Question 1

A $2 million jumbo CD is paying a quoted 3.55 percent interest rate on 180-day maturity CDs. How much money will you have at maturity if you invest in the CD?

Accepted Answer

A) $2,000,000 
B) $2,035,014 
C) $2,035,500 
D) $2,071,000 
E) $2,088,400 
A) $2,000,000 
B) $2,035,014 
C) $2,035,500 
D) $2,071,000 
E) $2,088,400

Question 2

In dollars outstanding in 2013,the largest money market security was

Accepted Answer

A) commercial paper. 
B) banker's acceptances. 
C) T-bills. 
D) Fed funds and repos. 
A) commercial paper. 
B) banker's acceptances. 
C) T-bills. 
D) Fed funds and repos.

Question 3

The bond equivalent yield times 365/360 is equal to the single payment yield.

Accepted Answer

A) True 
 B)False

Question 4

A dealer is quoting a $10,000 face 180-day T-bill quoted at 2.75 bid,2.65 ask. You could buy this bill at ______________ or sell it at _______________.

Accepted Answer

A) $9,869.23; $9864.36 
B) $9864.36; $9,869.23 
C) $9,867.50; $9,862.50 
D) $9,862.50; $9,867.50 
E) none of the options 
A) $9,869.23; $9864.36 
B) $9864.36; $9,869.23 
C) $9,867.50; $9,862.50 
D) $9,862.50; $9,867.50 
E) none of the options

Question 5

In the T-bill secondary market the ask yield will normally be less than the bid yield.

Accepted Answer

A) True 
 B)False

Question 6

A Chinese exporter sells $200,000 of toys to a French importer. The Chinese exporter requires the French importer to obtain a letter of credit. When the bank accepts the draft,the exporter discounts the 90-day note at a 4 percent discount. What is the exporter's true effective annual financing cost?

Accepted Answer

A) 4.00 percent 
B) 4.04 percent 
C) 4.10 percent 
D) 4.16 percent 
E) 4.22 percent 
A) 4.00 percent 
B) 4.04 percent 
C) 4.10 percent 
D) 4.16 percent 
E) 4.22 percent

Question 7

The rate of return on a repo is

Accepted Answer

A) determined by the rate of return on the underlying collateral. 
B) strongly affected by the current Fed funds rate at the time of the repo. 
C) determined at the time of the repo. 
D) determined by the rate of return on the underlying collateral and determined at the time of the repo. 
E) strongly affected by the current Fed funds rate at the time of the repo and determined at the time of the repo. 
A) determined by the rate of return on the underlying collateral. 
B) strongly affected by the current Fed funds rate at the time of the repo. 
C) determined at the time of the repo. 
D) determined by the rate of return on the underlying collateral and determined at the time of the repo. 
E) strongly affected by the current Fed funds rate at the time of the repo and determined at the time of the repo.

Question 8

The largest secondary money market in the United States is the secondary market for T-bills.

Accepted Answer

A) True 
 B)False

Question 9

Given the functions of the money markets,why is it necessary for money market securities to have a maturity of one year or less and low default risk?

Accepted Answer

Because these markets are designed to pr

Question 10

If your firm enters into an overnight reverse repurchase agreement,your firm is

Accepted Answer

A) borrowing Fed funds temporarily. 
B) selling a security now while agreeing to buy it back tomorrow. 
C) giving an unsecured loan to the counterparty. 
D) procuring a banker's acceptance. 
E) none of the options 
A) borrowing Fed funds temporarily. 
B) selling a security now while agreeing to buy it back tomorrow. 
C) giving an unsecured loan to the counterparty. 
D) procuring a banker's acceptance. 
E) none of the options

Question 11

Suppose that $10 million face value commercial paper with a 270-day maturity is selling for $9.55 million. What is the BEY on the paper?

Accepted Answer

A) 4.71 percent 
B) 6.42 percent 
C) 6.37 percent 
D) 6.28 percent 
E) 4.50 percent 
A) 4.71 percent 
B) 6.42 percent 
C) 6.37 percent 
D) 6.28 percent 
E) 4.50 percent

Question 12

The U.S. Treasury switched from a discriminating price auction to a single price auction because the latter lowered the average price paid by investors.

Accepted Answer

A) True 
 B)False

A $2 million jumbo CD is paying a quoted 3.55 percent interest rate on 180-day maturity CDs. How much money will you have at maturity if you invest in the CD?

In dollars outstanding in 2013,the largest money market security was

The bond equivalent yield times 365/360 is equal to the single payment yield.

A dealer is quoting a $10,000 face 180-day T-bill quoted at 2.75 bid,2.65 ask. You could buy this bill at or sell it at _.

In the T-bill secondary market the ask yield will normally be less than the bid yield.

A Chinese exporter sells $200,000 of toys to a French importer. The Chinese exporter requires the French importer to obtain a letter of credit. When the bank accepts the draft,the exporter discounts the 90-day note at a 4 percent discount. What is the exporter's true effective annual financing cost?

The rate of return on a repo is

The largest secondary money market in the United States is the secondary market for T-bills.

Given the functions of the money markets,why is it necessary for money market securities to have a maturity of one year or less and low default risk?

If your firm enters into an overnight reverse repurchase agreement,your firm is

Suppose that $10 million face value commercial paper with a 270-day maturity is selling for $9.55 million. What is the BEY on the paper?

The U.S. Treasury switched from a discriminating price auction to a single price auction because the latter lowered the average price paid by investors.

Introduction

Determinants of Interest Rates

Interest Rates and Security Valuation

The Federal Reserve System, Monetary Policy, and Interest Rates

Bond Markets

Mortgage Markets

Stock Markets

Foreign Exchange Markets

Derivative Securities Markets

Commercial Banks: Industry Overview

Commercial Banks Financial Statements and Analysis

Regulation of Commercial Banks

Other Lending Institutions: Savings Institutions, Credit Unions, and Finance Companies

Insurance Companies

Securities Firms and Investment Banks

Investment Companies

Pension Funds

Types of Risks Incurred by Financial Institutions

Managing Credit Risk on the Balance Sheet

Managing Liquidity Risk on the Balance Sheet

Managing Interest Rate Risk and Insolvency Risk on the Balance Sheet

Managing Risk Off the Balance Sheet With Derivative Securities

Managing Risk Off the Balance Sheet With Loan Sales and Securitization

Filters

Exam 5: Money Markets

A $2 million jumbo CD is paying a quoted 3.55 percent interest rate on 180-day maturity CDs. How much money will you have at maturity if you invest in the CD?

In dollars outstanding in 2013,the largest money market security was

The bond equivalent yield times 365/360 is equal to the single payment yield.

A dealer is quoting a $10,000 face 180-day T-bill quoted at 2.75 bid,2.65 ask. You could buy this bill at ______________ or sell it at _______________.

In the T-bill secondary market the ask yield will normally be less than the bid yield.

The rate of return on a repo is

The largest secondary money market in the United States is the secondary market for T-bills.

Given the functions of the money markets,why is it necessary for money market securities to have a maturity of one year or less and low default risk?

If your firm enters into an overnight reverse repurchase agreement,your firm is

Suppose that $10 million face value commercial paper with a 270-day maturity is selling for $9.55 million. What is the BEY on the paper?

The U.S. Treasury switched from a discriminating price auction to a single price auction because the latter lowered the average price paid by investors.

Introduction

Determinants of Interest Rates

Interest Rates and Security Valuation

The Federal Reserve System, Monetary Policy, and Interest Rates

Bond Markets

Mortgage Markets

Stock Markets

Foreign Exchange Markets

Derivative Securities Markets

Commercial Banks: Industry Overview

Commercial Banks Financial Statements and Analysis

Regulation of Commercial Banks

Other Lending Institutions: Savings Institutions, Credit Unions, and Finance Companies

Insurance Companies

Securities Firms and Investment Banks

Investment Companies

Pension Funds

Types of Risks Incurred by Financial Institutions

Managing Credit Risk on the Balance Sheet

Managing Liquidity Risk on the Balance Sheet

Managing Interest Rate Risk and Insolvency Risk on the Balance Sheet

Managing Risk Off the Balance Sheet With Derivative Securities

Managing Risk Off the Balance Sheet With Loan Sales and Securitization

Filters

A dealer is quoting a $10,000 face 180-day T-bill quoted at 2.75 bid,2.65 ask. You could buy this bill at or sell it at _.