Question 1

Briefly explain the process of securitizing mortgages.

Accepted Answer

The mortgage lender sells the loan to a

Question 2

Funds flow from lenders to borrowers

Accepted Answer

A)  indirectly through financial markets. 
B)  directly through financial intermediaries. 
C)  indirectly through financial intermediaries. 
D)  primarily through government agencies. 
A)  indirectly through financial markets. 
B)  directly through financial intermediaries. 
C)  indirectly through financial intermediaries. 
D)  primarily through government agencies.

Question 3

Fannie Mae and Freddie Mac both

Accepted Answer

A)  sell bonds to investors and use the funds to purchase mortgages. 
B)  help regulate the banking system. 
C)  directly lend funds to people seeking mortgages. 
D)  reduce access to funds for mortgages by purchasing existing mortgages. 
A)  sell bonds to investors and use the funds to purchase mortgages. 
B)  help regulate the banking system. 
C)  directly lend funds to people seeking mortgages. 
D)  reduce access to funds for mortgages by purchasing existing mortgages.

Question 4

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 5

Monetary policy refers to the government's

Accepted Answer

A)  decisions on how much money to spend. 
B)  decisions on how much money to collect in taxes. 
C)  plans for retiring the national debt. 
D)  management of the money supply and interest rates to achieve macroeconomic objectives. 
A)  decisions on how much money to spend. 
B)  decisions on how much money to collect in taxes. 
C)  plans for retiring the national debt. 
D)  management of the money supply and interest rates to achieve macroeconomic objectives.

Question 6

The process by which investment banks guarantee a certain price to a firm issuing stocks or bonds is known as

Accepted Answer

A)  underwriting. 
B)  securitization. 
C)  proprietary trading. 
D)  peer-to-peer lending. 
A)  underwriting. 
B)  securitization. 
C)  proprietary trading. 
D)  peer-to-peer lending.

Question 7

The main role of financial intermediaries is to

Accepted Answer

A)  provide funds to the federal government to cover the budget deficit. 
B)  borrow funds from savers and lend them to borrowers. 
C)  provide advice to consumers on how they should handle their finances. 
D)  help ensure that there is enough money in circulation. 
A)  provide funds to the federal government to cover the budget deficit. 
B)  borrow funds from savers and lend them to borrowers. 
C)  provide advice to consumers on how they should handle their finances. 
D)  help ensure that there is enough money in circulation.

Question 8

Financial securities that represent partial ownership of a corporation are known as

Accepted Answer

A)  bonds. 
B)  stocks. 
C)  coupons. 
D)  dividends. 
A)  bonds. 
B)  stocks. 
C)  coupons. 
D)  dividends.

Question 9

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 10

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.

Briefly explain the process of securitizing mortgages.

Funds flow from lenders to borrowers

Fannie Mae and Freddie Mac both

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

Monetary policy refers to the government's

The process by which investment banks guarantee a certain price to a firm issuing stocks or bonds is known as

The main role of financial intermediaries is to

Financial securities that represent partial ownership of a corporation are known as

A "primary market" is a market

By providing and communicating information,the financial system

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

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

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

Briefly explain the process of securitizing mortgages.

Funds flow from lenders to borrowers

Fannie Mae and Freddie Mac both

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

Monetary policy refers to the government's

The process by which investment banks guarantee a certain price to a firm issuing stocks or bonds is known as

The main role of financial intermediaries is to

Financial securities that represent partial ownership of a corporation are known as

A "primary market" is a market

By providing and communicating information,the financial system

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

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

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