Question 1

LIBOR measures

Accepted Answer

A) the duration of fixed-rate assets. 
B) the vulnerability of a bank's net worth to interest rate risk. 
C) rates that international banks charge on dollar-denominated loans. 
D) the value of the dollar relative to the currencies of the major trading partners of the United States. 
A) the duration of fixed-rate assets. 
B) the vulnerability of a bank's net worth to interest rate risk. 
C) rates that international banks charge on dollar-denominated loans. 
D) the value of the dollar relative to the currencies of the major trading partners of the United States.

Question 2

Standby letters of credit

Accepted Answer

A) are a form of swaps. 
B) are a promise by a bank to lend the borrower funds to pay off its maturing commercial paper. 
C) are a promise by a large depositor to provide additional funds to a bank should the bank face an unexpectedly large deposit outflow. 
D) represent the unused balance on a bank credit card. 
A) are a form of swaps. 
B) are a promise by a bank to lend the borrower funds to pay off its maturing commercial paper. 
C) are a promise by a large depositor to provide additional funds to a bank should the bank face an unexpectedly large deposit outflow. 
D) represent the unused balance on a bank credit card.

Question 3

About what percentage of their financial wealth do households invest in banks?

Accepted Answer

A) 5% 
B) 13% 
C) 20% 
D) 50% 
A) 5% 
B) 13% 
C) 20% 
D) 50%

Question 4

Approximately how much in assets did U.S. banks hold in 2006?

Accepted Answer

A) $500 million 
B) $6.5 billion 
C) $8.3 trillion 
D) $50.7 trillion 
A) $500 million 
B) $6.5 billion 
C) $8.3 trillion 
D) $50.7 trillion

Question 5

Why are U.S. government securities referred to as a bank's secondary reserves?

Accepted Answer

A) Their current market value may count toward meeting a bank's legal reserve requirements. 
B) They are very liquid. 
C) Banks are legally required to hold a certain minimum amount of these securities. 
D) They are the same thing as vault cash. 
A) Their current market value may count toward meeting a bank's legal reserve requirements. 
B) They are very liquid. 
C) Banks are legally required to hold a certain minimum amount of these securities. 
D) They are the same thing as vault cash.

Question 6

Federal funds are

Accepted Answer

A) the tax revenues of the Federal government. 
B) loans by the Federal Reserve to banks. 
C) loans by banks to the Federal Reserve. 
D) unsecured loans between banks. 
A) the tax revenues of the Federal government. 
B) loans by the Federal Reserve to banks. 
C) loans by banks to the Federal Reserve. 
D) unsecured loans between banks.

Question 7

Excess reserves equal

Accepted Answer

A) total reserves less required reserves. 
B) required reserves less total reserves. 
C) total reserves plus required reserves. 
D) required reserves divided by total reserves. 
A) total reserves less required reserves. 
B) required reserves less total reserves. 
C) total reserves plus required reserves. 
D) required reserves divided by total reserves.

Question 8

Swaps are

Accepted Answer

A) collateral required on repurchase agreements. 
B) collateral required on loans in the federal funds market. 
C) required reserves minus excess reserves. 
D) agreements to sell the expected future return from one financial instrument for the expected future return from another. 
A) collateral required on repurchase agreements. 
B) collateral required on loans in the federal funds market. 
C) required reserves minus excess reserves. 
D) agreements to sell the expected future return from one financial instrument for the expected future return from another.

LIBOR measures

Standby letters of credit

About what percentage of their financial wealth do households invest in banks?

Approximately how much in assets did U.S. banks hold in 2006?

Why are U.S. government securities referred to as a bank's secondary reserves?

Federal funds are

Excess reserves equal

Swaps are

Introducing Money and the Financial System

Money and the Payments System

Overview of the Financial System

Interest Rates and Rates of Return

The Theory of Portfolio Allocation

Determining Market Interest Rates

Risk Structure and Term Structure of Interest Rates

The Foreign-Exchange Market and Exchange Rates

Derivative Securities and Derivative Markets

Information and Financial Market Efficiency

Reducing Transactions Costs and Information Costs

What Financial Institutions Do

The Banking Industry

Banking Regulation: Crisis and Response

Banking in the International Economy

The Money Supply Process

Changes in the Monetary Base

Organization of Central Banks

Monetary Policy Tools

The Conduct of Monetary Policy

The International Financial System and Monetary Policy

The Demand for Money

Linking the Financial System and the Economy: the Is-Lm-Fe Model

Aggregate Demand and Aggregate Supply

Money and Output in the Short Run

Information Problems and Channels for Monetary Policy

Inflation: Causes and Consequences

Filters

Exam 13: The Business of Banking

LIBOR measures

Standby letters of credit

About what percentage of their financial wealth do households invest in banks?

Approximately how much in assets did U.S. banks hold in 2006?

Why are U.S. government securities referred to as a bank's secondary reserves?

Federal funds are

Excess reserves equal

Swaps are

Introducing Money and the Financial System

Money and the Payments System

Overview of the Financial System

Interest Rates and Rates of Return

The Theory of Portfolio Allocation

Determining Market Interest Rates

Risk Structure and Term Structure of Interest Rates

The Foreign-Exchange Market and Exchange Rates

Derivative Securities and Derivative Markets

Information and Financial Market Efficiency

Reducing Transactions Costs and Information Costs

What Financial Institutions Do

The Banking Industry

Banking Regulation: Crisis and Response

Banking in the International Economy

The Money Supply Process

Changes in the Monetary Base

Organization of Central Banks

Monetary Policy Tools

The Conduct of Monetary Policy

The International Financial System and Monetary Policy

The Demand for Money

Linking the Financial System and the Economy: the Is-Lm-Fe Model

Aggregate Demand and Aggregate Supply

Money and Output in the Short Run

Information Problems and Channels for Monetary Policy

Inflation: Causes and Consequences

Filters