Financial Markets and Institutions Final Exam Questions And
Answers 100 Verified!!
1. An investor requires a 3% increase in purchasing pow- 5%
er in order to induce her to lend. She expects inflation
to be 2% next year. The nominal rate she must charge
is .
2. The main provider(s) of funds in the US Treasury are households and busi-
nesses
3. The total US government debt is currently closest $18.1 trillion
to .
4. Funds are provided to the initial issuer of securities in primary market
the
5. Equity securities have a expected return than higher; higher
most long term debt securities, and they exhibit
degree of risk.
6. The required return to implement a given business lower; greater
project will be if interest rates are lower. This
implies that businesses will demand a quantity
of loanable funds when interest rates are lower.
7. Quantitative easing can be best described as the purchase of govern-
ment securities to lower
interest rates and increase
the money supply
8. If the economy weakens, there is pressure on in- downward; downward
terest rates. If the federal reserve increases the money
supply there is pressure on interest rates
9. decrease; upward
, Financial Markets and Institutions Final Exam Questions And
Answers 100 Verified!!
Assume that foreign investors who have invested in
US securities decide to decrease their holdings of US
securities and to instead increase their holdings of
securities in their own countries. This should cause
the supply of loanable funds in the US to and
should place pressure on US interest rates
10. The Federal Reserve does all but which of the follow- Insure Deposits
ing?
11. A short term unsecured promissory note issued by a commercial paper
company is
12. Assume the yield curve is flat. If investors flood the become upward sloping
short term market and avoid the long term market,
they may cause the yield curve to
13. Other things equal, the yield required on non-callable less than
bonds should be than the yield required on
callable bonds whose other characteristics are exactly
the same
14. The dollar price at which non-convertible bonds can Less than
be issued should be - than the price at which con-
vertible bonds can be issued.
15. Which of the following is an action that the Fed uses buying or selling treasury
to increase or decrease the money supply? securities in the secondary
market
16. To decrease the money supply, the Fed could the increase
reserve requirement ration
Answers 100 Verified!!
1. An investor requires a 3% increase in purchasing pow- 5%
er in order to induce her to lend. She expects inflation
to be 2% next year. The nominal rate she must charge
is .
2. The main provider(s) of funds in the US Treasury are households and busi-
nesses
3. The total US government debt is currently closest $18.1 trillion
to .
4. Funds are provided to the initial issuer of securities in primary market
the
5. Equity securities have a expected return than higher; higher
most long term debt securities, and they exhibit
degree of risk.
6. The required return to implement a given business lower; greater
project will be if interest rates are lower. This
implies that businesses will demand a quantity
of loanable funds when interest rates are lower.
7. Quantitative easing can be best described as the purchase of govern-
ment securities to lower
interest rates and increase
the money supply
8. If the economy weakens, there is pressure on in- downward; downward
terest rates. If the federal reserve increases the money
supply there is pressure on interest rates
9. decrease; upward
, Financial Markets and Institutions Final Exam Questions And
Answers 100 Verified!!
Assume that foreign investors who have invested in
US securities decide to decrease their holdings of US
securities and to instead increase their holdings of
securities in their own countries. This should cause
the supply of loanable funds in the US to and
should place pressure on US interest rates
10. The Federal Reserve does all but which of the follow- Insure Deposits
ing?
11. A short term unsecured promissory note issued by a commercial paper
company is
12. Assume the yield curve is flat. If investors flood the become upward sloping
short term market and avoid the long term market,
they may cause the yield curve to
13. Other things equal, the yield required on non-callable less than
bonds should be than the yield required on
callable bonds whose other characteristics are exactly
the same
14. The dollar price at which non-convertible bonds can Less than
be issued should be - than the price at which con-
vertible bonds can be issued.
15. Which of the following is an action that the Fed uses buying or selling treasury
to increase or decrease the money supply? securities in the secondary
market
16. To decrease the money supply, the Fed could the increase
reserve requirement ration
