Question 1

Which of the following is the major monetary policy-making body of the U.S. Federal Reserve System?

Accepted Answer

A) FOMC 
B) OCC 
C) FRB bank presidents 
D) U.S. Congress 
E) Group of Eight 
A) FOMC 
B) OCC 
C) FRB bank presidents 
D) U.S. Congress 
E) Group of Eight

Question 2

Explain how a change in open market operations can affect a new college graduate.

Accepted Answer

If the Fed increases bank reserves by bu

Question 3

From October 1983 to July 1993,the Federal Reserve targeted

Accepted Answer

A) the Fed funds rate. 
B) borrowed reserves. 
C) nonborrowed reserves. 
D) M1. 
E) M3. 
A) the Fed funds rate. 
B) borrowed reserves. 
C) nonborrowed reserves. 
D) M1. 
E) M3.

Question 4

Quantitative Easing program initiated by the Federal Reserve during the 2010-2014 period,involved the purchase of long-term corporate bonds.

Accepted Answer

A) True 
 B)False

Question 5

What supervisory and regulatory authority does the Fed have under current law?

Accepted Answer

1. The authority to conduct examinations

Question 6

An increase in Treasury securities held by the Fed leads to a decrease in the money supply.

Accepted Answer

A) True 
 B)False

Question 7

The Federal Reserve does all but which one of the following?

Accepted Answer

A) Conducts monetary policy 
B) Supervises and regulates bank activities 
C) Serves as the commercial bank for the U.S. Treasury 
D) Operates check clearing and wire transfer facilities 
E) Insures deposits 
A) Conducts monetary policy 
B) Supervises and regulates bank activities 
C) Serves as the commercial bank for the U.S. Treasury 
D) Operates check clearing and wire transfer facilities 
E) Insures deposits

Question 8

Assume oil prices rise in the United States,generating concerns that inflation may increase. If the Fed wishes to ensure that inflation does not get out of hand,the Fed could

Accepted Answer

A) intervene in the currency markets to push the value of the dollar down. 
B) decrease the discount rate. 
C) lower the target Fed funds rate. 
D) lower the target money supply growth rate. 
E) reduce reserve requirements at banks. 
A) intervene in the currency markets to push the value of the dollar down. 
B) decrease the discount rate. 
C) lower the target Fed funds rate. 
D) lower the target money supply growth rate. 
E) reduce reserve requirements at banks.

Question 9

The ________ is a nationwide network jointly operated by the Fed and private institutions that electronically process credit and debit transfers of funds.

Accepted Answer

A) Fedwire 
B) ACH 
C) CHIPS 
D) NASDAQ 
E) SWIFT 
A) Fedwire 
B) ACH 
C) CHIPS 
D) NASDAQ 
E) SWIFT

Question 10

Four seats on the FOMC are allocated to Federal Reserve Bank presidents on an annual rotating basis.

Accepted Answer

A) True 
 B)False

Question 11

The primary policy tool used by the Fed to meet its monetary policy goals is

Accepted Answer

A) changing the discount rate. 
B) changing reserve requirements. 
C) devaluing the currency. 
D) changing bank regulations. 
E) open market operations. 
A) changing the discount rate. 
B) changing reserve requirements. 
C) devaluing the currency. 
D) changing bank regulations. 
E) open market operations.

Question 12

The Federal Reserve System is charged with

Accepted Answer

A) regulating securities exchanges. 
B) conducting monetary policy. 
C) providing payment and other services to a variety of institutions. 
D) setting bank prime rates. 
E) conducting monetary policy and providing payment and other services to a variety of institutions. 
A) regulating securities exchanges. 
B) conducting monetary policy. 
C) providing payment and other services to a variety of institutions. 
D) setting bank prime rates. 
E) conducting monetary policy and providing payment and other services to a variety of institutions.

Question 13

The discount rate is the rate that

Accepted Answer

A) banks charge for loans to corporate customers. 
B) banks charge to lend foreign exchange to customers. 
C) banks charge each other on loans of excess reserves. 
D) banks charge securities dealers to finance their inventory. 
E) the Federal Reserve charges on loans to commercial banks. 
A) banks charge for loans to corporate customers. 
B) banks charge to lend foreign exchange to customers. 
C) banks charge each other on loans of excess reserves. 
D) banks charge securities dealers to finance their inventory. 
E) the Federal Reserve charges on loans to commercial banks.

Question 14

Which of the following is not a program initiated by world's major central banks during the financial crisis of 2007 to avoid a deep worldwide recession?

Accepted Answer

A) Expansion of retail deposit insurance 
B) Capital injections 
C) Purchase of U.S. dollars 
D) Debt guarantees 
E) Asset purchases/guarantees 
A) Expansion of retail deposit insurance 
B) Capital injections 
C) Purchase of U.S. dollars 
D) Debt guarantees 
E) Asset purchases/guarantees

Question 15

In the area of bank supervision,which of the following are functions of the Federal Reserve Banks?
I. Examinations of state member banks
II. Approval of member bank and bank holding company acquisitions
III. Deposit insurance

Accepted Answer

A) I only 
B) I and II only 
C) II and III only 
D) I and III only 
E) I,II,and III 
A) I only 
B) I and II only 
C) II and III only 
D) I and III only 
E) I,II,and III

Question 16

The Fed wishes to expand the money supply. What three things can it do? Which has the most predictable effects? Be specific.

Accepted Answer

Buy U.S. government securities

Question 17

Bank A has an increase in deposits of $20 million dollars and all bank reserve requirements are 10 percent. Bank A loans out the full amount of the deposit increase that is allowed. This amount winds up deposited in Bank B. Bank B lends out the full amount possible as well and this amount winds up deposited in Bank C. What is the total increase in deposits resulting from these three banks?

Accepted Answer

A) $48.00 million 
B) $54.20 million 
C) $56.33 million 
D) $57.10 million 
E) $60.00 million 
A) $48.00 million 
B) $54.20 million 
C) $56.33 million 
D) $57.10 million 
E) $60.00 million

Question 18

Why do changes in reserve requirements have less predictable effects on the money supply in comparison to changes in open market operations?

Accepted Answer

Changing the reserve requirements change

Question 19

The seven members of the Board of Governors of the Federal Reserve System serve 14-year nonrenewable terms. Each Board member is appointed by the president and confirmed by the Senate.

Accepted Answer

A) True 
 B)False

Question 20

The Fed changes reserve requirements from 10 percent to 7 percent,thereby creating $900 million in excess reserves. The total change in deposits (with no drains)would be

Accepted Answer

A) $3,000 million. 
B) $15,625 million. 
C) $12,857 million. 
D) $3,795 million. 
E) None of these choices are correct. 
A) $3,000 million. 
B) $15,625 million. 
C) $12,857 million. 
D) $3,795 million. 
E) None of these choices are correct.

Exam 4: The Federal Reserve System, monetary Policy, and Interest Rates

Which of the following is the major monetary policy-making body of the U.S. Federal Reserve System?

Explain how a change in open market operations can affect a new college graduate.

From October 1983 to July 1993,the Federal Reserve targeted

Quantitative Easing program initiated by the Federal Reserve during the 2010-2014 period,involved the purchase of long-term corporate bonds.

What supervisory and regulatory authority does the Fed have under current law?

An increase in Treasury securities held by the Fed leads to a decrease in the money supply.

The Federal Reserve does all but which one of the following?

Assume oil prices rise in the United States,generating concerns that inflation may increase. If the Fed wishes to ensure that inflation does not get out of hand,the Fed could

The ________ is a nationwide network jointly operated by the Fed and private institutions that electronically process credit and debit transfers of funds.

Four seats on the FOMC are allocated to Federal Reserve Bank presidents on an annual rotating basis.

The primary policy tool used by the Fed to meet its monetary policy goals is

The Federal Reserve System is charged with

The discount rate is the rate that

Which of the following is not a program initiated by world's major central banks during the financial crisis of 2007 to avoid a deep worldwide recession?

In the area of bank supervision,which of the following are functions of the Federal Reserve Banks? I. Examinations of state member banks II. Approval of member bank and bank holding company acquisitions III. Deposit insurance

The Fed wishes to expand the money supply. What three things can it do? Which has the most predictable effects? Be specific.

Why do changes in reserve requirements have less predictable effects on the money supply in comparison to changes in open market operations?

The seven members of the Board of Governors of the Federal Reserve System serve 14-year nonrenewable terms. Each Board member is appointed by the president and confirmed by the Senate.

The Fed changes reserve requirements from 10 percent to 7 percent,thereby creating $900 million in excess reserves. The total change in deposits (with no drains)would be

Introduction

Determinants of Interest Rates

Interest Rates and Security Valuation

Money Markets

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