Question 1

The transactions in which bankers acceptances are created include the ________.

Accepted Answer

A)  exporting of goods into the United State. 
B)  importing of goods from the United States to foreign entities. 
C)  storing and shipping of goods between two foreign countries where neither the importer nor the exporter is a U.S. firm. 
D)  None of these 
A)  exporting of goods into the United State. 
B)  importing of goods from the United States to foreign entities. 
C)  storing and shipping of goods between two foreign countries where neither the importer nor the exporter is a U.S. firm. 
D)  None of these C

Question 2

The yield offered on a CD depends on the credit rating of the issuing bank and the maturity of the CD but not on the supply and demand for CDs.

Accepted Answer

A) True 
 B)False  False

Question 3

Banks creating banker acceptances are money center banks, regional banks, Japanese banks, and Yankee banks.

Accepted Answer

A) True 
 B)False  True

Question 4

Why might some federal funds transactions require the use of a broker?

Accepted Answer

The broker stays in constant touch with

Question 5

Which of the below statements is TRUE?

Accepted Answer

A)  A small amount of interest is earned on federal funds. 
B)  Typically, larger banks have excess reserves, while money center banks find themselves short of reserves and must make up the shortfall. 
C)  Most transactions involving fed funds last for only one night; that is, a bank with insufficient reserves that borrows excess reserves from another financial institution will typically do so for the period of one full day. 
D)  The repo, which consists of the sale of a security, will provide funds for a long period of time. 
A)  A small amount of interest is earned on federal funds. 
B)  Typically, larger banks have excess reserves, while money center banks find themselves short of reserves and must make up the shortfall. 
C)  Most transactions involving fed funds last for only one night; that is, a bank with insufficient reserves that borrows excess reserves from another financial institution will typically do so for the period of one full day. 
D)  The repo, which consists of the sale of a security, will provide funds for a long period of time.

Question 6

Which of the below statements is FALSE?

Accepted Answer

A)  Prime CDs (those issued by high-rated domestic banks) trade at a lower yield than nonprime CDs (those issued by lower-rated domestic banks). 
B)  The yields posted on CDs vary depending on three factors: (1) the credit rating of the issuing bank, (2) the maturity of the CD, and (3) the supply and demand for CDs. 
C)  The rate or yield offered on Eurodollar CDs is the prime rate. 
D)  Eurodollar CDs are dollar obligations that are payable by an entity operating under a foreign jurisdiction, exposing the holders to a risk (referred to as sovereign risk) that their claim may not be enforced by the foreign jurisdiction. 
A)  Prime CDs (those issued by high-rated domestic banks) trade at a lower yield than nonprime CDs (those issued by lower-rated domestic banks). 
B)  The yields posted on CDs vary depending on three factors: (1) the credit rating of the issuing bank, (2) the maturity of the CD, and (3) the supply and demand for CDs. 
C)  The rate or yield offered on Eurodollar CDs is the prime rate. 
D)  Eurodollar CDs are dollar obligations that are payable by an entity operating under a foreign jurisdiction, exposing the holders to a risk (referred to as sovereign risk) that their claim may not be enforced by the foreign jurisdiction.

Question 7

________ rely primarily on deposits for funding and make less use of the money markets to obtain funds.

Accepted Answer

A)  Japanese banks 
B)  Regional 
C)  Money center banks 
D)  Yankee banks 
A)  Japanese banks 
B)  Regional 
C)  Money center banks 
D)  Yankee banks

Question 8

A LIBOR loan is a vehicle created to facilitate commercial trade transactions where in a bank accepts the ultimate responsibility to repay a loan to its holder.

Accepted Answer

A) True 
 B)False

Question 9

The maturities for the Eurodollar CD range from overnight to five years.

Accepted Answer

A) True 
 B)False

Question 10

CDs can be classified into four types, according to the issuing institution. Which of the below is NOT on of these four types?

Accepted Answer

A)  CDs issued by domestic banks 
B)  Eurodollar CDs 
C)  Yankee CD 
D)  Economy CDs 
A)  CDs issued by domestic banks 
B)  Eurodollar CDs 
C)  Yankee CD 
D)  Economy CDs

Question 11

A bank may sell its bankers acceptances directly to investors, or may sell all or part to dealers.

Accepted Answer

A) True 
 B)False

Question 12

The ________ maintain their own sales forces to sell the bankers acceptances they create but will use dealers to distribute those they cannot sell.

Accepted Answer

A)  smaller regional banks 
B)  larger city banks 
C)  smaller national banks 
D)  larger regional banks 
A)  smaller regional banks 
B)  larger city banks 
C)  smaller national banks 
D)  larger regional banks

Question 13

________ are foreign banks with U.S. branches.

Accepted Answer

A)  Yankee banks 
B)  German banks 
C)  Japanese banks 
D)  Mexican banks 
A)  Yankee banks 
B)  German banks 
C)  Japanese banks 
D)  Mexican banks

Question 14

The rate determined in the federal funds market is the major factor that influences the rate paid on all other private money market instruments.

Accepted Answer

A) True 
 B)False

Question 15

Some federal funds transactions require the use of a broker.

Accepted Answer

A) True 
 B)False

Question 16

Which of the below statements is FALSE?

Accepted Answer

A)  The Federal Reserve imposes no limit on the amount of eligible bankers acceptances that may be issued by a bank. 
B)  An accepting bank that has decided to retain a bankers acceptance in its portfolio may be able to use it as collateral for a loan at the discount window of the Federal Reserve. 
C)  The Federal Reserve imposes a reserve requirement on funds raised via bankers acceptances that are ineligible. 
D)  Investing in bankers acceptances exposes the investor to credit risk. 
A)  The Federal Reserve imposes no limit on the amount of eligible bankers acceptances that may be issued by a bank. 
B)  An accepting bank that has decided to retain a bankers acceptance in its portfolio may be able to use it as collateral for a loan at the discount window of the Federal Reserve. 
C)  The Federal Reserve imposes a reserve requirement on funds raised via bankers acceptances that are ineligible. 
D)  Investing in bankers acceptances exposes the investor to credit risk.

Question 17

Eligible bankers acceptances held in a bank's portfolio cannot used as collateral for a loan at the discount window of the Federal Reserve.

Accepted Answer

A) True 
 B)False

Question 18

What are the four types of CDs, according to the issuing institution.

Accepted Answer

CDs can be classified into four types, a

Question 19

Certificate of deposits (CDs) ________.

Accepted Answer

A)  are financial assets issued by banks or thrifts that indicate a specified sum of money has been deposited at an issuing depository institution. 
B)  are issued by banks but not thrifts to raise funds for financing their business activities. 
C)  bear a maturity date and a specified interest rate, but cannot be issued in any denomination. 
D)  are issued by banks that are not insured by the Federal Deposit Insurance Corporation. 
A)  are financial assets issued by banks or thrifts that indicate a specified sum of money has been deposited at an issuing depository institution. 
B)  are issued by banks but not thrifts to raise funds for financing their business activities. 
C)  bear a maturity date and a specified interest rate, but cannot be issued in any denomination. 
D)  are issued by banks that are not insured by the Federal Deposit Insurance Corporation.

Question 20

CDs can be classified into four types, based on the issuing entity: domestic CD, Eurodollar CD, Yankee CD, and thrift CD.

Accepted Answer

A) True 
 B)False

Exam 21: The Markets for Bank Obligations

The transactions in which bankers acceptances are created include the ________.

The yield offered on a CD depends on the credit rating of the issuing bank and the maturity of the CD but not on the supply and demand for CDs.

Banks creating banker acceptances are money center banks, regional banks, Japanese banks, and Yankee banks.

Why might some federal funds transactions require the use of a broker?

Which of the below statements is TRUE?

Which of the below statements is FALSE?

________ rely primarily on deposits for funding and make less use of the money markets to obtain funds.

A LIBOR loan is a vehicle created to facilitate commercial trade transactions where in a bank accepts the ultimate responsibility to repay a loan to its holder.

The maturities for the Eurodollar CD range from overnight to five years.

CDs can be classified into four types, according to the issuing institution. Which of the below is NOT on of these four types?

A bank may sell its bankers acceptances directly to investors, or may sell all or part to dealers.

The ________ maintain their own sales forces to sell the bankers acceptances they create but will use dealers to distribute those they cannot sell.

________ are foreign banks with U.S. branches.

The rate determined in the federal funds market is the major factor that influences the rate paid on all other private money market instruments.

Some federal funds transactions require the use of a broker.

Which of the below statements is FALSE?

Eligible bankers acceptances held in a bank's portfolio cannot used as collateral for a loan at the discount window of the Federal Reserve.

What are the four types of CDs, according to the issuing institution.

Certificate of deposits (CDs) ________.

CDs can be classified into four types, based on the issuing entity: domestic CD, Eurodollar CD, Yankee CD, and thrift CD.

Introduction

Financial Institutions, Financial Intermediaries, and Asset Management Firms

Depository Institutions: Activities and Characteristics

The U.S. Federal Reserve and the Creation of Money

Monetary Policy in the United States

Insurance Companies

Investment Companies and Exchange Traded Funds

Pension Funds

Properties and Pricing of Financial Assets

The Level and Structure of Interest Rates

The Term Structure of Interest Rates

Risk/Return and Asset Pricing Models

Primary Markets and the Underwriting of Securities

Secondary Markets

Treasury and Agency Securities Markets

Municipal Securities Markets

Markets for Common Stock: The Basic Characteristics

Markets for Common Stock: Structure and Organization

Markets for Corporate Senior Instruments: I

Markets for Corporate Senior Instruments: II

The Residential Mortgage Market

Mortgage-Backed Securities Market

Market for Commercial Mortgage Loans and Commercial Mortgage-Backed Securities

Market for Asset-Backed Securities

Financial Futures Markets

Options Markets

Pricing of Futures and Options Contracts

The Applications of Futures and Options Contracts

OTC Interest Rate Derivatives: Forward Rate Agreements, Swaps, Caps, and Floors

Market for Credit Risk Transfer Vehicles: Credit Derivatives and Collateralized Debt Obligations

The Market for Foreign Exchange and Risk Control Instruments

Filters