pays the bondholder the face value at maturity.
pays the face value at maturity plus any capital gain.
pays all interest and the face value at maturity.
pays the bondholder a fixed amount every period and the face value at maturity.
If the price of bonds is set __________ the equilibrium price, the quantity of bonds demanded exceeds the quantity of bonds supplied, a condition called excess __________.
below; supply
below; demand
above; supply
above; demand
Banks and other financial institutions engage in financial intermediation, which
can benefit economic performance.
involves borrowing from investors and lending to savers.
has no effect on economic performance.
can hurt the performance of the economy.
If there are four goods in a barter economy, then one needs to know __________ prices in order to exchange one good for another.
6
5
4
3
A __________ pays the owner a fixed coupon payment every year until the maturity date, when the ____________________ value is repaid.
discount bond; face
coupon bond; discount
discount bond; discount
coupon bond; face
The financial intermediaries that the average person interacts with most frequently are __________.
exchanges
over-the-counter markets
finance companies
banks
If you expect the inflation rate to be 4 percent next year and a one year bond has a yield to maturity of 7 percent, then the real interest rate on this bond is
-2 percent.
7 percent.
-3 percent.
3 percent.
Financial intermediaries provide customers with liquidity services. Liquidity services
allow customers to have a cup of coffee while waiting in the lobby
are another term for asset transformation
are a result of the asymmetric information problem
make it easier for customers to conduct transactions.
A sharp increase in the growth of the money supply is likely followed by
an increase in the inflation rate.
no change in the economy.
a depression.
a recession
Everything else held constant, when households save less, wealth and the demand for bonds __________ and the bond demand curve shifts __________.
decrease; left
increase; right
increase; left
decrease; right
Which of the following instruments are traded in a money market?
Residential mortgages.
Bank commercial loans.
State and local government bonds.
Commercial paper.
Which of the following statements about financial markets and securities is true?
Many common stocks are traded over-the-counter, although the largest corporations usually have their shares traded at organized stock exchanges such as the New York Stock Exchange.
As a corporation gets a share of the brokerʹs commission, a corporation acquires new funds whenever its securities are sold.
Capital market securities are usually more widely traded than shorter -term securities and so tend to be more liquid.
Because of their short-terms to maturity, the prices of money market instruments tend to fluctuate wildly.
The primary liabilities of depository institutions are
bonds.
premiums from policies.
shares.
deposits.
As a store of value, money
is a way of saving for future purchases.
cannot be a durable asset.
must be currency.
does not earn interest.
When the economy slips into a recession, normally the demand for bonds __________, the supply of bonds __________, and the interest rate __________, everything else held constant.
decreases; decreases; falls
increases; increases; rises
decreases; increases; rises
increases; decreases; falls
Which of the following instruments are traded in a money market?
Corporate bonds.
US Treasury bills
US government agency securities.
State and local government bonds.
If the nominal rate of interest is 2 percent, and the expected inflation rate is -10 percent, the real rate of interest is
12 percent.
2 percent.
8 percent.
10 percent.
Financial institutions that accept deposits and make loans are called __________ institutions.
underwriting
investment
depository
contractual savings
Deflation causes the demand for bonds to __________, the supply of bonds to __________, and bond prices to __________, everything else held constant.
increase; increase; increase
decrease; increase; increase
decrease; decrease; increase
increase; decrease; increase
An individualʹs annual salary is her
wealth
income
liabilities
money
Which of the following is not a contractual savings institution?
A life insurance company
A pension fund
A fire and casualty insurance company
A savings and loan association
The total collection of pieces of property that serve to store value is a personʹs
wealth
money
income
credit
The process of asset transformation refers to the conversion of
safer assets into safer liabilities.
risky assets into safer assets.
risky assets into risky liabilities.
safer assets into risky assets.
Everything else held constant, if the expected return on ABC stock rises from 5 to 10 percent and the expected return on CBS stock is unchanged, then the expected return of holding CBS stock __________ relative to ABC stock and the demand for CBS stock __________.
rises; falls
rises; rises
falls; rises
falls; falls
You would be more willing to buy AT&T bonds (holding everything else constant) if
your wealth has decreased.
interest rates are expected to rise.
the brokerage commissions on bond sales become cheaper
you expect diamonds to appreciate in value.
____________________ are financial intermediaries that acquire funds by selling shares to many individuals and using the proceeds to purchase diversified portfolios of stocks and bonds.
Investment banks
Mutual funds
Finance companies
Credit unions
A liquid asset is
difficult to resell.
always sold in an over-the-counter market.
an asset that can easily and quickly be sold to raise cash.
a share of an ocean resort.
____________________ is used to make purchases while __________ is the total collection of pieces of property that serve to store value.
Money; wealth
Money; income
Wealth; income
Income; money
The components of the U.S. M1 money supply are demand and checkable deposits plus
currency.
currency plus savings deposits.
currency plus travelers checks plus money market deposits.
currency plus travelers checks.
An important feature of money market mutual fund shares is
deposit insurance.
claims on shares of corporate stock.
the ability to write checks against shareholdings.
the ability to borrow against shareholdings.
The return on a 5 percent coupon bond that initially sells for $1,000 and sells for $950 next year is
5 percent.
- 5 percent.
- 10 percent.
0 percent.
A coupon bond that has no maturity date and no repayment of principal is called a
cabinet.
Treasury bill.
Treasury note.
consol.
Although the dominance of __________ over __________ is clear in all countries, the relative importance of bond versus stock markets differs widely.
government agencies; financial intermediaries
financial intermediaries; government agencies
financial intermediaries; securities markets
government agencies; securities markets
Compared to an economy that uses a medium of exchange, in a barter economy
liquidity costs are lower.
transaction costs are higher.
liquidity costs are higher.
transaction costs are lower.
If an individual moves money from a small -denomination time deposit to a demand deposit account,
M1 increases and M2 decreases.
M1 stays the same and M2 stays the same.
M1 stays the same and M2 increases.
M1 increases and M2 stays the same.
Which of the following statements about financial markets and securities is true?
A debt instrument is intermediate term if its maturity is ten years or longer.
A bond is a long-term security that promises to make periodic payments called dividends to the firmʹs residual claimants.
A debt instrument is intermediate term if its maturity is less than one year.
The maturity of a debt instrument is the number of years (term) to that instrumentʹs expiration date.
Which of the following can be described as involving direct finance?
People buy shares in a mutual fund.
A corporation buys a short-term corporate security in a secondary market.
People buy shares of common stock in the primary markets.
A corporation takes out loans from a bank.
The yield to maturity for a perpetuity is a useful approximation for the yield to maturity on long-term coupon bonds. It is called the __________ when approximating the yield for a coupon bond.
star yield
future yield
discount yield
current yield
If a $5,000 face-value discount bond maturing in one year is selling for $5,000, then its yield to maturity is
0 percent.
10 percent.
20 percent.
5 percent.
If stock prices are expected to drop dramatically, then, other things equal, the demand for stocks will __________ and that of Treasury bills will __________.
increase; increase
decrease; increase
decrease; decrease
increase; decrease
Everything else held constant, a decrease in wealth
reduces the demand for silver.
increases the demand for bonds.
increases the demand for gold.
increases the demand for stocks.
When an economy grows out of a recession, normally the demand for bonds __________ and the supply of bonds __________, everything else held constant.
decreases; decreases
increases; decreases
increases; increases
decreases; increases
Everything else held constant, if the expected return on US Treasury bonds falls from 8 to 7 percent and the expected return on corporate bonds falls from 10 to 8 percent, then the expected return of corporate bonds ____________________ relative to US Treasury bonds and the demand for corporate bonds __________.
falls; falls
falls; rises
rises; rises
rises; falls
An increase in an assetʹs expected return relative to that of an alternative asset, holding everything else constant, __________ the quantity demanded of the asset.
decreases
has no effect on
increases
erases
Everything else held constant, an increase in the liquidity of bonds results in a __________ in demand for bonds and the demand curve shifts to the __________.
rise; right
rise; left
fall; left
fall; right
An important function of secondary markets is to
raise funds for corporations through the sale of securities.
create a market for newly constructed houses.
make it easier for governments to raise taxes
make it easier to sell financial instruments to raise funds
The British Bankerʹs Association average of interbank rates for dollar deposits in the London market is called the
prime rate.
Libor rate.
federal funds rate.
Treasury Bill rate.
An equal increase in all bond interest rates
decreases the return to all bond maturities by an equal amount.
decreases long-term bond returns more than short-term bond returns.
increases the return to all bond maturities by an equal amount
has no effect on the returns to bonds.
Which of the following $5,000 face-value securities has the highest to maturity?
A 6 percent coupon bond selling for $5,500
A 6 percent coupon bond selling for $5,000
A 12 percent coupon bond selling for $4,500
A 10 percent coupon bond selling for $5,000
There is a __________ association between inflation and the growth rate of money __________.
negative; supply
positive; demand
positive; supply
negative; demand
A financial crisis is
not possible in the modern financial environment
a feature of developing economies only
typically followed by an economic boom
a major disruption in the financial markets
The primary assets of a finance company are
municipal bonds.
mortgages.
corporate stocks and bonds.
consumer and business loans.
The simple deposit multiplier can be expressed as the ratio of the
change in reserves in the banking system divided by the change in deposits.
change in deposits divided by the change in reserves in the banking system.
change in deposits divided by the required reserve ratio.
required reserve ratio divided by the change in reserves in the banking system.
If reserves in the banking system increase by $100, then checkable deposits will increase by $1000 in the simple model of deposit creation when the required reserve ratio is
0.10
0.01
0.20
0.05
Equity contracts
have the advantage over debt contracts of a lower costly state verification.
are not subject to the moral hazard problem
are claims to a share in the profits and assets of a business
are used much more frequently to raise capital than are debt contracts.
One financial intermediary in our financial structure that helps to reduce the moral hazard from arising from the principal-agent problem is the
savings and loan association
money market mutual fund
pawn broker.
venture capital firm.
