Question 1

Which of the following is least likely to purchase a large certificate of deposit (over $100,000)?

Accepted Answer

A)  Money market mutual funds 
B)  Individual investors 
C)  Large corporations 
D)  Institutional investors 
A)  Money market mutual funds 
B)  Individual investors 
C)  Large corporations 
D)  Institutional investors B

Question 2

Institutional traders do not typically engage in which of the following activities?

Accepted Answer

A)  Quote bids and offers for securities on a continuous basis 
B)  Accommodate incoming purchase and sale orders from financial institutions 
C)  Alter quotes in response to changing market conditions 
D)  Act as stockbrokers 
A)  Quote bids and offers for securities on a continuous basis 
B)  Accommodate incoming purchase and sale orders from financial institutions 
C)  Alter quotes in response to changing market conditions 
D)  Act as stockbrokers D

Question 3

Which of the following types of financial institutions is most likely to be a market maker in mortgage-backed securities?

Accepted Answer

A)  A commercial bank 
B)  An investment bank 
C)  A savings and loan association 
D)  A credit union 
A)  A commercial bank 
B)  An investment bank 
C)  A savings and loan association 
D)  A credit union C

Question 4

Which of the following is not a reference to "banking" in "money, banking, and financial markets?"

Accepted Answer

A)  Commercial banks 
B)  Savings banks 
C)  Financial intermediaries 
D)  Markets in which financial assets can be traded 
A)  Commercial banks 
B)  Savings banks 
C)  Financial intermediaries 
D)  Markets in which financial assets can be traded

Question 5

The primary job of a financial economist within the fixed-income division of a major financial institution is to

Accepted Answer

A)  conduct statistical analyses. 
B)  provide instant analysis to traders and salespeople. 
C)  alert traders and salespeople of the expected activities of the Federal Reserve. 
D)  construct concrete strategies for institutional investors based on expected interest rate movements. 
A)  conduct statistical analyses. 
B)  provide instant analysis to traders and salespeople. 
C)  alert traders and salespeople of the expected activities of the Federal Reserve. 
D)  construct concrete strategies for institutional investors based on expected interest rate movements.

Question 6

The prepayment uncertainty associated with __________ makes the maturity of these securities uncertain.

Accepted Answer

A)  corporate bonds 
B)  corporate stocks 
C)  GNMA pass-through securities and other mortgage-related securities 
D)  certificates of deposit 
A)  corporate bonds 
B)  corporate stocks 
C)  GNMA pass-through securities and other mortgage-related securities 
D)  certificates of deposit

Question 7

An insurance company economist would

Accepted Answer

A)  forecast interest rates. 
B)  talk only to their direct superiors, but not to the institution's corporate customers. 
C)  not be concerned about the costs and benefits of some internal investment project. 
D)  have little use for statistical analysis. 
A)  forecast interest rates. 
B)  talk only to their direct superiors, but not to the institution's corporate customers. 
C)  not be concerned about the costs and benefits of some internal investment project. 
D)  have little use for statistical analysis.

Question 8

Which of the following statements is not true about money?

Accepted Answer

A)  Money is sometimes viewed as a lubricant that greases the wheels of economic activity. 
B)  Without money, some transactions would be unimaginably difficult. 
C)  Money influences the behavior of the economy as a whole. 
D)  All of the above are true. 
A)  Money is sometimes viewed as a lubricant that greases the wheels of economic activity. 
B)  Without money, some transactions would be unimaginably difficult. 
C)  Money influences the behavior of the economy as a whole. 
D)  All of the above are true.

Question 9

Which of the following entities does not have an extensive bank examination staff?

Accepted Answer

A)  Office of the Comptroller of the Currency 
B)  Federal Deposit Insurance Corporation 
C)  Federal Reserve 
D)  Securities and Exchange Commission 
A)  Office of the Comptroller of the Currency 
B)  Federal Deposit Insurance Corporation 
C)  Federal Reserve 
D)  Securities and Exchange Commission

Question 10

Retail CDs are most likely marketed by

Accepted Answer

A)  people who are comfortable with interest rate calculations. 
B)  people who are comfortable with movements in the term structure of interest rates. 
C)  people with strong interpersonal skills. 
D)  people who interpret monetary policy actions taken by the Federal Reserve. 
A)  people who are comfortable with interest rate calculations. 
B)  people who are comfortable with movements in the term structure of interest rates. 
C)  people with strong interpersonal skills. 
D)  people who interpret monetary policy actions taken by the Federal Reserve.

Question 11

__________ generate(s)prices whenever securities are bought or sold.

Accepted Answer

A)  Financial markets 
B)  Financial institutions 
C)  The Federal Reserve 
D)  The Securities and Exchange Commission 
A)  Financial markets 
B)  Financial institutions 
C)  The Federal Reserve 
D)  The Securities and Exchange Commission

Question 12

The central bank of the United States is the

Accepted Answer

A)  Federal Reserve. 
B)  Securities and Exchange Commission. 
C)  Federal Deposit Insurance Corporation. 
D)  Department of the Treasury. 
A)  Federal Reserve. 
B)  Securities and Exchange Commission. 
C)  Federal Deposit Insurance Corporation. 
D)  Department of the Treasury.

Question 13

The Federal Reserve

Accepted Answer

A)  is uninvolved with banks. 
B)  has little impact on overall economic activity. 
C)  directly influences the lending and deposit creation activities of banks. 
D)  issues mandates telling businesses how much to invest. 
A)  is uninvolved with banks. 
B)  has little impact on overall economic activity. 
C)  directly influences the lending and deposit creation activities of banks. 
D)  issues mandates telling businesses how much to invest.

Question 14

A salesperson does not

Accepted Answer

A)  monitor market conditions and alter quotes so he does not get stuck with an unwanted inventory. 
B)  try to uncover information about securities that institutional investors are most interested in. 
C)  provide information to traders about the sentiment within the investment community. 
D)  convince bank customers to buy securities that the bank has already acquired through the activities of its traders. 
A)  monitor market conditions and alter quotes so he does not get stuck with an unwanted inventory. 
B)  try to uncover information about securities that institutional investors are most interested in. 
C)  provide information to traders about the sentiment within the investment community. 
D)  convince bank customers to buy securities that the bank has already acquired through the activities of its traders.

Question 15

Jobs in the private financial sector focus on __________; jobs in the public sector with the Federal Reserve, the Federal Deposit Insurance Corporation, or state agencies focus on __________.

Accepted Answer

A)  profits; profits 
B)  safety; profits 
C)  profits; safety 
D)  safety; safety 
A)  profits; profits 
B)  safety; profits 
C)  profits; safety 
D)  safety; safety

Question 16

The definition of money does not refer to

Accepted Answer

A)  coins and currency. 
B)  the monetary economy. 
C)  unemployment. 
D)  a tool used by the central bank to influence aggregate economic activity. 
A)  coins and currency. 
B)  the monetary economy. 
C)  unemployment. 
D)  a tool used by the central bank to influence aggregate economic activity.

Question 17

Which of the following features is not associated with a commercial bank loan?

Accepted Answer

A)  Convertibility 
B)  Covenants 
C)  Collateral requirements 
D)  Guarantees 
A)  Convertibility 
B)  Covenants 
C)  Collateral requirements 
D)  Guarantees

Question 18

Account executives work for

Accepted Answer

A)  commercial banks. 
B)  securities firms. 
C)  thrift institutions. 
D)  corporations. 
A)  commercial banks. 
B)  securities firms. 
C)  thrift institutions. 
D)  corporations.

Question 19

A __________ will review a commercial bank's books to determine whether loans with delinquent payments impair a bank's capital.

Accepted Answer

A)  loan officer 
B)  bank examiner 
C)  broker 
D)  bank teller 
A)  loan officer 
B)  bank examiner 
C)  broker 
D)  bank teller

Question 20

Which of the following statements about banks is false?

Accepted Answer

A)  They play a critical role in the economy. 
B)  They provide a place where individuals and businesses can invest their funds to earn interest with a minimum of risk. 
C)  They make loans, and are therefore very different from other financial institutions like finance companies and insurance companies. 
D)  They indirectly issue money in the form of deposits. 
A)  They play a critical role in the economy. 
B)  They provide a place where individuals and businesses can invest their funds to earn interest with a minimum of risk. 
C)  They make loans, and are therefore very different from other financial institutions like finance companies and insurance companies. 
D)  They indirectly issue money in the form of deposits.

Exam 1: Introducing Money, Banking, and Financial Markets

Which of the following is least likely to purchase a large certificate of deposit (over $100,000)?

Institutional traders do not typically engage in which of the following activities?

Which of the following types of financial institutions is most likely to be a market maker in mortgage-backed securities?

Which of the following is not a reference to "banking" in "money, banking, and financial markets?"

The primary job of a financial economist within the fixed-income division of a major financial institution is to

The prepayment uncertainty associated with __________ makes the maturity of these securities uncertain.

An insurance company economist would

Which of the following statements is not true about money?

Which of the following entities does not have an extensive bank examination staff?

Retail CDs are most likely marketed by

__________ generate(s)prices whenever securities are bought or sold.

The central bank of the United States is the

The Federal Reserve

A salesperson does not

Jobs in the private financial sector focus on __________; jobs in the public sector with the Federal Reserve, the Federal Deposit Insurance Corporation, or state agencies focus on __________.

The definition of money does not refer to

Which of the following features is not associated with a commercial bank loan?

Account executives work for

A __________ will review a commercial bank's books to determine whether loans with delinquent payments impair a bank's capital.

Which of the following statements about banks is false?

The Role of Money in the Macroeconomy

Financial Instruments, Markets, and Institutions

Interest Rate Measurement and Behavior

The Term and Risk Structure of Interest Rates

The Structure and Performance of Securities Markets

The Pricing of Risky Financial Assets

Money and Capital Markets

Demystifying Derivatives

Understanding Foreign Exchange

The Nature of Financial Intermediation

Depository Financial Institutions

Nondepository Financial Institutions

Understanding Financial Contracts

The Regulation of Markets and Institutions

Financial System Design

Who's in Charge Here?

Bank Reserves and the Money Supply

The Instruments of Central Bankin

Understanding Movements in Bank Reserves

Monetary Policy Strategy

The Classical Foundations

The Keynesian Framework

The ISLM World

Money and Economic Stability in the ISLM World

An Aggregate Supply and Demand Perspective on Money and Economic Stability

Rational Expectations: Theory and Policy Implications

Empirical Evidence on the Effectiveness of Monetary Policy

Tying It All Together

Filters

Jobs in the private financial sector focus on ; jobs in the public sector with the Federal Reserve, the Federal Deposit Insurance Corporation, or state agencies focus on .