ECON 206 FINAL EXAM 2024/2025 VERIFIED
QUESTIONS AND ANSWERS GRADED
A+
According to the efficient markets hypothesis, the current price of a financial security
-fully reflects all available relevant information.
-is a result of none of these
-is the discounted net present value of future interest payments
-is determined by the lowest successful bidder
fully reflects all available relevant information.
If the liquidity effect is smaller than the other effects, and the adjustment to expected inflation is
immediate, then the
-interest rate will fall immediately below the initial level when the money supply grows.
-interest rate will rise.
-interest rate will fall.
-interest rate will rise immediately above the initial level when the money supply grows.
interest rate will rise immediately above the initial level when the money supply grows.
,Municipal bonds have default risk, yet their interest rates are usually lower than the interest rates
on default-free Treasury bonds. This suggests that
-the benefit from the tax-exempt status of municipal bonds equals their default risk.
-the benefit from the tax-exempt status of municipal bonds exceeds their default risk.
-the benefit from the tax-exempt status of municipal bonds is less than their default risk.
-Treasury bonds are not default-free
-the benefit from the tax-exempt status of municipal bonds exceeds their default risk.
In the Gordon Growth Model, the dividend growth rate is assumed to be ________ the required
return on equity.
greater than
proportional to
less than
equal to
less than
The coronavirus pandemic lead to a decline in stock prices because
higher expected future stock prices.
,of a lowered expected dividend growth rate.
of a lowered required return on investment in equity.
higher current dividends
of a lowered expected dividend growth rate.
Financial markets quickly eliminate unexploited profit opportunities through changes in
dividend payments.
monetary policy.
asset prices.
tax laws.
asset prices.
Which of the following are reported as liabilities on a bank's balance sheet?
checkable deposits
deposits with other banks
consumer loans
reserves
checkable deposits
, Banks that actively manage liabilities will most likely meet a reserve shortfall by
-borrowing federal funds
-selling municipal bonds.
-calling in loans.
-seeking new deposits
borrowing federal funds
In the market for money, when the Fed ________ the money stock, the money supply curve
shifts to the ________ and the interest rate ________, everything else held constant.
-decreases; right; rises
-decreases; left; falls
-increases; left; rises
-increases; right; fall
increases; right; falls
If a bank has excess reserves greater than the amount of a deposit outflow, the outflow will result
in equal reductions in
capital and loans.
deposits and loans.
deposits and reserves.
capital and reserve
QUESTIONS AND ANSWERS GRADED
A+
According to the efficient markets hypothesis, the current price of a financial security
-fully reflects all available relevant information.
-is a result of none of these
-is the discounted net present value of future interest payments
-is determined by the lowest successful bidder
fully reflects all available relevant information.
If the liquidity effect is smaller than the other effects, and the adjustment to expected inflation is
immediate, then the
-interest rate will fall immediately below the initial level when the money supply grows.
-interest rate will rise.
-interest rate will fall.
-interest rate will rise immediately above the initial level when the money supply grows.
interest rate will rise immediately above the initial level when the money supply grows.
,Municipal bonds have default risk, yet their interest rates are usually lower than the interest rates
on default-free Treasury bonds. This suggests that
-the benefit from the tax-exempt status of municipal bonds equals their default risk.
-the benefit from the tax-exempt status of municipal bonds exceeds their default risk.
-the benefit from the tax-exempt status of municipal bonds is less than their default risk.
-Treasury bonds are not default-free
-the benefit from the tax-exempt status of municipal bonds exceeds their default risk.
In the Gordon Growth Model, the dividend growth rate is assumed to be ________ the required
return on equity.
greater than
proportional to
less than
equal to
less than
The coronavirus pandemic lead to a decline in stock prices because
higher expected future stock prices.
,of a lowered expected dividend growth rate.
of a lowered required return on investment in equity.
higher current dividends
of a lowered expected dividend growth rate.
Financial markets quickly eliminate unexploited profit opportunities through changes in
dividend payments.
monetary policy.
asset prices.
tax laws.
asset prices.
Which of the following are reported as liabilities on a bank's balance sheet?
checkable deposits
deposits with other banks
consumer loans
reserves
checkable deposits
, Banks that actively manage liabilities will most likely meet a reserve shortfall by
-borrowing federal funds
-selling municipal bonds.
-calling in loans.
-seeking new deposits
borrowing federal funds
In the market for money, when the Fed ________ the money stock, the money supply curve
shifts to the ________ and the interest rate ________, everything else held constant.
-decreases; right; rises
-decreases; left; falls
-increases; left; rises
-increases; right; fall
increases; right; falls
If a bank has excess reserves greater than the amount of a deposit outflow, the outflow will result
in equal reductions in
capital and loans.
deposits and loans.
deposits and reserves.
capital and reserve
