Question 1

The Troubled Asset Relief Program (TARP)allowed

Accepted Answer

A)  the Treasury to inject funds into commercial banks in return for stock in the banks. 
B)  the Fed to provide funds to commercial banks in return for stock. 
C)  the Treasury to insure bank deposits at major U.S. banks. 
D)  the Fed to make loans to banks as the lender of last resort. 
A)  the Treasury to inject funds into commercial banks in return for stock in the banks. 
B)  the Fed to provide funds to commercial banks in return for stock. 
C)  the Treasury to insure bank deposits at major U.S. banks. 
D)  the Fed to make loans to banks as the lender of last resort.

Question 2

By providing and communicating information,the financial system

Accepted Answer

A)  reduces the difference between the return on three-month U.S. Treasury bills and the return on thirty-year U.S. Treasury bonds. 
B)  relieves individual savers from the necessity of searching out individual borrowers. 
C)  eliminates the risk in investing in the stock market. 
D)  guarantees investors a reasonable return on their money. 
A)  reduces the difference between the return on three-month U.S. Treasury bills and the return on thirty-year U.S. Treasury bonds. 
B)  relieves individual savers from the necessity of searching out individual borrowers. 
C)  eliminates the risk in investing in the stock market. 
D)  guarantees investors a reasonable return on their money.

Question 3

Which of the following best describes a "bubble"?

Accepted Answer

A)  when the price of an asset reaches a new high 
B)  an unsustainable increase in the price of a class of assets 
C)  rapid increases in inflation 
D)  when bond prices rise more quickly than stock prices 
A)  when the price of an asset reaches a new high 
B)  an unsustainable increase in the price of a class of assets 
C)  rapid increases in inflation 
D)  when bond prices rise more quickly than stock prices

Question 4

The purpose of diversification is to

Accepted Answer

A)  increase the liquidity of a financial portfolio. 
B)  reduce the brokerage fees involved in managing a financial portfolio. 
C)  reduce risk. 
D)  reduce tax liability. 
A)  increase the liquidity of a financial portfolio. 
B)  reduce the brokerage fees involved in managing a financial portfolio. 
C)  reduce risk. 
D)  reduce tax liability.

Question 5

If you purchase a Treasury bond,the Treasury bond is

Accepted Answer

A)  an asset to you as well as an asset to the U.S. government. 
B)  an asset to you, but a liability to the U.S. government. 
C)  a liability to you, but an asset to the U.S. government. 
D)  a liability to you as well as a liability to the U.S. government. 
A)  an asset to you as well as an asset to the U.S. government. 
B)  an asset to you, but a liability to the U.S. government. 
C)  a liability to you, but an asset to the U.S. government. 
D)  a liability to you as well as a liability to the U.S. government.

Question 6

How do pawn shops provide financing?

Accepted Answer

The borrower provides collateral in the

Question 7

All of the following are examples of risky mortgages that became more common in the 2000s EXCEPT

Accepted Answer

A)  alt-A mortgages. 
B)  adjustable-rate mortgages with low rates for a few years and then higher rates in later years. 
C)  mortgages requiring down payments of at least 20%. 
D)  subprime mortgages. 
A)  alt-A mortgages. 
B)  adjustable-rate mortgages with low rates for a few years and then higher rates in later years. 
C)  mortgages requiring down payments of at least 20%. 
D)  subprime mortgages.

Question 8

Increased liquidity in recent decades has reduced interest rates on which of the following assets (holding constant all other things that affect interest rates)?

Accepted Answer

A)  U.S. government bonds 
B)  bonds issued by large corporations 
C)  business loans 
D)  bonds issued by state governments 
A)  U.S. government bonds 
B)  bonds issued by large corporations 
C)  business loans 
D)  bonds issued by state governments

Question 9

Financial intermediaries

Accepted Answer

A)  include banks and other depository institutions. 
B)  include the New York and American Stock exchanges. 
C)  directly issue claims on individual borrowers to savers. 
D)  are owned and operated by the federal government. 
A)  include banks and other depository institutions. 
B)  include the New York and American Stock exchanges. 
C)  directly issue claims on individual borrowers to savers. 
D)  are owned and operated by the federal government.

Question 10

Briefly explain the process of securitizing mortgages.

Accepted Answer

The mortgage lender sells the loan to a

Question 11

Which of the following is NOT a financial asset?

Accepted Answer

A)  a bond issued by Google 
B)  Wells Fargo Bank 
C)  a home mortgage loan 
D)  a certificate of deposit 
A)  a bond issued by Google 
B)  Wells Fargo Bank 
C)  a home mortgage loan 
D)  a certificate of deposit

Question 12

Which of the following is NOT a key financial service provided by the financial system?

Accepted Answer

A)  risk sharing 
B)  profitability 
C)  liquidity 
D)  information 
A)  risk sharing 
B)  profitability 
C)  liquidity 
D)  information

Question 13

What was the intent behind the intervention of the Fed and Treasury in financial markets during the Financial Crisis of 2007-2009?

Accepted Answer

The actions by the Fed and Treasury were

Question 14

A "primary market" is a market

Accepted Answer

A)  for government securities. 
B)  in which newly issued claims are sold to buyers by borrowers. 
C)  in which newly issued claims are sold by savers to borrowers. 
D)  for debt by large or "primary" corporations. 
A)  for government securities. 
B)  in which newly issued claims are sold to buyers by borrowers. 
C)  in which newly issued claims are sold by savers to borrowers. 
D)  for debt by large or "primary" corporations.

Question 15

The financial crisis of 2007-2009 worsened after the failure of which firm?

Accepted Answer

A)  General Motors 
B)  Lehman Brothers 
C)  Bear Stearns 
D)  American International Group (AIG) 
A)  General Motors 
B)  Lehman Brothers 
C)  Bear Stearns 
D)  American International Group (AIG)

Question 16

The bond market is important because

Accepted Answer

A)  it is the major source of borrowed funds for U.S. business. 
B)  it provides a rate of return significantly greater than the stock market. 
C)  it provides foreign purchasers of U.S. products a means to exchange their currencies for U.S. dollars. 
D)  it provides a way for businesses and governments to borrow funds from savers and it is the market that determines interest rates. 
A)  it is the major source of borrowed funds for U.S. business. 
B)  it provides a rate of return significantly greater than the stock market. 
C)  it provides foreign purchasers of U.S. products a means to exchange their currencies for U.S. dollars. 
D)  it provides a way for businesses and governments to borrow funds from savers and it is the market that determines interest rates.

Question 17

If you buy a bond issued by Intel,the bond is a(n):

Accepted Answer

A)  liability to Intel and an asset to you. 
B)  liability to you and an asset to Intel. 
C)  liability to both you and Intel. 
D)  asset to both you and Intel. 
A)  liability to Intel and an asset to you. 
B)  liability to you and an asset to Intel. 
C)  liability to both you and Intel. 
D)  asset to both you and Intel.

Question 18

How did securitization and the bursting of the housing bubble contribute to the Financial Crisis of 2007-2009?

Accepted Answer

Many investment banks and other investor

Question 19

The leading federal regulatory body for financial markets in the United States is the

Accepted Answer

A)  Federal Bureau of Investigation. 
B)  Securities and Exchange Commission. 
C)  Federal Financial Market Bureau. 
D)  Investors Protection Agency. 
A)  Federal Bureau of Investigation. 
B)  Securities and Exchange Commission. 
C)  Federal Financial Market Bureau. 
D)  Investors Protection Agency.

Question 20

Which of the following forms the largest share of household holdings of financial assets?

Accepted Answer

A)  corporate equities 
B)  bank deposits 
C)  pension funds reserves 
D)  life insurance 
A)  corporate equities 
B)  bank deposits 
C)  pension funds reserves 
D)  life insurance

The Troubled Asset Relief Program (TARP)allowed

By providing and communicating information,the financial system

Which of the following best describes a "bubble"?

The purpose of diversification is to

If you purchase a Treasury bond,the Treasury bond is

How do pawn shops provide financing?

All of the following are examples of risky mortgages that became more common in the 2000s EXCEPT

Increased liquidity in recent decades has reduced interest rates on which of the following assets (holding constant all other things that affect interest rates)?

Financial intermediaries

Briefly explain the process of securitizing mortgages.

Which of the following is NOT a financial asset?

Which of the following is NOT a key financial service provided by the financial system?

What was the intent behind the intervention of the Fed and Treasury in financial markets during the Financial Crisis of 2007-2009?

A "primary market" is a market

The financial crisis of 2007-2009 worsened after the failure of which firm?

The bond market is important because

If you buy a bond issued by Intel,the bond is a(n):

How did securitization and the bursting of the housing bubble contribute to the Financial Crisis of 2007-2009?

The leading federal regulatory body for financial markets in the United States is the

Which of the following forms the largest share of household holdings of financial assets?

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I: the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 1: Introducing Money and the Financial System

The Troubled Asset Relief Program (TARP)allowed

By providing and communicating information,the financial system

Which of the following best describes a "bubble"?

The purpose of diversification is to

If you purchase a Treasury bond,the Treasury bond is

How do pawn shops provide financing?

All of the following are examples of risky mortgages that became more common in the 2000s EXCEPT

Increased liquidity in recent decades has reduced interest rates on which of the following assets (holding constant all other things that affect interest rates)?

Financial intermediaries

Briefly explain the process of securitizing mortgages.

Which of the following is NOT a financial asset?

Which of the following is NOT a key financial service provided by the financial system?

What was the intent behind the intervention of the Fed and Treasury in financial markets during the Financial Crisis of 2007-2009?

A "primary market" is a market

The financial crisis of 2007-2009 worsened after the failure of which firm?

The bond market is important because

If you buy a bond issued by Intel,the bond is a(n):

How did securitization and the bursting of the housing bubble contribute to the Financial Crisis of 2007-2009?

The leading federal regulatory body for financial markets in the United States is the

Which of the following forms the largest share of household holdings of financial assets?

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, mutual Funds, hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I: the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters