G345 FINAL EXAM QUESTIONS AND ANSWERS
A futures contract is
a.) an agreement that specifies the delivery of a commodity or financial instrument at an
agreed-upon future date at a currently agreed upon price
b.) an agreement that specifies the delivery of a commodity or financial instrument at an
agreed-upon future date, with the price to be negotiated at the time of delivery.
c.) an agreement that specifies the delivery of a commodity or financial instrument at a
currently agreed upon price, with date of delivery to be negotiated subsequently.
d.) an agreement that specifies the delivery of a commodity or financial instrument, with
the price and date of delivery to be negotiated subsequently. - Answers - a
Hedgers are primarily interested in - Answers - reducing their exposure to the risk of
price fluctuations
A lender who is worried that its cost of funds might rise during the term of a loan it has
made, can hedge against this rise by - Answers - selling futures contracts on Treasury
bills
Profits from speculation arise because of - Answers - disagreements among traders
about future prices of a commodity or financial instrument.
Members of Congress are able to influence monetary policy (albeit indirectly) through
their ability to: - Answers - propose legislation that would force the Fed to submit budget
requests to Congress, as must other government agencies
The sum of vault cash and bank deposits at the Federal Reserve banks is called -
Answers - reserves
If the Fed purchases securities worth $10 million from a commercial bank, the
BANKING SYSTEM'S balance sheet will show - Answers - a decrease in securities held
of $10 million and an increase in bank reserves of $10 million
Factors that cause the monetary base to increase include - Answers - an increase in the
Fed's holding of Treasury securities
- Open Market Purchase-- makes reserves go up
If either Treasury deposits or foreign deposits at the Fed are predicted to temporarily
FALL, then a _____ open market _____ would be needed to offset the expected _____
in reserves and the monetary base - Answers - defensive, sale, increase
A futures contract is
a.) an agreement that specifies the delivery of a commodity or financial instrument at an
agreed-upon future date at a currently agreed upon price
b.) an agreement that specifies the delivery of a commodity or financial instrument at an
agreed-upon future date, with the price to be negotiated at the time of delivery.
c.) an agreement that specifies the delivery of a commodity or financial instrument at a
currently agreed upon price, with date of delivery to be negotiated subsequently.
d.) an agreement that specifies the delivery of a commodity or financial instrument, with
the price and date of delivery to be negotiated subsequently. - Answers - a
Hedgers are primarily interested in - Answers - reducing their exposure to the risk of
price fluctuations
A lender who is worried that its cost of funds might rise during the term of a loan it has
made, can hedge against this rise by - Answers - selling futures contracts on Treasury
bills
Profits from speculation arise because of - Answers - disagreements among traders
about future prices of a commodity or financial instrument.
Members of Congress are able to influence monetary policy (albeit indirectly) through
their ability to: - Answers - propose legislation that would force the Fed to submit budget
requests to Congress, as must other government agencies
The sum of vault cash and bank deposits at the Federal Reserve banks is called -
Answers - reserves
If the Fed purchases securities worth $10 million from a commercial bank, the
BANKING SYSTEM'S balance sheet will show - Answers - a decrease in securities held
of $10 million and an increase in bank reserves of $10 million
Factors that cause the monetary base to increase include - Answers - an increase in the
Fed's holding of Treasury securities
- Open Market Purchase-- makes reserves go up
If either Treasury deposits or foreign deposits at the Fed are predicted to temporarily
FALL, then a _____ open market _____ would be needed to offset the expected _____
in reserves and the monetary base - Answers - defensive, sale, increase
