Question 1

U.S. Treasury securities have zero default and market risk, but are subject, like all other securities, to inflation risk.

Accepted Answer

A) True 
 B)False

Question 2

A market is ____ if investors can easily sell their securities very quickly.

Accepted Answer

A)  Deep and broad 
B)  Illiquid 
C)  Narrow and deep 
D)  Safe and liquid 
E)  Stable 
A)  Deep and broad 
B)  Illiquid 
C)  Narrow and deep 
D)  Safe and liquid 
E)  Stable

Question 3

The money market instrument with the largest dollar volume outstanding in 1995 was U.S. Treasury bills.

Accepted Answer

A) True 
 B)False

Question 4

A high discount rate relative to other money market interest rates promotes a stable money market, according to your text.

Accepted Answer

A) True 
 B)False

Question 5

No nation's money market today is unaffected by movements in interest rates and security prices in the international money market.

Accepted Answer

A) True 
 B)False

Question 6

According to the textbook, usually the single most important institution in money markets is the:

Accepted Answer

A)  Government treasury 
B)  Pension fund sector 
C)  Insurance sector 
D)  Central bank 
E)  None of the above 
A)  Government treasury 
B)  Pension fund sector 
C)  Insurance sector 
D)  Central bank 
E)  None of the above

Question 7

The largest of all borrowers in the money market is the Bank of Japan.

Accepted Answer

A) True 
 B)False

Question 8

Financial instruments that have an original maturity of one year or less normally are traded in the:

Accepted Answer

A)  Corporate bond market 
B)  Municipal bond market 
C)  Mortgage market 
D)  Money market 
E)  Capital market
F) None of the above 
A)  Corporate bond market 
B)  Municipal bond market 
C)  Mortgage market 
D)  Money market 
E)  Capital market
F) None of the above

Question 9

All of the features or characteristics listed below are generally true of the U.S. money market except one. Which feature or characteristic below is not generally true of the nation's money market?

Accepted Answer

A)  Retail market 
B)  Payments made with federal funds 
C)  Dominated by a small number large financial institutions 
D)  Security prices and yields not greatly influenced by size of transactions volume 
E)  Maturities of loans and securities traded are one year or less
F) Market and default risk are lower than is true of the capital market 
A)  Retail market 
B)  Payments made with federal funds 
C)  Dominated by a small number large financial institutions 
D)  Security prices and yields not greatly influenced by size of transactions volume 
E)  Maturities of loans and securities traded are one year or less
F) Market and default risk are lower than is true of the capital market

Question 10

How does the method for determining Treasury bill yields differ from the primary method used to calculate yields on most bonds? Why is this difference important?
 Bill yields are determined by the bank discount method, which does not compound interest rates and uses a 360-day year for simplicity.

Accepted Answer

In contrast, the calculation of yields o

Question 11

The largest and best-known corporations generally qualify for the prime bank lending rate.

Accepted Answer

A) True 
 B)False

Question 12

Why has the money market grown so rapidly in recent years? Why have its services been in heavy demand?

Accepted Answer

The money market simultaneously answers

Question 13

One of the principal uses of the money market is to finance capital investment projects, according to the text.

Accepted Answer

A) True 
 B)False

Question 14

The money markets of developing nations tend to be:

Accepted Answer

A)  Extremely active and deep 
B)  More stable than those of developed countries 
C)  Bank dominated 
D)  Securities dominated 
E)  None of the above 
A)  Extremely active and deep 
B)  More stable than those of developed countries 
C)  Bank dominated 
D)  Securities dominated 
E)  None of the above

Question 15

The money market of the U.S. is dominated by a relatively small number of large financial institutions.

Accepted Answer

A) True 
 B)False

Question 16

Federal funds include deposits kept with the Federal Reserve banks and:

Accepted Answer

A)  Vault cash held by banks and thrift institutions 
B)  Demand deposits held by the public 
C)  Deposits banks kept with correspondent banks across the nation 
D)  Balances security purchasers kept with brokers 
E)  None of the above 
A)  Vault cash held by banks and thrift institutions 
B)  Demand deposits held by the public 
C)  Deposits banks kept with correspondent banks across the nation 
D)  Balances security purchasers kept with brokers 
E)  None of the above

Question 17

What are some of the most important determinants of the prices and yields attached to money market instruments? Can you explain why?

Accepted Answer

Safety and liquidity are hallmarks of th

Question 18

Dollar bills are also subject to market risk in the domestic economy.

Accepted Answer

A) True 
 B)False

Question 19

The Eurodollar market is one of the most highly regulated markets in the world.

Accepted Answer

A) True 
 B)False

Question 20

The mechanism through which holders of temporary cash surpluses meet holders of temporary cash deficits is the:

Accepted Answer

A)  Money market 
B)  Capital market 
C)  Clearinghouse 
D)  Financial futures market 
E)  Arbitrage process
F) None of the above 
A)  Money market 
B)  Capital market 
C)  Clearinghouse 
D)  Financial futures market 
E)  Arbitrage process
F) None of the above

Exam 10: Factors Affecting the Volume of CDs

U.S. Treasury securities have zero default and market risk, but are subject, like all other securities, to inflation risk.

A market is ____ if investors can easily sell their securities very quickly.

The money market instrument with the largest dollar volume outstanding in 1995 was U.S. Treasury bills.

A high discount rate relative to other money market interest rates promotes a stable money market, according to your text.

No nation's money market today is unaffected by movements in interest rates and security prices in the international money market.

According to the textbook, usually the single most important institution in money markets is the:

The largest of all borrowers in the money market is the Bank of Japan.

Financial instruments that have an original maturity of one year or less normally are traded in the:

All of the features or characteristics listed below are generally true of the U.S. money market except one. Which feature or characteristic below is not generally true of the nation's money market?

How does the method for determining Treasury bill yields differ from the primary method used to calculate yields on most bonds? Why is this difference important? Bill yields are determined by the bank discount method, which does not compound interest rates and uses a 360-day year for simplicity.

The largest and best-known corporations generally qualify for the prime bank lending rate.

Why has the money market grown so rapidly in recent years? Why have its services been in heavy demand?

One of the principal uses of the money market is to finance capital investment projects, according to the text.

The money markets of developing nations tend to be:

The money market of the U.S. is dominated by a relatively small number of large financial institutions.

Federal funds include deposits kept with the Federal Reserve banks and:

What are some of the most important determinants of the prices and yields attached to money market instruments? Can you explain why?

Dollar bills are also subject to market risk in the domestic economy.

The Eurodollar market is one of the most highly regulated markets in the world.

The mechanism through which holders of temporary cash surpluses meet holders of temporary cash deficits is the:

Understanding the Financial System and Its Impact on the Economy and Markets

Financial Systems, Monetary Units, and the Role of Money in the Economy

Financial Indices, Market Information, and Economic Data

The Financial Crisis and Its Impact on the Mortgage Market and Economy

Understanding Interest Rates, Savings, and the Wealth Effect

Financial Concepts and Interest Rates

Effects of Inflation and Yield Curves on Stock Prices and Investments

Understanding Risk and Market Factors in Financial Securities

Exploring Financial Markets and Hedging Strategies

Exploring the Reserve Accounting System, Money Markets, and Financial Instruments

Exploring Central Banks and Their Impact on the Economy and Financial System

Central Banking and Monetary Policy: Exploring Tools and Strategies

Banking and Financial Services: Regulations, Operations, and Trends

Comparative Analysis of Financial Institutions and Their Operations

Exploring Various Aspects of Pension Funds, Finance Companies, and Insurance Industry

The Impact of Deregulation and Regulation on Financial Institutions and Banking Industry in the United States

Treasury Auctions, Public Debt, and Government Borrowing: Exploring the Us Treasury System

Corporate Bond Pricing, Market Development, and Financing Strategies

The Truth About Regulation Fd and Stock Holdings: Debunking Common Myths in the Financial Market

Flexible Savings Account Options

Mortgage Market and Mortgage Instruments

International Financial Transactions and Balance of Payments

International Banking and Financial Regulations

Exploring the Complexities of Financial Services and Regulation

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