Question 1

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 2

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 3

A stronger dollar benefits ________ and hurts ________

Accepted Answer

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

Question 4

(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 5

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 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

Different interest rates have a tendency to move in unison.

Accepted Answer

A) True 
 B)False

Question 9

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 10

In recent years, financial markets have become more risky. However, only a limited number of tools (such as derivatives)are available to assist in managing this risk.

Accepted Answer

A) True 
 B)False

Question 11

________ was the stock market's worst one-day drop in history in the 1980s.

Accepted Answer

A) Black Friday 
B) Black Monday 
C) Blackout Day 
D) none of the above 
A) Black Friday 
B) Black Monday 
C) Blackout Day 
D) none of the above

Question 12

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

Accepted Answer

The answer of Have interest rates been more or less...

Question 13

Banks, savings and loan associations, mutual savings banks, and credit unions

Accepted Answer

A) are no longer important players in financial intermediation. 
B) have been providing services only to small depositors since deregulation. 
C) have been adept at innovating in response to changes in the regulatory environment. 
D) all of the above. 
E) only A and C of the above. 
A) are no longer important players in financial intermediation. 
B) have been providing services only to small depositors since deregulation. 
C) have been adept at innovating in response to changes in the regulatory environment. 
D) all of the above. 
E) only A and C of the above.

Question 14

Interest rates are determined in the bond markets.

Accepted Answer

A) True 
 B)False

Question 15

The price of one country's currency in terms of another's is called

Accepted Answer

A) the foreign exchange rate. 
B) the interest rate. 
C) the Dow Jones industrial average. 
D) none of the above. 
A) the foreign exchange rate. 
B) the interest rate. 
C) the Dow Jones industrial average. 
D) none of the above.

Question 16

What is money?

Accepted Answer

The answer of What is money?...

Question 17

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

Accepted Answer

The answer of Why should consumers be concerned with movements...

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The central bank of the United States is

Accepted Answer

A) Citicorp. 
B) The Fed. 
C) Bank of America. 
D) The Treasury. 
E) none of the above. 
A) Citicorp. 
B) The Fed. 
C) Bank of America. 
D) The Treasury. 
E) none of the above.

Question 20

Why is the stock market so important to individuals, firms, and the economy?

Accepted Answer

The answer of Why is the stock market so important...

Exam 1: Why Study Financial Markets and Institutions

Financial markets and institutions

Monetary policy affects

A stronger dollar benefits ________ and hurts ________

(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.

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

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

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

Different interest rates have a tendency to move in unison.

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

In recent years, financial markets have become more risky. However, only a limited number of tools (such as derivatives)are available to assist in managing this risk.

________ was the stock market's worst one-day drop in history in the 1980s.

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

Banks, savings and loan associations, mutual savings banks, and credit unions

Interest rates are determined in the bond markets.

The price of one country's currency in terms of another's is called

What is money?

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

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

The central bank of the United States is

Why is the stock market so important to individuals, firms, and the economy?

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 Why Are They so Damaging to the Economy

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

Savings Associations and Credit Unions

Finance Companies

Filters

A stronger dollar benefits and hurts

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