Financial markets and institutions Exam 1 Correctly Solved Questions And
Answers | Updated
1. Money Markets financial markets in which debt securities with original maturities of one year or
less than one year are issued and traded (e.g. CD's and Treasury bills)
2. Capital Markets financial markets in which debt instruments with original maturities greater than
one year and equity instruments are issued and traded (e.g. bonds and stocks)
3. Bond Markets financial markets in which debt instruments (bonds) are issued and traded.
4. Foreign Ex- financial markets in which currencies are traded.
change Markets
5. Federal Reserve supervises and regulates: bank holding companies, member state banks, foreign
System (Fed) branches of member banks, foreign banks with US operations, and nonbanking
activities of foreign banks
6. Structure of the 12 districts, operates under a board of governors, all national banks have to align
Federal Reserve with the fed
System
7. Board of Gover- 7-member board appointed by the President and confirmed by the Senate
nors 14 year terms, non renewable
chairman and vice chairman are appointed to 4 year renewable terms
Approves changes in reserve requirements and discount rates and interest rates
Supervises and regulates some banks in the banking system
Issues regulations covering banking and consumer protection matters
8. Federal Reserve Participate in the country's payment system
Banks Distribute notes and coins
Supervise and regulate member banks and bank holding companies (BHCs)
Act as bankers to members banks and the Treasury
9. Oversees the country's open market operations (OMO)
- Primary tool to administer the country's monetary
, Financial markets and institutions Exam 1 Correctly Solved Questions And
Answers | Updated
Federal Open policy and manage its credit environment
Market Commit- - Purchase and Sale of Treasury securities
tee (FOMC) - Repurchase Agreements versus Reverse Repurchase Agreements
12 members, 7 are on board of governors
president of NY bank is automatically on the committee and the other 4 spots
rotate among remaining 11 bank heads
set ranges for monetary growth and the fed fund rates
10. Monetary policy Open Market Operations (OMOs)
tools of the fed Reserve Requirements
Contractual Clearing Balances
Discount Window Lending
- Primary Window - is a lending program available to depository institutions that
are in generally sound financial condition
- Secondary Window - is available to depository institutions that are not eligible
for primary credit.
- Seasonal Window - program assists small depository institutions in managing
significant seasonal swings in their loans and deposits
11. Charter cate- Member Banks
gories of com- - National Banks - chartered by the federal government through the Oflce of the
mercial banks Comptroller of the Currency (OCC)
- State member Banks - chartered by the state that are members of the Federal
Reserve System
Non member Banks
- State non member Banks - chartered by the state that are not members of the
Federal Reserve System
12.
, Financial markets and institutions Exam 1 Correctly Solved Questions And
Answers | Updated
Money Market Issuing and trading of short-term debt obligations with original maturity of one
Fundamentals year or less
Participants include corporations and financial institutions that have idle cash but
are restricted to a short-term investment horizon
Allocates the nation's supply of liquid funds among major short-term sources of
funds (lenders) and users of funds (borrowers)
Low risk, high liquidity
13. Money Market in- Banker's Acceptances
struments Commercial Paper (CPs)
Federal Funds ("Fed Funds")
Negotiable Certificates of Deposit (NCDs)
Repurchase Agreements ("Repos")
Treasury Bills (T-Bills)
14. Bankers Accep- A time draft payable to a seller of goods with payment guaranteed by a bank
tances Arise from international trade transactions and are used to finance trade in goods
that have yet to be shipped from a foreign exporter (seller) to a domestic importer
(buyer)
Foreign exporters prefer that banks act as guarantors for payment before sending
goods to importer
SINGLE PAYMENT YIELD
15. Commercial Pa- An unsecured short-term promissory note issued by a corporation to raise
per short-term cash, often to finance working capital requirements
Generally sold with maturities of 1 to 270 days (if maturity is greater than 270
days, SEC requires registration)
Generally held until maturity so there is not an active secondary market
- can be asset backed
-DISCOUNT YIELD
Answers | Updated
1. Money Markets financial markets in which debt securities with original maturities of one year or
less than one year are issued and traded (e.g. CD's and Treasury bills)
2. Capital Markets financial markets in which debt instruments with original maturities greater than
one year and equity instruments are issued and traded (e.g. bonds and stocks)
3. Bond Markets financial markets in which debt instruments (bonds) are issued and traded.
4. Foreign Ex- financial markets in which currencies are traded.
change Markets
5. Federal Reserve supervises and regulates: bank holding companies, member state banks, foreign
System (Fed) branches of member banks, foreign banks with US operations, and nonbanking
activities of foreign banks
6. Structure of the 12 districts, operates under a board of governors, all national banks have to align
Federal Reserve with the fed
System
7. Board of Gover- 7-member board appointed by the President and confirmed by the Senate
nors 14 year terms, non renewable
chairman and vice chairman are appointed to 4 year renewable terms
Approves changes in reserve requirements and discount rates and interest rates
Supervises and regulates some banks in the banking system
Issues regulations covering banking and consumer protection matters
8. Federal Reserve Participate in the country's payment system
Banks Distribute notes and coins
Supervise and regulate member banks and bank holding companies (BHCs)
Act as bankers to members banks and the Treasury
9. Oversees the country's open market operations (OMO)
- Primary tool to administer the country's monetary
, Financial markets and institutions Exam 1 Correctly Solved Questions And
Answers | Updated
Federal Open policy and manage its credit environment
Market Commit- - Purchase and Sale of Treasury securities
tee (FOMC) - Repurchase Agreements versus Reverse Repurchase Agreements
12 members, 7 are on board of governors
president of NY bank is automatically on the committee and the other 4 spots
rotate among remaining 11 bank heads
set ranges for monetary growth and the fed fund rates
10. Monetary policy Open Market Operations (OMOs)
tools of the fed Reserve Requirements
Contractual Clearing Balances
Discount Window Lending
- Primary Window - is a lending program available to depository institutions that
are in generally sound financial condition
- Secondary Window - is available to depository institutions that are not eligible
for primary credit.
- Seasonal Window - program assists small depository institutions in managing
significant seasonal swings in their loans and deposits
11. Charter cate- Member Banks
gories of com- - National Banks - chartered by the federal government through the Oflce of the
mercial banks Comptroller of the Currency (OCC)
- State member Banks - chartered by the state that are members of the Federal
Reserve System
Non member Banks
- State non member Banks - chartered by the state that are not members of the
Federal Reserve System
12.
, Financial markets and institutions Exam 1 Correctly Solved Questions And
Answers | Updated
Money Market Issuing and trading of short-term debt obligations with original maturity of one
Fundamentals year or less
Participants include corporations and financial institutions that have idle cash but
are restricted to a short-term investment horizon
Allocates the nation's supply of liquid funds among major short-term sources of
funds (lenders) and users of funds (borrowers)
Low risk, high liquidity
13. Money Market in- Banker's Acceptances
struments Commercial Paper (CPs)
Federal Funds ("Fed Funds")
Negotiable Certificates of Deposit (NCDs)
Repurchase Agreements ("Repos")
Treasury Bills (T-Bills)
14. Bankers Accep- A time draft payable to a seller of goods with payment guaranteed by a bank
tances Arise from international trade transactions and are used to finance trade in goods
that have yet to be shipped from a foreign exporter (seller) to a domestic importer
(buyer)
Foreign exporters prefer that banks act as guarantors for payment before sending
goods to importer
SINGLE PAYMENT YIELD
15. Commercial Pa- An unsecured short-term promissory note issued by a corporation to raise
per short-term cash, often to finance working capital requirements
Generally sold with maturities of 1 to 270 days (if maturity is greater than 270
days, SEC requires registration)
Generally held until maturity so there is not an active secondary market
- can be asset backed
-DISCOUNT YIELD
