FIN 326 Module 2 Exam with 100%
Correct Answers
What is a negotiable CD? - Answer- A bank issued time deposit
A dealer is quoting a $10,000 face 180 day T-Bill quoted at 2.75 bid, 2.65 ask. You can
buy this bill at ____ or sell it at _______. - Answer- $9,867.50;$9862.50
You buy a $10,000 par Treasury bill at $9,575 and sell it 60 days later for $9,675. What
was your EAR? - Answer- 6.52%
A time draft payable to a seller of goods with payment guaranteed by a bank is a... -
Answer- Banker's acceptance
A short term unsecured promissory note issued by a company is... - Answer-
Commercial Paper
The most liquid of the money market securities are... - Answer- T-Bills
Eurodollar CDs include... - Answer- 1. Dollars deposited in Caribbean banks
2. Dollars deposited in Europe
In the T-bill auction process the competitive bidder is guaranteed______ and a
noncompetitive bidder is guaranteed a _____. - Answer- Maximum price; given quantity
The rate or return on a repo is... - Answer- 1. Strongly affected by the current Fed funds
rate at the time of the repo
2. Determined at the time of the repo
A repo in essence is a collateralized... - Answer- Fed funds loan
If a $10,000 par T-Bill has a 3.75% discount quote and a 90 day maturity, what is the
price of the T-Bill to the nearest dollar? - Answer- $9906.25
For the purpose for which they are used, money market securities should have what? -
Answer- 1. Low trading costs
2. Little price risk
In a Treasury auction, preferential bidding status is granted to? - Answer-
Noncompetitive bidders
Correct Answers
What is a negotiable CD? - Answer- A bank issued time deposit
A dealer is quoting a $10,000 face 180 day T-Bill quoted at 2.75 bid, 2.65 ask. You can
buy this bill at ____ or sell it at _______. - Answer- $9,867.50;$9862.50
You buy a $10,000 par Treasury bill at $9,575 and sell it 60 days later for $9,675. What
was your EAR? - Answer- 6.52%
A time draft payable to a seller of goods with payment guaranteed by a bank is a... -
Answer- Banker's acceptance
A short term unsecured promissory note issued by a company is... - Answer-
Commercial Paper
The most liquid of the money market securities are... - Answer- T-Bills
Eurodollar CDs include... - Answer- 1. Dollars deposited in Caribbean banks
2. Dollars deposited in Europe
In the T-bill auction process the competitive bidder is guaranteed______ and a
noncompetitive bidder is guaranteed a _____. - Answer- Maximum price; given quantity
The rate or return on a repo is... - Answer- 1. Strongly affected by the current Fed funds
rate at the time of the repo
2. Determined at the time of the repo
A repo in essence is a collateralized... - Answer- Fed funds loan
If a $10,000 par T-Bill has a 3.75% discount quote and a 90 day maturity, what is the
price of the T-Bill to the nearest dollar? - Answer- $9906.25
For the purpose for which they are used, money market securities should have what? -
Answer- 1. Low trading costs
2. Little price risk
In a Treasury auction, preferential bidding status is granted to? - Answer-
Noncompetitive bidders
