Exam 11: Exploring the Reserve Accounting System, Money Markets, and Financial Instruments

With the lagged reserve accounting system there is a 16-day lag between the reserve computation and reserve maintenance periods for non personal time deposits and other non transaction liabilities.

The most prominent example of non personal time deposits are business CDs.

Which of the following items are considered today a part of the federal funds market?

The strategy of varying rates offered on alternative sources of funds to gain a measure of control over incoming funds is known as:

The target account used by a bank's money manager to keep legal reserves at the level required by law is the vault-cash account.

A banker borrowing in the money market must consider not only current money-market interest rates, but expected future interest rates as well.

The item that is part of legal reserves whose daily average amount is figured over the same computation period as transaction deposits is:

The period of time over which a bank determines what its legal reserve requirement must be is known as the reserve maintenance period.

Negotiable CDs issued in the United States by foreign banks operating branches or agency offices in the U.S. are known as:

A buyer in the secondary CD market redeems the CD (at maturity) with the seller, irrespective of which financial institution is the issuer.

Most money market CDs have maturities of ____ months or less, according to the textbook.

The high quality of commercial paper results in comparatively high investment yields.

CDs in maximum denominations of $100,000 sold through security brokers are known as:

A primary use of the bankers acceptance is to:

All Eurodollar CDs carry fixed interest rates.

A commercial bank under Federal Reserve rules is not permitted to borrow more than half of its legal reserve requirements in the federal funds market.

A check drawn on a bank's reserve account at the Federal Reserve Bank in its district is payable immediately.

The secondary market for Japanese bank CDs is very large and active and today stretches around the world.

The federal funds interest rate tends to fall around holiday periods.

The Federal Reserve's monetary policy, can he be viewed it as either loose, a higher federal funds rate or tight, a lower federal funds rate.