Question 1

If the Fed changes discount policies it may affect the supply of loanable funds.

Accepted Answer

A) True 
 B)False

Question 2

Securities that may be bought and sold through the usual market channels are called:

Accepted Answer

A) Treasury bonds 
B) Treasury notes 
C) Treasury bills 
D) Marketable government securities 
E) none of the above 
A) Treasury bonds 
B) Treasury notes 
C) Treasury bills 
D) Marketable government securities 
E) none of the above

Question 3

Paper money popularly called greenbacks was issued by the U.S.government to help finance which of the following wars?

Accepted Answer

A) Civil War 
B) World War I 
C) Revolutionary War 
D) Spanish-American War 
A) Civil War 
B) World War I 
C) Revolutionary War 
D) Spanish-American War

Question 4

Treasury notes are intermediate-term Federal debt obligations.

Accepted Answer

A) True 
 B)False

Question 5

The liquidity preference theory holds that securities of different maturities are not perfect substitutes for each other.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not considered to be a basic theory used to explain the term structure of interest rates?

Accepted Answer

A) expectations theory 
B) loanable funds theory 
C) liquidity premium theory 
D) market segmentation theory 
E) all of the above are theories used to explain the term structure of interest rates. 
A) expectations theory 
B) loanable funds theory 
C) liquidity premium theory 
D) market segmentation theory 
E) all of the above are theories used to explain the term structure of interest rates.

Question 7

When referring to an "upward sloping" yield curve,interest rates:

Accepted Answer

A) are flat across all maturities 
B) decrease as maturity increases 
C) increase as maturity decreases 
D) increase as maturity increases 
A) are flat across all maturities 
B) decrease as maturity increases 
C) increase as maturity decreases 
D) increase as maturity increases

Question 8

In response to the financial crisis of 2007-2009,the yield spread between Aaa corporate bonds and treasury bonds:

Accepted Answer

A) widened 
B) narrowed 
C) remained the same 
D) none of the above 
A) widened 
B) narrowed 
C) remained the same 
D) none of the above

Question 9

The liquidity premium is compensation for those financial debt instruments that cannot be easily converted to cash at prices close to their estimated fair market values.

Accepted Answer

A) True 
 B)False

Question 10

Economists have estimated that the real rate of interest in the United States and other countries has averaged in the ________________ range in recent years.

Accepted Answer

A) 2 to 4 percent 
B) 3 to 5 percent 
C) 4 to 6 percent 
D) 5 to 7 percent 
E) none of the above 
A) 2 to 4 percent 
B) 3 to 5 percent 
C) 4 to 6 percent 
D) 5 to 7 percent 
E) none of the above

Question 11

A "shock" may be defined as an unanticipated change that will cause the demand for,or supply of loanable funds to change.

Accepted Answer

A) True 
 B)False

Question 12

If the nominal rate of interest is 10%,the risk-free rate of interest is 3%,the default premium is 3%,the liquidity premium is 0.5%,and the maturity premium is 1.5%,then the inflation premium must be ______.

Accepted Answer

A) 2.0% 
B) 2.5% 
C) 3.0% 
D) none of the above 
A) 2.0% 
B) 2.5% 
C) 3.0% 
D) none of the above

Question 13

A decrease in the supply for loanable funds accompanied by a decrease in demand will cause interest rates to:

Accepted Answer

A) increase 
B) decrease 
C) stay the same 
D) not enough information to tell 
A) increase 
B) decrease 
C) stay the same 
D) not enough information to tell

Question 14

If you expect the inflation premium to be 2%,the default risk premium to be 1% and the real interest rate to be 4%,what interest would you expect to observe in the marketplace under the simplest form of market interest rates?

Accepted Answer

A) 4% 
B) 7% 
C) 2% 
D) 1% 
A) 4% 
B) 7% 
C) 2% 
D) 1%

Question 15

In reaction to the then developing 2007-2009 financial crisis,short-term interest rates _______ sharply and were ______ than ______ percent by October,2008.

Accepted Answer

A) declined,less,0.5 
B) rose,more,10 
C) declined,more,6. 
D) declined,less,20 
E) none of the above 
A) declined,less,0.5 
B) rose,more,10 
C) declined,more,6. 
D) declined,less,20 
E) none of the above

Question 16

The loanable funds theory states that interest rates are a function of the supply of and demand for loanable funds.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is most correct?

Accepted Answer

A) Inverse refunding is one of the new debt-management techniques used to extend the average maturity of the marketable debt without disturbing the financial markets and occurs when the Treasury offers the owners of a given issue the opportunity to exchange their holdings well in advance of the holdings' regular maturity for new securities of longer maturity. 
B) Reverse refunding is one of the new debt-management techniques used to extend the average maturity of the marketable debt without disturbing the financial markets and occurs when the Treasury offers the owners of a given issue the opportunity to exchange their holdings well in advance of the holdings' regular maturity for new securities of longer maturity. 
C) Extended refunding is one of the new debt-management techniques used to extend the average maturity of the marketable debt without disturbing the financial markets and occurs when the Treasury offers the owners of a given issue the opportunity to exchange their holdings well in advance of the holdings' regular maturity for new securities of longer maturity. 
D) Laddered refunding is one of the new debt-management techniques used to extend the average maturity of the marketable debt without disturbing the financial markets and occurs when the Treasury offers the owners of a given issue the opportunity to exchange their holdings well in advance of the holdings' regular maturity for new securities of longer maturity. 
E) none of the above 
A) Inverse refunding is one of the new debt-management techniques used to extend the average maturity of the marketable debt without disturbing the financial markets and occurs when the Treasury offers the owners of a given issue the opportunity to exchange their holdings well in advance of the holdings' regular maturity for new securities of longer maturity. 
B) Reverse refunding is one of the new debt-management techniques used to extend the average maturity of the marketable debt without disturbing the financial markets and occurs when the Treasury offers the owners of a given issue the opportunity to exchange their holdings well in advance of the holdings' regular maturity for new securities of longer maturity. 
C) Extended refunding is one of the new debt-management techniques used to extend the average maturity of the marketable debt without disturbing the financial markets and occurs when the Treasury offers the owners of a given issue the opportunity to exchange their holdings well in advance of the holdings' regular maturity for new securities of longer maturity. 
D) Laddered refunding is one of the new debt-management techniques used to extend the average maturity of the marketable debt without disturbing the financial markets and occurs when the Treasury offers the owners of a given issue the opportunity to exchange their holdings well in advance of the holdings' regular maturity for new securities of longer maturity. 
E) none of the above

Question 18

Which of the following is NOT a determinant of market interest rates?

Accepted Answer

A) the inflation premium 
B) the maturity risk premium 
C) the volatility risk premium 
D) the real rate of interest 
A) the inflation premium 
B) the maturity risk premium 
C) the volatility risk premium 
D) the real rate of interest

Question 19

Economists have estimated that the inflation rate in the United States and other countries has averaged in the ________________ range in recent years.

Accepted Answer

A) 2 to 4 percent 
B) 3 to 5 percent 
C) 4 to 6 percent 
D) 5 to 7 percent 
E) none of the above 
A) 2 to 4 percent 
B) 3 to 5 percent 
C) 4 to 6 percent 
D) 5 to 7 percent 
E) none of the above

Question 20

Federal obligations usually issued for maturities of five up to one year are called:

Accepted Answer

A) Treasury bonds 
B) Treasury notes 
C) Treasury bills 
D) Agency issues 
E) none of the above 
A) Treasury bonds 
B) Treasury notes 
C) Treasury bills 
D) Agency issues 
E) none of the above

If the Fed changes discount policies it may affect the supply of loanable funds.

Securities that may be bought and sold through the usual market channels are called:

Paper money popularly called greenbacks was issued by the U.S.government to help finance which of the following wars?

Treasury notes are intermediate-term Federal debt obligations.

The liquidity preference theory holds that securities of different maturities are not perfect substitutes for each other.

Which of the following is not considered to be a basic theory used to explain the term structure of interest rates?

When referring to an "upward sloping" yield curve,interest rates:

In response to the financial crisis of 2007-2009,the yield spread between Aaa corporate bonds and treasury bonds:

The liquidity premium is compensation for those financial debt instruments that cannot be easily converted to cash at prices close to their estimated fair market values.

Economists have estimated that the real rate of interest in the United States and other countries has averaged in the ________________ range in recent years.

A "shock" may be defined as an unanticipated change that will cause the demand for,or supply of loanable funds to change.

If the nominal rate of interest is 10%,the risk-free rate of interest is 3%,the default premium is 3%,the liquidity premium is 0.5%,and the maturity premium is 1.5%,then the inflation premium must be ______.

A decrease in the supply for loanable funds accompanied by a decrease in demand will cause interest rates to:

If you expect the inflation premium to be 2%,the default risk premium to be 1% and the real interest rate to be 4%,what interest would you expect to observe in the marketplace under the simplest form of market interest rates?

In reaction to the then developing 2007-2009 financial crisis,short-term interest rates _ sharply and were than __ percent by October,2008.

The loanable funds theory states that interest rates are a function of the supply of and demand for loanable funds.

Which of the following statements is most correct?

Which of the following is NOT a determinant of market interest rates?

Economists have estimated that the inflation rate in the United States and other countries has averaged in the ________________ range in recent years.

Federal obligations usually issued for maturities of five up to one year are called:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 8: Interest Rates

If the Fed changes discount policies it may affect the supply of loanable funds.

Securities that may be bought and sold through the usual market channels are called:

Paper money popularly called greenbacks was issued by the U.S.government to help finance which of the following wars?

Treasury notes are intermediate-term Federal debt obligations.

The liquidity preference theory holds that securities of different maturities are not perfect substitutes for each other.

Which of the following is not considered to be a basic theory used to explain the term structure of interest rates?

When referring to an "upward sloping" yield curve,interest rates:

In response to the financial crisis of 2007-2009,the yield spread between Aaa corporate bonds and treasury bonds:

The liquidity premium is compensation for those financial debt instruments that cannot be easily converted to cash at prices close to their estimated fair market values.

Economists have estimated that the real rate of interest in the United States and other countries has averaged in the ________________ range in recent years.

A "shock" may be defined as an unanticipated change that will cause the demand for,or supply of loanable funds to change.

If the nominal rate of interest is 10%,the risk-free rate of interest is 3%,the default premium is 3%,the liquidity premium is 0.5%,and the maturity premium is 1.5%,then the inflation premium must be ______.

A decrease in the supply for loanable funds accompanied by a decrease in demand will cause interest rates to:

If you expect the inflation premium to be 2%,the default risk premium to be 1% and the real interest rate to be 4%,what interest would you expect to observe in the marketplace under the simplest form of market interest rates?

In reaction to the then developing 2007-2009 financial crisis,short-term interest rates _______ sharply and were ______ than ______ percent by October,2008.

The loanable funds theory states that interest rates are a function of the supply of and demand for loanable funds.

Which of the following statements is most correct?

Which of the following is NOT a determinant of market interest rates?

Economists have estimated that the inflation rate in the United States and other countries has averaged in the ________________ range in recent years.

Federal obligations usually issued for maturities of five up to one year are called:

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

In reaction to the then developing 2007-2009 financial crisis,short-term interest rates _ sharply and were than __ percent by October,2008.