Question 1

The two government sponsored enterprises (GSEs) that sell bonds and use the proceeds to purchase mortgages are

Accepted Answer

A) Fannie Mae and Freddie Mac 
B) Ginnie Mae and Housing and Urban Development (HU
D)  
C) Ginnie Mae and Daisy Mae 
D) Freddie Mac and Housing and Urban Development (HU
D)  
A) Fannie Mae and Freddie Mac 
B) Ginnie Mae and Housing and Urban Development (HU
D)  
C) Ginnie Mae and Daisy Mae 
D) Freddie Mac and Housing and Urban Development (HU
D)

Question 2

Loans to purchase housing, land, or other real structures are called which of the following?

Accepted Answer

A) home equity loans 
B) mortgages 
C) variable rate loans 
D) fixed rate loans 
A) home equity loans 
B) mortgages 
C) variable rate loans 
D) fixed rate loans

Question 3

Since 1984, the trading of bankers' acceptances has

Accepted Answer

A) Declined. 
B) remained the same. 
C) risen slightly. 
D) remained the same, and then risen sharply. 
A) Declined. 
B) remained the same. 
C) risen slightly. 
D) remained the same, and then risen sharply.

Question 4

Market makers are which of the following?

Accepted Answer

A) Buyers 
B) Sellers 
C) Coordinators of buyers and sellers 
D) All of the above are market makers. 
A) Buyers 
B) Sellers 
C) Coordinators of buyers and sellers 
D) All of the above are market makers.

Question 5

Nearly all transactions in financial markets occur in the

Accepted Answer

A) money market. 
B) secondary market. 
C) CD market. 
D) primary market. 
A) money market. 
B) secondary market. 
C) CD market. 
D) primary market.

Question 6

If Michelle wanted to purchase newly issued stock from a new computer company, she would purchase this in a

Accepted Answer

A) primary market. 
B) secondary market. 
C) money market. 
D) CD market. 
A) primary market. 
B) secondary market. 
C) money market. 
D) CD market.

Question 7

Dollar-denominated deposits held abroad are called

Accepted Answer

A) eurodollars. 
B) corporate stocks. 
C) banker's acceptances. 
D) commercial paper. 
A) eurodollars. 
B) corporate stocks. 
C) banker's acceptances. 
D) commercial paper.

Question 8

Assume you bought a one-year Treasury bill in June, 2010 for $9,789 that can be redeemed for $10,000 in June, 2011. What is the yield on this purchase?

Accepted Answer

A) $211.00 
B) 2.11% 
C) 2.16% 
D) $46.39 
A) $211.00 
B) 2.11% 
C) 2.16% 
D) $46.39

Question 9

Equity claims that represent ownership of the net assets and income are called

Accepted Answer

A) bonds. 
B) debtors' equity. 
C) stocks. 
D) repurchase agreements. 
A) bonds. 
B) debtors' equity. 
C) stocks. 
D) repurchase agreements.

Question 10

The __________ is the market for financial assets with an original maturity of one year or less.

Accepted Answer

A) money market 
B) commercial paper market 
C) capital market 
D) Eurodollar market 
A) money market 
B) commercial paper market 
C) capital market 
D) Eurodollar market

Question 11

The __________ is the price at which a market maker is willing to buy securities

Accepted Answer

A) bid price 
B) primary market price 
C) broker price 
D) asked price 
A) bid price 
B) primary market price 
C) broker price 
D) asked price

Question 12

Repurchase agreements are

Accepted Answer

A) long-term agreements to buy a government security that will then be sold back to the original seller. 
B) long-term agreements to buy a corporate bond that will then be sold back to the original seller. 
C) short term agreements in which the seller sells a government security with the simultaneous agreement to buy the security back at a higher price on a later date. 
D) short-term agreements to sell a corporate bond that will then be bought back by the original buyer. 
A) long-term agreements to buy a government security that will then be sold back to the original seller. 
B) long-term agreements to buy a corporate bond that will then be sold back to the original seller. 
C) short term agreements in which the seller sells a government security with the simultaneous agreement to buy the security back at a higher price on a later date. 
D) short-term agreements to sell a corporate bond that will then be bought back by the original buyer.

Question 13

The __________ market is where a security is sold for the first time.

Accepted Answer

A) money 
B) spot 
C) primary 
D) secondary 
A) money 
B) spot 
C) primary 
D) secondary

Question 14

A U.S. Treasury bill has which of the following characteristics?

Accepted Answer

A) short-term debt 
B) sells at a discount 
C) is very liquid and very safe 
D) All of the above are characteristics of a Treasury bill. 
A) short-term debt 
B) sells at a discount 
C) is very liquid and very safe 
D) All of the above are characteristics of a Treasury bill.

Question 15

Income that is received from equity claims on corporations is called which of these?

Accepted Answer

A) dividends 
B) interest 
C) net income 
D) incremental profit 
A) dividends 
B) interest 
C) net income 
D) incremental profit

Question 16

Long-term debt instruments issued by corporations are called

Accepted Answer

A) revenue bonds. 
B) corporate stocks. 
C) corporate bonds. 
D) commercial paper. 
A) revenue bonds. 
B) corporate stocks. 
C) corporate bonds. 
D) commercial paper.

Question 17

Preferred stock pays a ________ dividend.

Accepted Answer

A) fixed 
B) variable 
C) lower 
D) higher 
A) fixed 
B) variable 
C) lower 
D) higher

Question 18

In order to make markets, which of the following are true about the activities of the market maker?

Accepted Answer

A) Market makers charge a brokerage fee for each transaction. 
B) Market makers hold an inventory of securities in which they deal. 
C) Markets makers raise funds to finance deficits. 
D) All of the above are true. 
A) Market makers charge a brokerage fee for each transaction. 
B) Market makers hold an inventory of securities in which they deal. 
C) Markets makers raise funds to finance deficits. 
D) All of the above are true.

Question 19

The __________ is the price the market maker (dealer) is willing to pay to acquire a security.

Accepted Answer

A) bid price 
B) asked price 
C) dealer price 
D) discount basis price 
A) bid price 
B) asked price 
C) dealer price 
D) discount basis price

Question 20

Which market is often referred to as the short-term market?

Accepted Answer

A) the capital market 
B) the primary market 
C) the money market 
D) the stock market 
A) the capital market 
B) the primary market 
C) the money market 
D) the stock market

Exam 4: Financial Markets, Instruments, and Market Makers

The two government sponsored enterprises (GSEs) that sell bonds and use the proceeds to purchase mortgages are

Loans to purchase housing, land, or other real structures are called which of the following?

Since 1984, the trading of bankers' acceptances has

Market makers are which of the following?

Nearly all transactions in financial markets occur in the

If Michelle wanted to purchase newly issued stock from a new computer company, she would purchase this in a

Dollar-denominated deposits held abroad are called

Assume you bought a one-year Treasury bill in June, 2010 for $9,789 that can be redeemed for $10,000 in June, 2011. What is the yield on this purchase?

Equity claims that represent ownership of the net assets and income are called

The __________ is the market for financial assets with an original maturity of one year or less.

The __________ is the price at which a market maker is willing to buy securities

Repurchase agreements are

The __________ market is where a security is sold for the first time.

A U.S. Treasury bill has which of the following characteristics?

Income that is received from equity claims on corporations is called which of these?

Long-term debt instruments issued by corporations are called

Preferred stock pays a ________ dividend.

In order to make markets, which of the following are true about the activities of the market maker?

The __________ is the price the market maker (dealer) is willing to pay to acquire a security.

Which market is often referred to as the short-term market?

Introduction and Overview

Money and Its Role in the Economy

The Overseer: the Federal Reserve System

Interest Rates and Bond Prices

The Structure of Interest Rates

Market Efficiency and the Flow of Funds Among Sectors

An Introduction to Financial Intermediaries and Risk

Commercial Banking Structure, Regulation, and Performance

Financial Innovation

Financial Instability and Strains on the Financial System

Regulation of the Banking System and the Financial Services Industry

The Debt Markets

The Stock Market

Securities Firms, Mutual Funds, and Financial Conglomerates

How Exchange Rates Are Determined

Forward, Futures, and Options Agreements

The International Financial System

The Fed, Depository Institutions, and the Money Supply Process

The Demand for Real Money Balances and Market Equilibrium

Financial Aspects of the Household, Business, Government, and Rest-Of-The-World Sectors

Aggregate Demand and Aggregate Supply

The Challenges of Monetary Policy

The Process of Monetary Policy Formation

Policy Implementation

Monetary Policy in a Globalized Financial System

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