Solution-Not an asset of depository institutions | Homework Help

Which of the following statements is false?

A.M1, M2, and M3 include demand deposits and other checkable deposits.

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B.Term repurchase agreements are included in M3, but not in M1 and M2.

C.U.S. savings bonds are included in M3, but not in M1 and M2.

D.Travelers’ checks are included in M1, M2, and M3.

2. Because of the financial crisis that began in 2008, by the end of 2009:

A.unemployment was in excess of 10 percent

B.many homeowners owed more money on their mortgage loans than the their homes were worth

C.home mortgage foreclosure rates and personal and business bankruptcies were increasing

D.over 100 banks in the U.S. had already failed with over 500 more being considered financially weak

E.all of the above are true

3. If the interest rate is greater than 0%, then a dollar today is worth

 

A.more than a dollar tomorrow

B.the same as a dollar tomorrow

C.less than a dollar tomorrow

D.there is not sufficient information to tell

4. If the nominal interest rate is 8% and the risk-free rate is 3%, the expected inflation rate must be:

 

A.3%

B.5%

C.11%

D.cannot be determined without aIDitional information

5. Jill Clinton puts $1,000 in a savings passbook that pays 4% compounded quarterly. How much will she have in her account after five years?

A.$1,200.50

B.$1,220.20

C.$1,174.80

D.$1,217.50

6. is a short-term unsecured promissory note issued by a high credit-quality corporation with maturities of one to three months in length with an active secondary money.

A.A negotiable certificate of deposit (NCD)

B.A repurchase agreement

C.Commercial paper

D.Government bond

E.none of the above

7. Which of the following is not an asset of depository institutions?

A.cash

B.unsecured loans

C.time deposits

D.U.S. government securities

 

8. ___________________ provide the record-keeping mechanism for showing ownership of the financial instruments used in the flow of financial funds between savers and borrowers and record revenues, expenses, and profitability of organizations that produce and exchange goods and services.

 

A.Financial Managers

B.Accountants

C.Operations Managers

D.Statisticians

E.none of the above

9. Define the term annuity due

10. Identify the objectives of the national economic policy.

11. Which of the following institutions is not part of the modern banking system?

 

A.credit unions

B.savings and loan associations

C.mutual funds

D.mutual savings banks

12. In response to the financial crisis of 2007-2009, the yield spread between Aaa corporate bonds and treasury bonds:

 

A.widened

B.narrowed

C.remained the same

D.none of the above

13. An increase in inflation should:

 

A.increase the demand for loanable funds

B.decrease the interest rate on loans

C.increase the interest rate on loans

D.none of the above

14. If you expect the inflation premium to be 2%, the default risk premium to be 1% and the real interest rate to be 4%, what interest would you expect to observe in the marketplace on short term treasury securities?

 

A.8%

B.7%

C.6%

D.5%

15. If the stated or nominal interest rate is 10 percent and the inflation rate is 5 percent, the net or differential compounding rate would be ________ percent

 

A.ten

B.five

C.two

D.fifteen

16. Automatic stabilizers include all of the following except:

 

A.unemployment insurance

B.social security

C.welfare

D.pay-as-you-go tax system

17. You need to have $35,000 on hand to buy a new Lexus five years from today. To achieve that goal, you want to know how much you must invest today in a certificate of deposit guaranteed to return you 3% per year. To help determine how much to investment today, you will use:

 

A.present value factors

B.annuity value factors

C.present value factors of an annuity

D.future value factors of an annuity

18. An organization that sells or markets new securities issued by businesses to individuals and institutional investors is called a (n)

 

A.mutual fund

B.investment bank

C.insurance company

D.brokerage firm

19. Gross Private Domestic Investment (GPDI) measures fixed investment in:

 

A.residential and non-residential structures

B.individual expenditures for nondurable goods

C.individual expenditures for services

D.none of the above

20. Which of the following statements is most correct?

 

A.Capital markets include short-term and long-term debt securities such as Treasury bills, notes, and bonds.

B.Money market instruments include commercial paper, federal funds, repurchase agreements, and Treasury notes.

C.Real estate mortgages are money market instruments.

D.Federal agencies, and state and local governments, generally issue longer-term financial claims which trade in the capital market.

 

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