Question 1

Financial institutions are among the largest employers in the country and frequently pay very high salaries.

Accepted Answer

A) True 
 B)False

Question 2

(I)A bond is a debt security that promises to make payments periodically for a specified period of time.
(II)A stock 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 3

Have interest rates been more or less volatile in recent years? Why?

Accepted Answer

Assumption - We are talking about intern

Question 4

Compared to interest rates on long-term U.S.government bonds,interest rates on ________ fluctuate more and are lower on average.

Accepted Answer

A)  medium-quality corporate bonds 
B)  low-quality corporate bonds 
C)  high-quality corporate bonds 
D)  three-month Treasury bills 
E)  none of the above 
A)  medium-quality corporate bonds 
B)  low-quality corporate bonds 
C)  high-quality corporate bonds 
D)  three-month Treasury bills 
E)  none of the above

Question 5

The organization responsible for the conduct of monetary policy in the United States is the

Accepted Answer

A)  Comptroller of the Currency. 
B)  U.S. Treasury. 
C)  Federal Reserve System. 
D)  Bureau of Monetary Affairs. 
A)  Comptroller of the Currency. 
B)  U.S. Treasury. 
C)  Federal Reserve System. 
D)  Bureau of Monetary Affairs.

Question 6

________ are an example of a financial institution.

Accepted Answer

A)  Banks 
B)  Insurance companies 
C)  Finance companies 
D)  All of the above 
A)  Banks 
B)  Insurance companies 
C)  Finance companies 
D)  All of the above

Question 7

Typically,increasing interest rates

Accepted Answer

A)  discourages individuals from saving. 
B)  discourages corporate investments. 
C)  encourages corporate expansion. 
D)  encourages corporate borrowing. 
E)  none of the above. 
A)  discourages individuals from saving. 
B)  discourages corporate investments. 
C)  encourages corporate expansion. 
D)  encourages corporate borrowing. 
E)  none of the above.

Question 8

In a bull market stock prices are rising,on average.

Accepted Answer

A) True 
 B)False

Question 9

From the peak of the high-tech bubble in 2000,the stock market ________ by over ________ by late 2002.

Accepted Answer

A)  collapsed; 75% 
B)  rose; 35% 
C)  collapsed; 30% 
D)  rose; 50% 
A)  collapsed; 75% 
B)  rose; 35% 
C)  collapsed; 30% 
D)  rose; 50%

Question 10

How does a bond differ from a stock?

Accepted Answer

A bond and a stock represent two differe

Question 11

The bond markets are important because

Accepted Answer

A)  they are easily the most widely followed financial markets in the United States. 
B)  they are the markets where interest rates are determined. 
C)  they are the markets where foreign exchange rates are determined. 
D)  all of the above. 
A)  they are easily the most widely followed financial markets in the United States. 
B)  they are the markets where interest rates are determined. 
C)  they are the markets where foreign exchange rates are determined. 
D)  all of the above.

Question 12

Different interest rates have a tendency to move in unison.

Accepted Answer

A) True 
 B)False

Question 13

Money is defined as

Accepted Answer

A)  anything that is generally accepted in payment for goods and services or in the repayment of debt. 
B)  bills of exchange. 
C)  a riskless repository of spending power. 
D)  all of the above. 
E)  only A and B of the above. 
A)  anything that is generally accepted in payment for goods and services or in the repayment of debt. 
B)  bills of exchange. 
C)  a riskless repository of spending power. 
D)  all of the above. 
E)  only A and B of the above.

Question 14

Financial markets and institutions

Accepted Answer

A)  involve the movement of huge quantities of money. 
B)  affect the profits of businesses. 
C)  affect the types of goods and services produced in an economy. 
D)  do all of the above. 
E)  do only A and B of the above. 
A)  involve the movement of huge quantities of money. 
B)  affect the profits of businesses. 
C)  affect the types of goods and services produced in an economy. 
D)  do all of the above. 
E)  do only A and B of the above.

Question 15

Stock prices since the 1980s have been

Accepted Answer

A)  relatively stable, trending upward at a steady pace. 
B)  relatively stable, trending downward at a moderate rate. 
C)  extremely volatile. 
D)  unstable, trending downward at a moderate rate. 
A)  relatively stable, trending upward at a steady pace. 
B)  relatively stable, trending downward at a moderate rate. 
C)  extremely volatile. 
D)  unstable, trending downward at a moderate rate.

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)  produce nothing of value and are therefore a drain on society's resources. 
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)  produce nothing of value and are therefore a drain on society's resources. 
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

If you are planning a vacation to Europe,do you prefer a strong dollar or weak dollar relative to the euro? Why?

Accepted Answer

One would prefer strong dollar as he wou

Question 18

What is the central bank and what does it do?

Accepted Answer

The Central Bank is an independent natio

Question 19

A weaker dollar benefits ________ and hurts ________.

Accepted Answer

A)  American businesses; American consumers 
B)  American businesses; foreign consumers 
C)  American consumers; American businesses 
D)  foreign businesses; American consumers 
A)  American businesses; American consumers 
B)  American businesses; foreign consumers 
C)  American consumers; American businesses 
D)  foreign businesses; American consumers

Question 20

How does the value of the dollar affect the competitiveness of American businesses?

Accepted Answer

The value of dollar affects the competit

Exam 1: Why Study Financial Markets and Institutions?

Financial institutions are among the largest employers in the country and frequently pay very high salaries.

(I)A bond is a debt security that promises to make payments periodically for a specified period of time. (II)A stock is a security that is a claim on the earnings and assets of a corporation.

Have interest rates been more or less volatile in recent years? Why?

Compared to interest rates on long-term U.S.government bonds,interest rates on ________ fluctuate more and are lower on average.

The organization responsible for the conduct of monetary policy in the United States is the

________ are an example of a financial institution.

Typically,increasing interest rates

In a bull market stock prices are rising,on average.

From the peak of the high-tech bubble in 2000,the stock market ________ by over ________ by late 2002.

How does a bond differ from a stock?

The bond markets are important because

Different interest rates have a tendency to move in unison.

Money is defined as

Financial markets and institutions

Stock prices since the 1980s have been

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

If you are planning a vacation to Europe,do you prefer a strong dollar or weak dollar relative to the euro? Why?

What is the central bank and what does it do?

A weaker dollar benefits ________ and hurts ________.

How does the value of the dollar affect the competitiveness of American businesses?

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

From the peak of the high-tech bubble in 2000,the stock market by over by late 2002.

A weaker dollar benefits and hurts .