Question 1

The largest one-day drop in the history of the American stock markets occurred in

Accepted Answer

A)  1929. 
B)  1987. 
C)  2000. 
D)  2001. 
A)  1929. 
B)  1987. 
C)  2000. 
D)  2001. B

Question 2

Financial market activities affect

Accepted Answer

A)  personal wealth. 
B)  spending decisions by individuals and business firms. 
C)  the economy's location in the business cycle. 
D)  all of the above. 
A)  personal wealth. 
B)  spending decisions by individuals and business firms. 
C)  the economy's location in the business cycle. 
D)  all of the above. D

Question 3

In recent years,financial markets have become more stable and less risky.

Accepted Answer

A) True 
 B)False  False

Question 4

Interest rates are determined in the bond markets.

Accepted Answer

A) True 
 B)False

Question 5

A declining stock market index due to lower share prices

Accepted Answer

A)  reduces people's wealth and as a result may reduce their willingness to spend. 
B)  increases people's wealth and as a result may increase their willingness to spend. 
C)  decreases the amount of funds that business firms can raise by selling newly issued stock. 
D)  both A and C of the above. 
E)  both B and C of the above. 
A)  reduces people's wealth and as a result may reduce their willingness to spend. 
B)  increases people's wealth and as a result may increase their willingness to spend. 
C)  decreases the amount of funds that business firms can raise by selling newly issued stock. 
D)  both A and C of the above. 
E)  both B and C of the above.

Question 6

Changes in stock prices

Accepted Answer

A)  affect people's wealth and their willingness to spend. 
B)  affect firms' decisions to sell stock to finance investment spending. 
C)  are characterized by considerable fluctuations. 
D)  all of the above. 
E)  only A and B of the above. 
A)  affect people's wealth and their willingness to spend. 
B)  affect firms' decisions to sell stock to finance investment spending. 
C)  are characterized by considerable fluctuations. 
D)  all of the above. 
E)  only A and B of the above.

Question 7

In recent years

Accepted Answer

A)  interest rates have remained constant. 
B)  the success of financial institutions has reached levels unprecedented since the Great Depression. 
C)  stock markets have crashed. 
D)  all of the above. 
A)  interest rates have remained constant. 
B)  the success of financial institutions has reached levels unprecedented since the Great Depression. 
C)  stock markets have crashed. 
D)  all of the above.

Question 8

A stock is a debt security that promises to make periodic payments for a specific period of time.

Accepted Answer

A) True 
 B)False

Question 9

Financial innovation has provided more options to both investors and borrowers.

Accepted Answer

A) True 
 B)False

Question 10

Monetary policy is chiefly concerned with

Accepted Answer

A)  how much money businesses earn. 
B)  the level of interest rates and the nation's money supply. 
C)  how much money people pay in taxes. 
D)  whether people have saved enough money for retirement. 
A)  how much money businesses earn. 
B)  the level of interest rates and the nation's money supply. 
C)  how much money people pay in taxes. 
D)  whether people have saved enough money for retirement.

Question 11

Holding everything else constant,as the dollar weakens vacations abroad become less attractive.

Accepted Answer

A) True 
 B)False

Question 12

(I)Debt markets are often referred to generically as the bond market.
(II)A bond is a security that is a claim on the earnings and assets of a corporation.

Accepted Answer

A)  (I) is true, (II) false. 
B)  (I) is false, (II) true. 
C)  Both are true. 
D)  Both are false. 
A)  (I) is true, (II) false. 
B)  (I) is false, (II) true. 
C)  Both are true. 
D)  Both are false.

Question 13

Although the internet has changed many aspects of our lives,it hasn't proven very useful for collecting and/or analyzing financial and economic data.

Accepted Answer

A) True 
 B)False

Question 14

A rising stock market index due to higher share prices

Accepted Answer

A)  increases people's wealth and as a result may increase their willingness to spend. 
B)  increases the amount of funds that business firms can raise by selling newly issued stock. 
C)  decreases the amount of funds that business firms can raise by selling newly issued stock. 
D)  both A and B of the above. 
A)  increases people's wealth and as a result may increase their willingness to spend. 
B)  increases the amount of funds that business firms can raise by selling newly issued stock. 
C)  decreases the amount of funds that business firms can raise by selling newly issued stock. 
D)  both A and B of the above.

Question 15

The government organization responsible for the conduct of monetary policy in the United States is the U.S.Treasury.

Accepted Answer

A) True 
 B)False

Question 16

Economists group commercial banks,savings and loan associations,credit unions,mutual funds,mutual savings banks,insurance companies,pension funds,and finance companies together under the heading financial intermediaries.Financial intermediaries

Accepted Answer

A)  act as middlemen, borrowing funds from those who have saved and lending these funds to others. 
B)  play an important role in determining the quantity of money in the economy. 
C)  help promote a more efficient and dynamic economy. 
D)  do all of the above. 
E)  do only A and C of the above. 
A)  act as middlemen, borrowing funds from those who have saved and lending these funds to others. 
B)  play an important role in determining the quantity of money in the economy. 
C)  help promote a more efficient and dynamic economy. 
D)  do all of the above. 
E)  do only A and C of the above.

Question 17

Monetary policy affects

Accepted Answer

A)  interest rates. 
B)  inflation. 
C)  business cycles. 
D)  all of the above. 
A)  interest rates. 
B)  inflation. 
C)  business cycles. 
D)  all of the above.

Question 18

Why should consumers be concerned with movements in foreign exchange rates?

Accepted Answer

Consumers should understand the movement

Question 19

What is monetary policy and who is responsible for its implementation?

Accepted Answer

Monetary policy concerns the actions of

Question 20

Interest rates are important to financial institutions since an interest rate increase ________ the cost of acquiring funds and ________ the income from assets.

Accepted Answer

A)  decreases; decreases 
B)  increases; increases 
C)  decreases; increases 
D)  increases; decreases 
A)  decreases; decreases 
B)  increases; increases 
C)  decreases; increases 
D)  increases; decreases

Exam 1: Why Study Financial Markets and Institutions?

The largest one-day drop in the history of the American stock markets occurred in

Financial market activities affect

In recent years,financial markets have become more stable and less risky.

Interest rates are determined in the bond markets.

A declining stock market index due to lower share prices

Changes in stock prices

In recent years

A stock is a debt security that promises to make periodic payments for a specific period of time.

Financial innovation has provided more options to both investors and borrowers.

Monetary policy is chiefly concerned with

Holding everything else constant,as the dollar weakens vacations abroad become less attractive.

(I)Debt markets are often referred to generically as the bond market. (II)A bond is a security that is a claim on the earnings and assets of a corporation.

Although the internet has changed many aspects of our lives,it hasn't proven very useful for collecting and/or analyzing financial and economic data.

A rising stock market index due to higher share prices

The government organization responsible for the conduct of monetary policy in the United States is the U.S.Treasury.

Economists group commercial banks,savings and loan associations,credit unions,mutual funds,mutual savings banks,insurance companies,pension funds,and finance companies together under the heading financial intermediaries.Financial intermediaries

Monetary policy affects

Why should consumers be concerned with movements in foreign exchange rates?

What is monetary policy and who is responsible for its implementation?

Interest rates are important to financial institutions since an interest rate increase ________ the cost of acquiring funds and ________ the income from assets.

Overview of the Financial System

What Do Interest Rates Mean and What Is Their Role in Valuation?

Why Do Interest Rates Change?

How Do Risk and Term Structure Affect Interest Rates?

Are Financial Markets Efficient?

Why Do Financial Institutions Exist?

Why Do Financial Crises Occur and

Central Banks and the Federal Reserve System

Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics

The Money Markets

The Bond Market

The Stock Market

The Mortgage Markets

The Foreign Exchange Market

The International Financial System

Banking and the Management of Financial Institutions

Financial Regulation

Banking Industry: Structure and Competition

The Mutual Fund Industry

Insurance Companies and Pension Funds

Investment Banks, Security Brokers and Dealers, and Venture Capital Firms

Risk Management in Financial Institutions

Hedging with Financial Derivatives

Financial Crises In Emerging Market Economies

Savings Associations and Credit Unions

Finance Companies

Filters

Interest rates are important to financial institutions since an interest rate increase the cost of acquiring funds and the income from assets.