MONEY AND BANKING (DAVIDSSON) FINAL EXAM QUESTIONS

MONEY AND BANKING FINAL EXAM

Ifooaoochangeooinootheoomoneyoostockooisoocompletelyooneutral,ooitoowilloonotoogenerateooa
nyoochangeooinoorelativeooprices.
(a)ootrue
(b)oofalseoo-ooans--✔✔(a)ooTrue

AllooofootheoofollowingooareooFederalooReserveooassetsooexcept:
(a)ooFederalooReserveooNotes
(b)ooU.S.oogovernmentoosecurities
(c)oodiscountooloansootooobanks
(d)oogoldoocertificates
(e)ooforeignoocurrenciesoo-ooans--✔✔NotooD

Whichooofootheoofollowingoocanooaffectootheooliquidityooofooaoofinancialooinstrument?
(a)oomaturity
(b)oodefault-risk
(c)oomarketability
(d)ooallooofootheooabove
(e)oononeooofootheooaboveoo-ooans--✔✔(d)ooallooofootheooabove

Ifootheoopriceooofoooilooremainsooconstantoorelativeootooootheroogoodsooandooservices,oowh
atooisoohappeningootoootheoopriceoolevel?
(a)ooitooisoorising
(b)ooitooisoofalling
(c)ooitooremainsootheoosame
(d)ooweoodooonotooknowoo-ooans--✔✔(d)ooweoodooonotooknow

IfootheoomarketoopriceooofooaooTreasuryoobillooorooanyoootheroodebtooinstrumentoorises,oow
hatoohappensootoootheooyieldootooomaturityooonoothatooinstrumentooforoosomeoneooaboutoo
tooopurchaseooit?
(a)ooitoogoesooup
(b)ooitoogoesoodown
(c)ooitooremainsootheoosame
(d)ooweoodooonotooknowoo-ooans--✔✔(b)ooitoogoesoodown

Allooofootheoofollowingoocanooqualifyooasoomoneyoosubstitutesoo(insideoomoney)ooexcept:
(a)oobankoonotes
(b)oodeposits
(c)ootheootokenoocoinsoocurrentlyooissuedoobyootheooU.S.ooTreasury
(d)oogoldoocertificatesoo100-percentoobackedoobyoogold

,(e)ooFederalooReserveoonotesoowhenootheyoowereooredeemableooonoodemandooforoogoldo
o-ooans--✔✔(c)ootheootokenoocoinsoocurrentlyooissuedoobyootheooU.S.ooTreasury


Whichooadjustsooforooinflationooandooisoomeasuredooaccordingootoooconstantooprices:
(a)oorealoomagnitudes
(b)oonominaloomagnitudesoo-ooans--✔✔(a)oorealoomagnitudes

Allooofootheoofollowingooareooderivativeoosecuritiesooexcept:
(a)ooaoocreditoodefaultooswap
(b)ooaoostockoooption
(c)ooaoofinancialoofuturesoocontractoo
(d)ooaoomortgage-backedoosecurity
(e)ooaoosubprimeoomortgageoo-ooans--✔✔NotooA

Allooofootheoofollowingooareoodepositoryooinstitutionsooexcept:
(a)oocommercialoobanks
(b)oosavingsooandooloanooassociations
(c)oosavingsoobanks
(d)oocreditoounions
(e)oofinanceoocompaniesoo-ooans--✔✔(e)oofinanceoocompanies

Whatoohappensootooointerestooratesooasoodefaultooriskooincreases,ooceterisooparibus?oo
(a)ootheyoorise
(b)ootheyoofall
(c)ootheyooremainootheoosame
(d)ooweoodooonotooknowoo-ooans--✔✔(a)ootheyoorise

Ifootheoorealoorateooofoointerestooisoo3oopercent,ooandootheooexpectedoorateooofooinflationooi
soo2oopercent,oowhatoowilloobeootheoonominaloorateooofoointerest?
(a)oo1oopercent
(b)oo3oopercent
(c)oo5oopercent
(d)oo1.5oopercent
(e)oononeooofootheooaboveoo-ooans--✔✔(c)oo5oopercent

Foroo$9,900ooyouoopurchaseooaooT-
billoothatoowilloopayoo$10,000ooinoo42oodays.ooWhatooisooyourooyieldootooomaturity?oo
(a)oo8.78oopercent
(b)oo8.57oopercent
(c)oo7.88oopercent
(d)oo3.68oopercent
(e)oo4.24oopercentoo-ooans--✔✔(a)oo8.78oopercent

Whatoodistinguishesootheoomoneyoomarketoofromootheoocapitaloomarket?
(a)oomaturity
(b)oodefault-risk

, (c)oomarketability
(d)ooallooofootheooabove
(e)oononeooofootheooaboveoo-ooans--✔✔(a)oomaturity`

Whatoohappensootoootheoodemandooforoomoneyooasootheoointerestoorateooonoootherooasse
tsoorises,ooceterisooparibus?ooDoesooit:
(a)oorise
(b)oofall
(c)ooremainootheoosame
(d)ooweoodon'tooknowoo-ooans--✔✔(b)oofall

Whichooofootheoofollowingoocanoocontributeootooomoraloohazardooinootheoofinancialoosyste
m:
(a)oodepositooinsurance
(b)oo"toooobigootooofail"
(c)oopurchaseooandooassumptionooagreements
(d)oodiscounts
(e)ooallooofootheooaboveoo-ooans--✔✔(e)ooallooofootheooabove

Whatootendsootooohappenootoootheoomoneyoostockooduringooaoobankoopanic:
(a)ooitoorises
(b)ooitoofalls
(c)ooitooremainsootheoosame
(d)ooweoodon'tooknowoo-ooans--✔✔(b)ooitoofalls

TheooBaselooAccordsooareootheoosourceooofoowhichooofootheoofollowingoobankooregulation
s:
(a)ooreserveoorequirements
(b)oorisk-basedoopremiumsooforoodepositooinsurance
(c)oorisk-basedoocapitaloorequirements
(d)ooallooofootheooabove
(e)oononeooofootheooaboveoo-ooans--✔✔(c)oorisk-basedoocapitaloorequirements

Whichooofootheoofollowingoostatementsooisoofalse?
(a)ooTheoomostoocommonooshapeooforootheooyieldoocurveooisoodownwardoosloping
(b)ooBecauseooofooliquidityoopreference,oofinancialooinstrumentsoowithoogreaterooliquidityoo
haveoolowerooyieldsootooomaturity.
(c)ooTheoopresentoovalueooofooaoodollaroopaidootodayooisoogreateroothanootheoopresentoova
lueooofooaoodollaroopaidoooneooyearoofromoonow.
(d)ooTheooequilibriumoorateooofoopureooprofitooisoozero.
(e)ooUnderootheooNationalooBankingooActs,ootheoofederaloobond-
collateraloorequirementoocreatedootheooproblemooofooanooinelasticoocurrencyooandoomade
oobankoorunsoomoreoolikely.oo-ooans--
✔✔(a)ooTheoomostoocommonooshapeooforootheooyieldoocurveooisoodownwardoosloping

Commodityoomoney:oo