Question 1

Among marketable government securities, the largest dollar volume is in the form of

Accepted Answer

A)  Treasury bonds. 
B)  Treasury notes. 
C)  Treasury bills. 
D)  federal funds. 
A)  Treasury bonds. 
B)  Treasury notes. 
C)  Treasury bills. 
D)  federal funds.

Question 2

Trading in collateralized mortgage obligations (CMOs)takes place in the __________ market between __________.

Accepted Answer

A)  primary; specialists 
B)  organized exchange; dealers 
C)  over-the-counter; dealers 
D)  primary; Ginnie Mae and Freddie Mac 
A)  primary; specialists 
B)  organized exchange; dealers 
C)  over-the-counter; dealers 
D)  primary; Ginnie Mae and Freddie Mac

Question 3

According to economic theory, a rising money supply influences stock prices through a(n)__________ in the __________ stock.

Accepted Answer

A)  increase; demand for 
B)  decrease; demand for 
C)  increase; supply of 
D)  decrease; supply of 
A)  increase; demand for 
B)  decrease; demand for 
C)  increase; supply of 
D)  decrease; supply of

Question 4

A newly-issued eighteen-year Treasury security can be stripped into __________ separate zero coupon securities.

Accepted Answer

A)  two 
B)  eighteen 
C)  thirty-seven 
D)  seventy-three 
A)  two 
B)  eighteen 
C)  thirty-seven 
D)  seventy-three

Question 5

The difference in the selling and purchase prices of government securities in a typical overnight repurchase agreement is set to reflect

Accepted Answer

A)  the difference in the auction price of the securities and their current market price. 
B)  the overnight cost of funds. 
C)  LIBOR. 
D)  the discount on Treasury bills. 
A)  the difference in the auction price of the securities and their current market price. 
B)  the overnight cost of funds. 
C)  LIBOR. 
D)  the discount on Treasury bills.

Question 6

The Treasury bill auction is over when the market reaches the

Accepted Answer

A)  highest bid. 
B)  stop-out price. 
C)  discount price. 
D)  optimal price. 
A)  highest bid. 
B)  stop-out price. 
C)  discount price. 
D)  optimal price.

Question 7

Most government securities transactions take place in the

Accepted Answer

A)  futures market. 
B)  commodities market. 
C)  over-the-counter dealer market. 
D)  New York securities market. 
A)  futures market. 
B)  commodities market. 
C)  over-the-counter dealer market. 
D)  New York securities market.

Question 8

Empirical evidence reveals a(n)__________ relationship between money and stock prices.

Accepted Answer

A)  positive and consistent 
B)  negative and consistent 
C)  completely independent 
D)  inconsistent 
A)  positive and consistent 
B)  negative and consistent 
C)  completely independent 
D)  inconsistent

Question 9

The Eurodollar market is an alternative way for __________ to lend or borrow.

Accepted Answer

A)  governments 
B)  corporations 
C)  banks 
D)  pension plans 
A)  governments 
B)  corporations 
C)  banks 
D)  pension plans

Question 10

A 91-day $10,000 Treasury bill is selling for $9,000. The bill's yield on a discount basis is __________ percent.

Accepted Answer

A)  3.36 
B)  3.96 
C)  7.91 
D)  10.0 
A)  3.36 
B)  3.96 
C)  7.91 
D)  10.0

Question 11

The main reason for the rising market value of corporate stock is

Accepted Answer

A)  falling interest rates. 
B)  changes in tax laws. 
C)  increases in the prices of existing stock. 
D)  the increased supply of new stock. 
A)  falling interest rates. 
B)  changes in tax laws. 
C)  increases in the prices of existing stock. 
D)  the increased supply of new stock.

Question 12

Commercial paper is most commonly issued with a maturity of __________ days.

Accepted Answer

A)  5 
B)  10 
C)  30 
D)  270 
A)  5 
B)  10 
C)  30 
D)  270

Question 13

Currently challenging Treasury bills as the centerpiece of the money market is (are)

Accepted Answer

A)  federal funds. 
B)  Eurodollars. 
C)  commercial paper. 
D)  negotiable CDs. 
A)  federal funds. 
B)  Eurodollars. 
C)  commercial paper. 
D)  negotiable CDs.

Question 14

A "Jumbo" CD is one in excess of

Accepted Answer

A)  $1,000. 
B)  $10,000. 
C)  $50,000. 
D)  $100,000. 
A)  $1,000. 
B)  $10,000. 
C)  $50,000. 
D)  $100,000.

Question 15

About what percentage of marketable national debt is held by foreigners?

Accepted Answer

A)  5 percent 
B)  15 percent 
C)  25 percent 
D)  50 percent 
A)  5 percent 
B)  15 percent 
C)  25 percent 
D)  50 percent

Question 16

An important market for overnight borrowing and lending is the

Accepted Answer

A)  commercial paper market. 
B)  repo market. 
C)  Treasury bill market. 
D)  Treasury bond market. 
A)  commercial paper market. 
B)  repo market. 
C)  Treasury bill market. 
D)  Treasury bond market.

Question 17

A good purchase for an investor seeking a high degree of liquidity with minimal market risk would be a U.S.

Accepted Answer

A)  Treasury bill. 
B)  Treasury bond. 
C)  Treasury note. 
D)  savings bond. 
A)  Treasury bill. 
B)  Treasury bond. 
C)  Treasury note. 
D)  savings bond.

Question 18

__________ bonds are municipal bonds that are backed by the general taxing power of the state or local government.

Accepted Answer

A)  General obligation 
B)  Revenue 
C)  Tax-anticipation 
D)  Bond-anticipation 
A)  General obligation 
B)  Revenue 
C)  Tax-anticipation 
D)  Bond-anticipation

Question 19

Compared with other bonds, convertible bonds usually have

Accepted Answer

A)  less liquidity. 
B)  a higher price. 
C)  a higher yield. 
D)  low tax payments. 
A)  less liquidity. 
B)  a higher price. 
C)  a higher yield. 
D)  low tax payments.

Question 20

Drexel Burnham Lambert pioneered the widespread issuance of

Accepted Answer

A)  junk bonds. 
B)  commercial paper. 
C)  callable bonds. 
D)  convertible bonds. 
A)  junk bonds. 
B)  commercial paper. 
C)  callable bonds. 
D)  convertible bonds.

Exam 8: Money and Capital Markets

Among marketable government securities, the largest dollar volume is in the form of

Trading in collateralized mortgage obligations (CMOs)takes place in the __________ market between __________.

According to economic theory, a rising money supply influences stock prices through a(n)__________ in the __________ stock.

A newly-issued eighteen-year Treasury security can be stripped into __________ separate zero coupon securities.

The difference in the selling and purchase prices of government securities in a typical overnight repurchase agreement is set to reflect

The Treasury bill auction is over when the market reaches the

Most government securities transactions take place in the

Empirical evidence reveals a(n)__________ relationship between money and stock prices.

The Eurodollar market is an alternative way for __________ to lend or borrow.

A 91-day $10,000 Treasury bill is selling for $9,000. The bill's yield on a discount basis is __________ percent.

The main reason for the rising market value of corporate stock is

Commercial paper is most commonly issued with a maturity of __________ days.

Currently challenging Treasury bills as the centerpiece of the money market is (are)

A "Jumbo" CD is one in excess of

About what percentage of marketable national debt is held by foreigners?

An important market for overnight borrowing and lending is the

A good purchase for an investor seeking a high degree of liquidity with minimal market risk would be a U.S.

__________ bonds are municipal bonds that are backed by the general taxing power of the state or local government.

Compared with other bonds, convertible bonds usually have

Drexel Burnham Lambert pioneered the widespread issuance of

Introducing Money, Banking, and Financial Markets

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

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

Trading in collateralized mortgage obligations (CMOs)takes place in the market between .

According to economic theory, a rising money supply influences stock prices through a(n) in the stock.