FIN 306 QUIZ 1 QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026
Primary Markets - Answers markets in which corporations raise funds through new issues of
securities
Secondary Markets - Answers Stocks and bonds that are issued in the primary market and are then
traded, rebought and resold in the secondary market.
Money Markets - Answers markets that trade debt securities or instruments with maturities of less
than one year
Money Market Instruments - Answers Treasury Bills
Fed Fund rate
Repurchase Agreements
Commercial Paper
Negotiable Certificates of Deposits
Banker Acceptances
Capital Market - Answers markets that trade equity (stocks) and debt (bonds) instruments with
maturities of more than one year
Capital Market Instruments - Answers Corporate Stock
Mortgage Loans
Corporate Bonds
Treasury Bonds
State and Local Bonds
Bank + Consumer Loans
financial instution - Answers commercial banks, savings banks, credit unions, thrifts, insurance
companies, and mutual funds that channel funds from those with surplus funds (suppliers of funds) to
those with shortages of funds (users of funds)
Federal Reserve - Answers the central banking system of the United States
Fed's mandate - Answers maximize sustainable employment
stable prices
moderate long-term interest rates
facilitate foreign transactions
How many reserve banks are there? - Answers 12
What are the Fed's objectives? - Answers 1. Conducting monetary policy
2. Supervising and regulating depository institutions
3. Maintaining the stability of the financial system
4. Providing payment and other financial services to the U.S. gov, the public, financial institutions, and
foreign official institutions
FOMC (Federal Open Market Committee) - Answers 12 Memeber group that buys and sells US gov.
securities to influence the money supply.
monetary policy - Answers Government policy that attempts to manage the economy by controlling
the money supply and thus interest rates.
interest rates - Answers these represent the cost of borrowing money
Great Recession - Answers severe ongoing global economic problem that began in December 2007
and took a particularly sharp downward turn in September 2008; has affected the global economy,
with higher detriment in some countries than others; sparked by the outbreak of the late-2000s
financial crisis
Great Depression - Answers (HH) , starting with collapse of the US stock market in 1929, period of
worldwide economic stagnation and depression. Heavy borrowing by European nations from USA
during WW1 contributed to instability in European economies. Sharp declines in income and
production as buying and selling slowed down. Widespread unemployment, countries raised tariffs to
protect their industries. America stopped investing in Europe. Lead to loss of confidence that
economies were self adjusting, HH was blamed for it
discount rate - Answers rate the Federal Reserve charges for loans to commercial banks
Fed Funds Rate - Answers Interest rate banks charge each other for loans
Loanable Funds Theory - Answers holds that interest rates are a function of the supply of and
demand for loanable funds
process of monetary policy - Answers 1. open market operations
2. reserve requirements
Primary Markets - Answers markets in which corporations raise funds through new issues of
securities
Secondary Markets - Answers Stocks and bonds that are issued in the primary market and are then
traded, rebought and resold in the secondary market.
Money Markets - Answers markets that trade debt securities or instruments with maturities of less
than one year
Money Market Instruments - Answers Treasury Bills
Fed Fund rate
Repurchase Agreements
Commercial Paper
Negotiable Certificates of Deposits
Banker Acceptances
Capital Market - Answers markets that trade equity (stocks) and debt (bonds) instruments with
maturities of more than one year
Capital Market Instruments - Answers Corporate Stock
Mortgage Loans
Corporate Bonds
Treasury Bonds
State and Local Bonds
Bank + Consumer Loans
financial instution - Answers commercial banks, savings banks, credit unions, thrifts, insurance
companies, and mutual funds that channel funds from those with surplus funds (suppliers of funds) to
those with shortages of funds (users of funds)
Federal Reserve - Answers the central banking system of the United States
Fed's mandate - Answers maximize sustainable employment
stable prices
moderate long-term interest rates
facilitate foreign transactions
How many reserve banks are there? - Answers 12
What are the Fed's objectives? - Answers 1. Conducting monetary policy
2. Supervising and regulating depository institutions
3. Maintaining the stability of the financial system
4. Providing payment and other financial services to the U.S. gov, the public, financial institutions, and
foreign official institutions
FOMC (Federal Open Market Committee) - Answers 12 Memeber group that buys and sells US gov.
securities to influence the money supply.
monetary policy - Answers Government policy that attempts to manage the economy by controlling
the money supply and thus interest rates.
interest rates - Answers these represent the cost of borrowing money
Great Recession - Answers severe ongoing global economic problem that began in December 2007
and took a particularly sharp downward turn in September 2008; has affected the global economy,
with higher detriment in some countries than others; sparked by the outbreak of the late-2000s
financial crisis
Great Depression - Answers (HH) , starting with collapse of the US stock market in 1929, period of
worldwide economic stagnation and depression. Heavy borrowing by European nations from USA
during WW1 contributed to instability in European economies. Sharp declines in income and
production as buying and selling slowed down. Widespread unemployment, countries raised tariffs to
protect their industries. America stopped investing in Europe. Lead to loss of confidence that
economies were self adjusting, HH was blamed for it
discount rate - Answers rate the Federal Reserve charges for loans to commercial banks
Fed Funds Rate - Answers Interest rate banks charge each other for loans
Loanable Funds Theory - Answers holds that interest rates are a function of the supply of and
demand for loanable funds
process of monetary policy - Answers 1. open market operations
2. reserve requirements
