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

The high quality of commercial paper results in:

What is the discount rate (DR) and the investment return (IR) on the following commercial notes?

Contemporaneous reserve accounting:

Non-bank thrift institutions that offer transaction accounts must keep reserve balances at the Federal Reserve banks.

The majority of federal funds transactions are overnight loans.

Money market CDs must be negotiable instruments with minimum denominations of $100,000.

A primary uses of the bankers acceptances to finance the purchase of internationally traded goods while those goods are in transit.

The commercial paper market all but dried up during the recent credit crisis of 2007-2009.

One-year T-bills are usually auctioned on a different schedule than 13-week and 26-week bills.

There has recently been a lot of criticism over the operation of the U.S. mortgage market.

The form of commercial paper in which loans or credit receivables are pooled into packages and then paper is issued as claims against that pool is known as:

Negotiable CDs, by attracting funds out of expensive checking accounts, help to lower the average cost of bank funds.

Which of the following statements regarding Fannie and Freddie, government-sponsored agencies, is/are true?

Why are acceptances not as widely used inside the United States as they are in international markets?

Asian CDs normally trade in $10,000 units like U.S. T-bills.

Contemporaneous reserve accounting has replaced lagged reserve accounting as a means of calculating deposit reserves nowadays in most large U.S. banks.

The period of time over which a bank must hold its required amount of legal reserves is known as the reserve computation period.

The following are among uses of funds for securities dealers:

Federal agencies active in the financial markets are usually set up to aid so-called disadvantaged sectors of the economy. Please give some examples of disadvantaged sectors.

With the lagged reserve accounting system there is a 60-day lag between the reserve computation and reserve maintenance periods for non personal time deposits and other non transaction liabilities.