Question 1

Through maturity transformation

Accepted Answer

A)  Commercial banks address information asymmetries 
B)  Commercial banks issue payment media 
C)  Commercial banks are exposed to risk of higher interest rates 
D)  None of the above 
A)  Commercial banks address information asymmetries 
B)  Commercial banks issue payment media 
C)  Commercial banks are exposed to risk of higher interest rates 
D)  None of the above C

Question 2

Central banks no longer use money stock targets to achieve macroeconomic goals because

Accepted Answer

A)  The demand for money has proven to be unstable and unpredictable 
B)  The money stock is no longer fashionable 
C)  Fiscal policy has taken center stage 
D)  Central banks still rely on the money stock 
A)  The demand for money has proven to be unstable and unpredictable 
B)  The money stock is no longer fashionable 
C)  Fiscal policy has taken center stage 
D)  Central banks still rely on the money stock A

Question 3

A write-down of assets by a commercial bank results in

Accepted Answer

A)  Fewer liabilities 
B)  Greater net worth 
C)  A loss of net worth 
D)  None of the above 
A)  Fewer liabilities 
B)  Greater net worth 
C)  A loss of net worth 
D)  None of the above C

Question 4

The velocity of money refers to

Accepted Answer

A)  The speed by which payments are made through a clearinghouse 
B)  The role of transaction deposits in funding bank assets 
C)  Profits from issuing money 
D)  The number of times per year that the money stock turns over in making payment for final goods and services 
A)  The speed by which payments are made through a clearinghouse 
B)  The role of transaction deposits in funding bank assets 
C)  Profits from issuing money 
D)  The number of times per year that the money stock turns over in making payment for final goods and services

Question 5

Under a gold standard, equilibrium between money demand and money supply is achieved by

Accepted Answer

A)  The money supply's adjusting to money demand 
B)  The economy's (and thus money demand's) adjusting to the supply of money determined by the amount of gold in the economy 
C)  Equilibrium between money demand and money supply is never achieved 
D)  Intervention by international monetary institutions 
A)  The money supply's adjusting to money demand 
B)  The economy's (and thus money demand's) adjusting to the supply of money determined by the amount of gold in the economy 
C)  Equilibrium between money demand and money supply is never achieved 
D)  Intervention by international monetary institutions

Question 6

Seignorage is

Accepted Answer

A)  The license required to open a commercial bank 
B)  Another term for the intermediation function 
C)  Profits from issuing money 
D)  The costs of running a commercial bank 
A)  The license required to open a commercial bank 
B)  Another term for the intermediation function 
C)  Profits from issuing money 
D)  The costs of running a commercial bank

Question 7

A federal safety net is extended to commercial banks because

Accepted Answer

A)  They hold a lot of the retail public's assets 
B)  They pose systemic risk to the financial system and the economy 
C)  They play a pivotal role in the payment system 
D)  All of the above 
A)  They hold a lot of the retail public's assets 
B)  They pose systemic risk to the financial system and the economy 
C)  They play a pivotal role in the payment system 
D)  All of the above

Question 8

Commercial banks

Accepted Answer

A)  Address information asymmetries 
B)  Provide liquidity to the economy 
C)  Transform maturities 
D)  All of the above 
A)  Address information asymmetries 
B)  Provide liquidity to the economy 
C)  Transform maturities 
D)  All of the above

Question 9

The primary function of commercial banks is to

Accepted Answer

A)  Underwrite securities 
B)  Receive core deposits and make loans 
C)  Broker transactions for customers 
D)  Acquire long-term assets 
A)  Underwrite securities 
B)  Receive core deposits and make loans 
C)  Broker transactions for customers 
D)  Acquire long-term assets

Question 10

The payment system connecting commercial banks requires which of the following to be able to make a payment between customers using different banks?

Accepted Answer

A)  An ECN 
B)  A clearinghouse, including an ACH 
C)  An OTC 
D)  All of the above 
A)  An ECN 
B)  A clearinghouse, including an ACH 
C)  An OTC 
D)  All of the above

Question 11

Clearinghouses are used

Accepted Answer

A)  In conducting the business of ECNs 
B)  By specialist systems in executing trades 
C)  In the process of making payments using transaction deposits where more than one bank is involved 
D)  In routing orders to over-the-counter markets 
A)  In conducting the business of ECNs 
B)  By specialist systems in executing trades 
C)  In the process of making payments using transaction deposits where more than one bank is involved 
D)  In routing orders to over-the-counter markets

Question 12

Predecessors of fractional reserve commercial banks were

Accepted Answer

A)  Private insurers 
B)  Goldsmiths 
C)  Underwriters 
D)  Undertakers 
A)  Private insurers 
B)  Goldsmiths 
C)  Underwriters 
D)  Undertakers

Through maturity transformation

Central banks no longer use money stock targets to achieve macroeconomic goals because

A write-down of assets by a commercial bank results in

The velocity of money refers to

Under a gold standard, equilibrium between money demand and money supply is achieved by

Seignorage is

A federal safety net is extended to commercial banks because

Commercial banks

The primary function of commercial banks is to

The payment system connecting commercial banks requires which of the following to be able to make a payment between customers using different banks?

Clearinghouses are used

Predecessors of fractional reserve commercial banks were

Introduction

Overview of the Financial System

Factors Affecting Yields

Principles of Portfolio Selection and Efficient Markets

The Money Market

The Bond Market

Securitization

The Mortgage Market

The Equity Market

Central Banking and the Federal Reserve

Monetary Policy: The Basics

Monetary Policy: Challenges Faced by Policymakers

Financial Crises

The Foreign Exchange Market and Exchange Rate Regimes

Depository Institutions

The Pricing of Financial Assets

Mutual Funds

Hedge, Venture Capital, and Private Equity Funds

Large Institutional Investors

Filters

Exam 3: The Special Role of Commercial Banks

Through maturity transformation

Central banks no longer use money stock targets to achieve macroeconomic goals because

A write-down of assets by a commercial bank results in

The velocity of money refers to

Under a gold standard, equilibrium between money demand and money supply is achieved by

Seignorage is

A federal safety net is extended to commercial banks because

Commercial banks

The primary function of commercial banks is to

The payment system connecting commercial banks requires which of the following to be able to make a payment between customers using different banks?

Clearinghouses are used

Predecessors of fractional reserve commercial banks were

Introduction

Overview of the Financial System

Factors Affecting Yields

Principles of Portfolio Selection and Efficient Markets

The Money Market

The Bond Market

Securitization

The Mortgage Market

The Equity Market

Central Banking and the Federal Reserve

Monetary Policy: The Basics

Monetary Policy: Challenges Faced by Policymakers

Financial Crises

The Foreign Exchange Market and Exchange Rate Regimes

Depository Institutions

The Pricing of Financial Assets

Mutual Funds

Hedge, Venture Capital, and Private Equity Funds

Large Institutional Investors

Filters