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7/25/2019 FIN 350 Week 2 Quiz
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FIN 350 Week 2 Quiz – Strayer
Click on the Link Below to Purchae !" #ra$e$ Coure %aterial
http://budapp.net/FIN-350-Week-2-Quiz-Strayer-401.htm
Cha&ter '()ole o* Financial %arket an$ Intitution
1. Finania! market partiipant# $h% pr%&ide 'und# are a!!ed
a. de'iit unit#.
b. #urp!u# unit#.
. primary unit#.
d. #e%ndary unit#.
2. (he main pr%&ider)#* %' 'und# t% the +.S. (rea#ury i# )are*
a. h%u#eh%!d# and bu#ine##e#.
b. '%rei,n 'inania! in#tituti%n#.
. the Federa! e#er&e Sy#tem.
d. '%rei,n n%n'inania! #et%r#.
3. (he !ar,e#t de'iit unit i# )are*
a. h%u#eh%!d# and bu#ine##e#.
b. '%rei,n 'inania! in#tituti%n#.
. the +.S. (rea#ury.
d. '%rei,n n%n'inania! #et%r#.
4. (h%#e 'inania! market# that 'ai!itate the '!%$ %' #h%rt-term 'und# are kn%$n a#
a. m%ney market#.
b. apita! market#.
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. primary market#.
d. #e%ndary market#.
5. Fund# are pr%&ided t% the initia! i##uer %' #euritie# in the
a. #e%ndary market.
b. primary market.
. de'iit market.
d. #urp!u# market.
. Whih %' the '%!!%$in, i# a apita! market in#trument
a. a #i-m%nth
b. a three-m%nth (rea#ury bi!!
. a ten-year b%ndd. an a,reement '%r a bank t% !%an 'und# diret!y t% a %mpany '%r nine m%nth#
. Whih %' the '%!!%$in, i# a m%ney market #eurity
a. (rea#ury n%te
b. muniipa! b%nd
. m%rt,a,e
d. %mmeria! paper
. (he redit%r# in the 'edera! 'und# market are
a. h%u#eh%!d#.
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b. dep%#it%ry in#tituti%n#.
. 'irm#.
d. ,%&ernment a,enie#.
. 67uity #euritie# ha&e a 8888 epeted return than m%#t !%n,-term debt #euritie#9 and
they ehibit a 8888 de,ree %' ri#k.
a. hi,her hi,her
b. !%$er !%$er
. !%$er hi,her
d. hi,her !%$er
10. ;%ney market #euritie# ,enera!!y ha&e 8888. apita! market #euritie# are typia!!y
epeted t% ha&e a 8888.
a. !e## !i7uidity hi,her annua!ized return
b. m%re !i7uidity !%$er annua!ized return
. !e## !i7uidity !%$er annua!ized return
d. m%re !i7uidity hi,her annua!ized return
11. I' #eurity prie# 'u!!y re'!et a!! a&ai!ab!e in'%rmati%n9 the market# '%r the#e #euritie# are
a. e''iient.
b. primary.
. %&er&a!ued.
d. under&a!ued.
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12. I' market# are 88889 in&e#t%r# %u!d u#e a&ai!ab!e in'%rmati%n i,n%red by the market t%
earn abn%rma!!y hi,h return#.
a. per'et
b. ati&e. ine''iient
d. in e7ui!ibrium
13. I' 'inania! market# are e''iient9 thi# imp!ie# that a!! #euritie# #h%u!d earn the #ame
return.a. (rue
b. Fa!#e
14. (he Seuritie# <t %' 133
a. re7uired %mp!ete di#!%#ure %' re!e&ant 'inania! in'%rmati%n '%r pub!i!y %''ered
#euritie# in the primary market. b. de!ared tradin, #trate,ie# t% manipu!ate the prie# %' pub!i #e%ndary #euritie#
i!!e,a!.
. de!ared mi#!eadin, 'inania! #tatement# '%r pub!i primary #euritie# i!!e,a!.
d. re7uired %mp!ete di#!%#ure %' re!e&ant 'inania! in'%rmati%n '%r #euritie# traded in
the #e%ndary market.
e. a!! %' the ab%&e
15. (he Seuritie# 6han,e %mmi##i%n )S6* $a# e#tab!i#hed by the
a. Federa! e#er&e <t.
b. ;Fadden <t.
. Seuritie# 6han,e <t %' 134.
d. =!a##-Stea,a!! <t.
e. n%ne %' the ab%&e
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1. %mm%n #t%k i# an eamp!e %' a)n*
a. debt #eurity.
b. m%ney market #eurity.
. e7uity #eurity.
d. < and >
1. I' 'inania! market# $ere 88889 a!! in'%rmati%n ab%ut any #euritie# '%r #a!e in primary and
#e%ndary market# $%u!d be %ntinu%u#!y and 'ree!y a&ai!ab!e t% in&e#t%r#.
a. e''iient
b. ine''iient
. per'et
d. imper'et
1. (he typia! r%!e %' a #euritie# 'irm in a pub!i %''erin, %' #euritie# i# t%
a. purha#e the entire i##ue '%r it# %$n in&e#tment.
b. p!ae the entire i##ue $ith a #in,!e !ar,e in&e#t%r.
. #pread the i##ue ar%## #e&era! in&e#t%r# unti! the entire i##ue i# #%!d.
d. pr%&ide a!! !ar,e in&e#t%r# $ith !%an# #% that they an in&e#t in the %''erin,.
1. With%ut the partiipati%n %' 'inania! intermediarie# in 'inania! market tran#ati%n#9
a. in'%rmati%n and tran#ati%n %#t# $%u!d be !%$er.
b. tran#ati%n %#t# $%u!d be hi,her but in'%rmati%n %#t# $%u!d be unhan,ed.
. in'%rmati%n %#t# $%u!d be hi,her but tran#ati%n %#t# $%u!d be unhan,ed.
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d. in'%rmati%n and tran#ati%n %#t# $%u!d be hi,her.
20. Whih %' the '%!!%$in, i# m%#t !ike!y t% be de#ribed a# a dep%#it%ry in#tituti%n
a. 'inane %mpanie#
b. #euritie# 'irm#
. redit uni%n#
d. pen#i%n 'und#
e. in#urane %mpanie#
21. In a,,re,ate9 8888 are the m%#t d%minant dep%#it%ry in#tituti%n9 $ith m%re t%ta! a##et#
than %ther dep%#it%ry in#tituti%n#.
a. %mmeria! bank#
b. #a&in,# bank#
. redit uni%n#
d. S?@#
22. Whih %' the '%!!%$in, i# a n%ndep%#it%ry 'inania! in#tituti%n
a. #a&in,# bank# b. %mmeria! bank#
. #a&in,# and !%an a##%iati%n#
d. mutua! 'und#
23. Whih %' the '%!!%$in, di#tin,ui#he# redit uni%n# 'r%m %mmeria! bank# and #a&in,#
in#tituti%n#
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a. redit uni%n# are n%n-pr%'it
b. redit uni%n# aept dep%#it# but d% n%t make !%an#
. redit uni%n# make !%an# but d% n%t aept dep%#it#
d. Sa&in,# in#tituti%n# re#trit their bu#ine## t% member# $h% #hare a %mm%n b%nd
24. When a #euritie# 'irm at# a# a br%ker9 it
a. ,uarantee# the i##uer a #pei'i prie '%r ne$!y i##ued #euritie#.
b. make# a market in #pei'i #euritie# by adAu#tin, it# %$n in&ent%ry.
. eeute# tran#ati%n# bet$een t$% partie#.
d. purha#e# #euritie# '%r it# %$n a%unt.
25. When a #euritie# 'irm at# a# a)n* 88889 it maintain# a p%#iti%n in #euritie#.
a. ad&i#er b. dea!er
. br%ker
d. n%ne %' the ab%&e
2. 8888 %btain 'und# by i##uin, #euritie#9 then !end the 'und# t% indi&idua!# and #ma!! bu#ine##e#.
a. Finane %mpanie#
b. Seuritie# 'irm#
. ;utua! 'und#
d. In#urane %mpanie#
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2. B%u#eh%!d# $ith 8888 are #er&ed by 8888.
a. de'iient 'und# dep%#it%ry in#tituti%n# and 'inane %mpanie#
b. de'iient 'und# 'inane %mpanie# %n!y
. #a&in,# 'inane %mpanie# %n!y
d. #a&in,# pen#i%n 'und# and 'inane %mpanie#
2. 8888 %nentrate %n m%rt,a,e !%an#.
a. Finane %mpanie#
b. %mmeria! bank#
. Sa&in,# in#tituti%n#
d. redit uni%n#
2. 8888 #euritie# ha&e a maturity %' %ne year %r !e## 8888 #euritie# are ,enera!!y m%re!i7uid.
a. ;%ney market apita! market
b. ;%ney market m%ney market
. apita! market m%ney market
d. apita! market apita! market
30. Whih %' the '%!!%$in, i# n%t a maA%r in&e#t%r in #t%k#
a. %mmeria! bank#
b. in#urane %mpanie#
. mutua! 'und#
d. pen#i%n 'und#
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31. Whih %' the '%!!%$in, 'inania! intermediarie# %mm%n!y in&e#t# in #t%k# and b%nd#
a. pen#i%n 'und#
b. in#urane %mpanie#
. mutua! 'und#
d. a!! %' the ab%&e
32. Seuritie# are erti'iate# that repre#ent a !aim %n the i##uer.a. (rue
b. Fa!#e
33. ebt #euritie# are erti'iate# that repre#ent debt )b%rr%$ed 'und#* by the i##uer.
a. (rue
b. Fa!#e
34. < 'i&e-year #eurity $a# purha#ed t$% year# a,% by an in&e#t%r $h% p!an# t% re#e!! it. (he
#eurity $i!! be #%!d by the in&e#t%r in the #%-a!!ed
a. #e%ndary market.
b. primary market.
. de'iit market.
d. #urp!u# market.
35. When #eurity prie# 'u!!y re'!et a!! a&ai!ab!e in'%rmati%n9 the market# '%r the#e #euritie#
are #aid t% be e''iient.
a. (rue b. Fa!#e
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3. I' market# are per'et9 #euritie# buyer# and #e!!er# t% n%t ha&e 'u!! ae## t% in'%rmati%nand ann%t a!$ay# break d%$n #euritie# t% the prei#e #ize they de#ire.
a. (rue
b. Fa!#e
3. < br%ker eeute# #euritie# tran#ati%n# bet$een t$% partie# and har,e# a 'ee re'!eted in
the bid-a#k #pread.
a. (rue b. Fa!#e
3. (he eur% inrea#ed bu#ine## bet$een 6ur%pean %untrie# and reated a m%re %mpetiti&e
en&ir%nment in 6ur%pe.
a. (rue
b. Fa!#e
3. In reent year#9 'inania! in#tituti%n# ha&e %n#%!idated t% apita!ize %n e%n%mie# %' #a!e
and %n e%n%mie# %' #%pe.
a. (rue
b. Fa!#e
40. Seuritie# are erti'iate# that repre#ent a !aim %n the pr%&ider %' 'und#.
a. (rue
b. Fa!#e
41. ebt #euritie# in!ude %mmeria! paper9 (rea#ury b%nd#9 and %rp%rate b%nd#.
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a. (rue
b. Fa!#e
42. %mm%n type# %' apita! market #euritie# in!ude (rea#ury bi!!# and %mmeria! paper.
a. (rue
b. Fa!#e
43. %mm%n type# %' m%ney market #euritie# in!ude ne,%tiab!e erti'iate# %' dep%#it and
(rea#ury bi!!#.a. (rue
b. Fa!#e
44. ;%ney market #euritie# are %mm%n!y i##ued in %rder t% 'inane the purha#e %' a##et#
#uh a# bui!din,#9 e7uipment9 %r mahinery.
a. (rue b. Fa!#e
45. (he t%ta! a##et &a!ue %' #a&in,# in#tituti%n# i# !ar,er than that %' %mmeria! bank#.
a. (rue
b. Fa!#e
4. Finania! market# 'ai!itatin, the '!%$ %' #h%rt-term 'und# $ith maturitie# %' !e## than %ne
year are kn%$n a#
a. #e%ndary market#.
b. apita! market#.
. primary market#.
d. m%ney market#.
e. n%ne %' the ab%&e
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4. Whih %' the '%!!%$in, tran#ati%n# $%u!d n%t be %n#idered a #e%ndary market
tran#ati%n
a. <n indi&idua! in&e#t%r purha#e# #%me ei#tin, #hare# %' #t%k in I>; thr%u,h hi#
br%ker.
b. <n in#tituti%na! in&e#t%r #e!!# #%me i#ney #t%k thr%u,h it# br%ker.
. < 'irm that $a# pri&ate!y he!d en,a,e# in an %''erin, %' #t%k t% the pub!i.
d. <!! %' the ab%&e are #e%ndary market tran#ati%n#.
4. I' in&e#t%r# #peu!ate in the under!yin, a##et rather than deri&ati&e %ntrat# %n the
under!yin, a##et9 they $i!! pr%bab!y ahie&e 8888 return#9 and they are ep%#ed t%
re!ati&e!y 8888 ri#k.
a. !%$er !%$er
b. !%$er hi,her
. hi,her !%$er
d. hi,her hi,her
4. 8888 maintain a !ar,er am%unt %' a##et# in a,,re,ate than the %ther type# %' n%ndep%#it%ry
in#tituti%n#.
a. Finane %mpanie#
b. ;utua! 'und#
. @i'e in#urane %mpanie#
d. Seuritie# 'irm#
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50. < %mm%n u#e %' 'und# '%r 8888 i# in&e#tment in #t%k# and bu#ine##e#9 $hi!e their main
u#e %' 'und# i# pr%&idin, !%an# t% h%u#eh%!d# and bu#ine##e#.
a. #a&in,# in#tituti%n#
b. %mmeria! bank#
. mutua! 'und#
d. 'inane %mpanie#
51. @%n,-term debt #euritie# tend t% ha&e a 8888 epeted return and 8888 ri#k than m%ney
market #euritie#.
a. !%$er !%$er
b. !%$er hi,her
. hi,her !%$er
d. hi,her hi,her
52. %mm%n type# %' apita! market #euritie# in!ude (rea#ury bi!!# and %mmeria! paper.
a. (rue
b. Fa!#e
53. %mm%n type# %' m%ney market #euritie# in!ude ne,%tiab!e erti'iate# %' dep%#it and
(rea#ury bi!!#.
a. (rue
b. Fa!#e
54. apita! market #euritie# are %mm%n!y i##ued in %rder t% 'inane the purha#e %' a##et#
#uh a# bui!din,#9 e7uipment9 %r mahinery.
a. (rue
b. Fa!#e
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55. %mmeria! bank# in a,,re,ate ha&e m%re a##et# than redit uni%n#.
a. (rue b. Fa!#e
5. (h%#e partiipant# $h% reei&e m%re m%ney than they #pend are re'erred t% a#
a. de'iit unit#.
b. #urp!u# unit#.
. b%rr%$in, unit#.
d. ,%&ernment unit#.
5. 67uity #euritie#
a. ha&e a maturity. b. pay intere#t %n a peri%di ba#i#.
. repre#ent %$ner#hip in the i##uer.
d. repay the prinipa! am%unt at maturity.
5. (he term 8888 in&%!&e# dei#i%n# #uh a# h%$ muh 'undin, t% %btain9 and h%$ t% in&e#t
the pr%eed# t% epand %perati%n#.
a. %rp%rate 'inane
b. in&e#tment mana,ement
. 'inania! market# and in#tituti%n#
d. n%ne %' the ab%&e
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5. (here i# a 8888 re!ati%n#hip bet$een the ri#k %' a #eurity and the epeted return 'r%m
in&e#tin, in the #eurity.
a. p%#iti&e
b. ne,ati&e
. indeterminab!e
d. n%ne %' the ab%&e
0. I' a #eurity i# under&a!ued9 #%me in&e#t%r# $%u!d apita!ize 'r%m thi# by purha#in, that#eurity. <# a re#u!t9 the #eurityC# prie $i!! 88889 re#u!tin, in a 8888 return '%r th%#e
in&e#t%r#.
a. ri#e !%$er
b. 'a!! hi,her
. 'a!! !%$er
d. ri#e hi,her
1. (he redit ri#i# in the 200-200 peri%d $a# au#ed by $eak e%n%mie# in <#ia.
a. (rue
b. Fa!#e
2. 8888 are !a##i'ied a# a dep%#it%ry in#tituti%n.
a. redit uni%n#
b. Den#i%n 'und#
. Finane %mpanie#
d. Seuritie# 'irm#
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3. (he main rea#%n that dep%#it%ry in#tituti%n# eperiened 'inania! pr%b!em# durin, the
redit ri#i# $a# their in&e#tment in:
a. m%rt,a,e#.
b. m%ney market #euritie#.
. #t%k.
d. (rea#ury b%nd#.
4. (h%#e 'inania! market# that 'ai!itate the '!%$ %' #h%rt-term 'und# )$ith maturitie# %' !e##than %ne year* are kn%$n a# apita! market#9 $hi!e th%#e that 'ai!itate the '!%$ %' !%n,-
term 'und# are kn%$n a# m%ney market#.
a. (rue
b. Fa!#e
5. (rea#ury b%nd# ha&e a maturity %' %ne t% three year#.
a. (rue
b. Fa!#e
. Sine market# are e''iient9 in#tituti%na! and indi&idua! in&e#t%r# #h%u!d i,n%re the &ari%u#
in&e#tment in#trument# a&ai!ab!e.
a. (rue
b. Fa!#e
. Speu!atin, $ith deri&ati&e %ntrat# %n an under!yin, a##et typia!!y re#u!t# in b%th
hi,her ri#k and hi,her return# than #peu!atin, in the under!yin, a##et it#e!'.
a. (rue
b. Fa!#e
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. When #eurity prie# 'u!!y re'!et a!! a&ai!ab!e in'%rmati%n9 the market# '%r the#e #euritie#
are #aid t% be per'et.
a. (rue
b. Fa!#e
. Seuritie# that are n%t a# #a'e and !i7uid a# %ther #euritie# are ne&er %n#idered '%r
in&e#tment by any%ne.
a. (rue
b. Fa!#e
0. >y re7uirin, 'u!! di#!%#ure %' in'%rmati%n9 #euritie# !a$# pre&ent in&e#t%r# 'r%m makin,
p%%r in&e#tment dei#i%n#.
a. (rue
b. Fa!#e
1. When a dep%#it%ry in#tituti%n %''er# a !%an9 it i# atin, a# a redit%r.
a. (rue
b. Fa!#e
2. Sa&in,# in#tituti%n# repre#ent a n%ndep%#it%ry in#tituti%n.a. (rue
b. Fa!#e
3. ;%#t mutua! 'und# %btain 'und# by i##uin, #euritie#9 then !end the 'und# t% indi&idua!#
and #ma!! bu#ine##e#.
a. (rue
b. Fa!#e
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4. In#tituti%na! in&e#t%r# n%t %n!y pr%&ide 'inania! #upp%rt t% %mpanie# but eeri#e #%me
de,ree %' %rp%rate %ntr%! %&er them.a. (rue
b. Fa!#e
5. Whih %' the '%!!%$in, i# n%t a rea#%n $hy dep%#it%ry 'inania! in#tituti%n# are p%pu!ar
a. (hey %''er dep%#it a%unt# that an a%mm%date the am%unt and !i7uidity
harateri#ti# de#ired by m%#t #urp!u# unit#. b. (hey repaka,e 'und# reei&ed 'r%m dep%#it# t% pr%&ide !%an# %' the #ize and maturity
de#ired by de'iit unit#.
. (hey aept the ri#k %n !%an# pr%&ided.
d. (hey u#e their in'%rmati%n re#%ure# t% at a# a br%ker + eeutin, #euritie#
tran#ati%n# bet$een t$% partie#.
e. (hey ha&e m%re eperti#e than indi&idua! #urp!u# unit# in e&a!uatin, the
redit$%rthine## %' de'iit unit#.
. <%rdin, t% y%ur tet9 $hih %' the '%!!%$in, i# n%t %n#idered a m%ney market #eurity
a. (rea#ury bi!!#
b. (rea#ury n%te#
. retai!
d. bankerC# aeptanee. %mmeria! paper
. 8888 are n%t %n#idered apita! market #euritie#.
a. epurha#e a,reement#
b. ;uniipa! b%nd#
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. %rp%rate b%nd#
d. 67uity #euritie#
e. ;%rt,a,e#
. 8888 are !%n,-term debt %b!i,ati%n# i##ued by %rp%rati%n# and ,%&ernment a,enie# t%
#upp%rt their %perati%n#.
a. %mm%n #t%k
b. eri&ati&e #euritie#
. >%nd#
d. N%ne %' the ab%&e
. 67uity #euritie# #h%u!d n%rma!!y ha&e a 8888 epeted return and 8888 ri#k than m%ney
market #euritie#.
a. !%$er !%$er
b. !%$er hi,her
. hi,her !%$er
d. hi,her hi,her
0. I' in&e#t%r# #peu!ate in deri&ati&e %ntrat# rather than the under!yin, a##et9 they $i!!
pr%bab!y ahie&e 8888 return#9 and they are ep%#ed t% re!ati&e!y 8888 ri#k.
a. !%$er !%$er
b. !%$er hi,her
. hi,her !%$er
d. hi,her hi,her
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1. When partiu!ar #euritie# are perei&ed t% be 8888 by the market9 their prie# derea#e
$hen they are #%!d by in&e#t%r#.
a. under&a!ued
b. %&er&a!ued
. 'air!y pried
d. e''iient
e. n%ne %' the ab%&e
2. Whih %' the '%!!%$in, are n%t %n#idered dep%#it%ry 'inania! in#tituti%n#
a. 'inane %mpanie#
b. %mmeria! bank#
. #a&in,# in#tituti%n#
d. redit uni%n#
e. <!! %' the ab%&e are dep%#it%ry 'inania! in#tituti%n#.
3. (he main #%ure %' 'und# '%r 8888 i# pr%eed# 'r%m #e!!in, #euritie# t% h%u#eh%!d# and
bu#ine##e#9 $hi!e their main u#e %' 'und# i# pr%&idin, !%an# t% h%u#eh%!d# and bu#ine##e#.
a. #a&in,# in#tituti%n#
b. %mmeria! bank#
. mutua! 'und#d. 'inane %mpanie#
e. pen#i%n 'und#
4. Whih %' the '%!!%$in, #tatement# i# in%rret
a. Finania! market# attrat 'und# 'r%m in&e#t%r# and hanne! the 'und# t% %rp%rati%n#.
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b. ;%ney market# enab!e %rp%rati%n# t% b%rr%$ 'und# %n a #h%rt-term ba#i# #% that they
an #upp%rt their ei#tin, %perati%n#.
. Finania! in#tituti%n# #er&e #%!e!y a# intermediarie# $ith the 'inania! market# and
ne&er #er&e a# in&e#t%r#.
d. In&e#t%r# #eek t% in&e#t their 'und# in the #t%k %' 'irm# that are pre#ent!y under&a!uedand ha&e muh p%tentia! t% impr%&e.
5. Whih %' the '%!!%$in, i# n%t a typia! m%ney market #eurity
a. (rea#ur y bi!!#
b. (rea#ury b%nd#
. %mmeria! paper
d. Ne,%tiab!e erti'iate# %' dep%#it
. ebt #euritie# i##ued by a #ma!! 'irm may be 888888889 meanin, that 8888888 in&e#t%r#$ant t% in&e#t in th%#e #euritie#.
a.a. !i7uid many
b.a. !i7uid n%t many
.a. i!!i7uid n%t many
d.a. i!!i7uid many
. Ea!uin, #t%k# i# ea#ier than &a!uin, debt #euritie# beau#e #t%k# pr%mi#e t% pr%&ide
in&e#t%r# $ith #pei'i payment# at re,u!ar inter&a!#.
a. (rue
b. Fa!#e
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. 888888888888 app!ie# p#yh%!%,y t% 'inania! dei#i%n# and %''er# an ep!anati%n '%r $hy
market# are n%t a!$ay# e''iient.
a.a. D#yh%!%,ia! marketin,
b.a. >eha&i%ra! 'inane.a. Ine''iient market# the%ry
d.a. Finania! p#yh%!%,y
. Internati%na! inte,rati%n %' #euritie# market# a!!%$#:
a.a. ,%&ernment# and %rp%rati%n# t% ha&e ea#ier ae## t% 'undin, 'r%m redit%r# and
in&e#t%r# in %ther %untrie#.
b.a. in&e#t%r# and redit%r# t% bene'it 'r%m in&e#tment %pp%rtunitie# in %ther %untrie#.
.a. %ne# %untry# 'inania! pr%b!em# t% ad&er#e!y a''et %ther %untrie#.
d.a. <!! %' the ab%&e
0. (he '%rei,n ehan,e market 'ai!itate# the ehan,e %':
a.a. in'%rmati%n bet$een in&e#t%r# in di''erent %untrie#.
b.a. debt #euritie#.
.a. e7uity #euritie#.
d.a. urrenie#.
1. Whih %' the '%!!%$in, i# not an eamp!e %' the ,%&ernment# reent inrea#ed r%!e in
'inania! market#
a.a. the Federa! e#er&e# purha#e %' debt #euritie# durin, the redit ri#i#
b.a. re,u!ati%n# han,in, the $ay that the redit ri#k %' b%nd# i# a##e##ed
.a. re,u!ati%n# #ettin, maimum rate# '%r (rea#ury #euritie#
d.a. inrea#ed m%nit%rin, %' #t%k tradin, and pr%#euti%n %' th%#e $h% trade %n in#idein'%rmati%n
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2. %mmeria! paper repre#ent# !%n,-term debt %b!i,ati%n# reated t% 'inane the purha#e %'
%mmeria! pr%perty.
a. (rue
b. Fa!#e
3. (he ri#k that 'inania! pr%b!em# %u!d #pread am%n, 'inania! in#tituti%n# and ar%##
'inania! market#9 au#in, a %!!ap#e %' the 'inania! #y#tem9 i# kn%$n a#:
a.a. #y#temi ri#k.
b.a. !e&era,e ri#k.
.a. 'inania! me!td%$n ri#k.
d.a. redit ri#k.
4. Sy#temi ri#k ei#t# beau#e:
a.a. there i# n% ,%&ernment re,u!ati%n %' 'inania! market#.
b.a. 'inania! in#tituti%n# in&e#t in #imi!ar #euritie# and there'%re are #imi!ar!y ep%#ed t%
!ar,e de!ine# in prie# %' th%#e #euritie#.
.a. 'inania! in#tituti%n# b%rr%$ u#in, !%n,-term debt #euritie# but !end their 'und# '%r
#h%rt-term peri%d#.
d.a. 'inania! in#tituti%n# in&e#t hea&i!y in (rea#ury #euritie# and there'%re are ep%#ed t%
the p%##ibi!ity that the ,%&ernment $i!! de'au!t %n it# debt#.
Cha&ter 2(,eter-ination o* Interet )ate
%.L/IPL C1IC
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1. (he !e&e! %' in#ta!!ment debt a# a perenta,e %' di#p%#ab!e in%me i# ,enera!!y 8888
durin, ree##i%nary peri%d#.
a. hi,her
b. !%$er
. zer%
d. ne,ati&e
2. <t any ,i&en p%int in time9 h%u#eh%!d# $%u!d demand a 8888 7uantity %' !%anab!e 'und# at
8888 rate# %' intere#t.
a. ,reater hi,her
b. ,reater !%$er
. #ma!!er !%$er
d. n%ne %' the ab%&e
3. >u#ine##e# demand !%anab!e 'und# t%
a. 'inane in#ta!!ment debt.
b. #ub#idize %ther %m panie#.
. in&e#t in 'ied and #h%rt-term a##et#.
d. n%ne %' the ab%&e
4. (he re7uired return t% imp!ement a ,i&en bu#ine## pr%Aet $i!! be 8888 i' intere#t rate# are
!%$er. (hi# imp!ie# that bu#ine##e# $i!! demand a 8888 7uantity %' !%anab!e 'und# $hen
intere#t rate# are !%$er.
a. ,reater !%$er
b. !%$er ,reater
. !%$er !%$er
d. ,reater ,reater
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5. I' intere#t rate# are 88889 8888 pr%Aet# $i!! ha&e p%#iti&e NDE#.
a. hi,her m%re
b. !%$er m%re
. !%$er n%
d. n%ne %' the ab%&e
. (he demand '%r 'und# re#u!tin, 'r%m bu#ine## in&e#tment in #h%rt-term a##et# i# 8888
re!ated t% the number %' pr%Aet# imp!emented9 and i# there'%re 8888 re!ated t% the intere#t
rate.
a. in&er#e!y p%#iti&e!y
b. p%#iti&e!y in&er#e!y
. in&er#e!y in&er#e!y
d. p%#iti&e!y p%#iti&e!y
. I' e%n%mi %nditi%n# be%me !e## 'a&%rab!e9 then:
a. epeted a#h '!%$# %n &ari%u# pr%Aet# $i!! inrea#e.
b. m%re pr%p%#ed pr%Aet# $i!! ha&e epeted return# ,reater than the hurd!e rate.
. there $%u!d be additi%na! aeptab!e bu#ine## pr%Aet#.d. there $%u!d be a derea#ed demand by bu#ine## '%r !%anab!e 'und#.
. <# a re#u!t %' m%re 'a&%rab!e e%n%mi %nditi%n#9 there i# a)n* 8888 demand '%r !%anab!e
'und#9 au#in, an 8888 #hi't in the demand ur&e.
a. derea#ed in$ard
b. derea#ed %ut$ard
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. inrea#ed %ut$ard
d. inrea#ed in$ard
. (he 'edera! ,%&ernment demand '%r !%anab!e 'und# i# 8888. I' the bud,et de'iit $a#
epeted t% inrea#e9 the 'edera! ,%&ernment demand '%r !%anab!e 'und# $%u!d 8888.
a. intere#t e!a#ti derea#e
b. intere#t e!a#ti inrea#e
. intere#t ine!a#ti inrea#e
d. intere#t ine!a#ti derea#e
10. Gther thin,# bein, e7ua!9 '%rei,n ,%&ernment# and %rp%rati%n# $%u!d demand 8888 +.S.
'und# i' their !%a! intere#t rate# $ere !%$er than +.S. rate#. (here'%re9 '%r a ,i&en #et %'
'%rei,n intere#t rate#9 '%rei,n demand '%r +.S. 'und# i# 8888 re!ated t% +.S. intere#t rate#.
a. !e## in&er#e!y b. m%re p%#iti&e!y
. !e## p%#iti&e!y
d. m%re in&er#e!y
11. F%r a ,i&en #et %' '%rei,n intere#t rate#9 the 7uantity %' +.S. !%anab!e 'und# demanded by
'%rei,n ,%&ernment# %r 'irm# $i!! be 8888 +.S. intere#t rate#.
a. p%#iti&e!y re!ated t%
b. in&er#e!y re!ated t%
. unre!ated t%
d. n%ne %' the ab%&e
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12. (he 7uantity %' !%anab!e 'und# #upp!ied i# n%rma!!y
a. hi,h!y intere#t e!a#ti.
b. m%re intere#t e!a#ti than the demand '%r !%anab!e 'und#.
. !e## intere#t e!a#ti than the demand '%r !%anab!e 'und#.
d. e7ua!!y intere#t e!a#ti a# the demand '%r !%anab!e 'und#.
e. < and >
13. (he 8888 #et%r i# the !ar,e#t #upp!ier %' !%anab!e 'und#.
a. h%u#eh%!d
b. ,%&ernment
. bu#ine##
d. n%ne %' the ab%&e
14. I' a #tr%n, e%n%my a!!%$# '%r a !ar,e 8888 in h%u#eh%!d# in%me9 the #upp!y ur&e $i!!
#hi't 8888.
a. derea#e %ut$ard
b. inrea#e in$ard
. inrea#e %ut$ard
d. n%ne %' the ab%&e
15. (he e7ui!ibrium intere#t rate
a. e7uate# the a,,re,ate demand '%r 'und# $ith the a,,re,ate #upp!y %' !%anab!e 'und#.
b. e7uate# the e!a#tiity %' the a,,re,ate demand and #upp!y '%r !%anab!e 'und#.
. derea#e# a# the a,,re,ate #upp!y %' !%anab!e 'und# derea#e#.
d. inrea#e# a# the a,,re,ate demand '%r !%anab!e 'und# derea#e#.
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1. (he e7ui!ibrium intere#t rate #h%u!d
a. 'a!! $hen the a,,re,ate #upp!y 'und# eeed# a,,re,ate demand '%r 'und#.
b. ri#e $hen the a,,re,ate #upp!y %' 'und# eeed# a,,re,ate demand '%r 'und#.
. 'a!! $hen the a,,re,ate demand '%r 'und# eeed# a,,re,ate #upp!y %' 'und#.
d. ri#e $hen a,,re,ate demand '%r 'und# e7ua!# a,,re,ate #upp!y %' 'und#.
e. > and
1. Whih %' the '%!!%$in, i# !ike!y t% au#e a derea#e in the e7ui!ibrium +.S. intere#t rate9
%ther thin,# bein, e7ua!
a. a derea#e in #a&in,# by '%rei,n #a&er#
b. an inrea#e in in'!ati%n
. pe##imi#ti e%n%mi pr%Aeti%n# that au#e bu#ine##e# t% redue epan#i%n p!an#
d. a derea#e in #a&in,# by +.S. h%u#eh%!d#
1. (he Fi#her e''et #tate# that the
a. n%mina! intere#t rate e7ua!# the epeted in'!ati%n rate p!u# the rea! rate %' intere#t.
b. n%mina! intere#t rate e7ua!# the rea! rate %' intere#t minu# the epeted in'!ati%n rate.
. rea! rate %' intere#t e7ua!# the n%mina! intere#t rate p!u# the epeted in'!ati%n rate.
d. epeted in'!ati%n rate e7ua!# the n%mina! intere#t rate p!u# the rea! rate %' intere#t.
1. I' the rea! intere#t rate $a# ne,ati&e '%r a peri%d %' time9 then
a. in'!ati%n i# epeted t% eeed the n%mina! intere#t rate in the 'uture.
b. in'!ati%n i# epeted t% be !e## than the n%mina! intere#t rate in the 'uture.
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. atua! in'!ati%n $a# !e## than the n%mina! intere#t rate.
d. atua! in'!ati%n $a# ,reater than the n%mina! intere#t rate.
20. I' in'!ati%n i# epeted t% derea#e9 then
a. #a&er# $i!! pr%&ide !e## 'und# at the ei#tin, e7ui!ibrium intere#t rate.
b. the e7ui!ibrium intere#t rate $i!! inrea#e.
. the e7ui!ibrium intere#t rate $i!! derea#e.
d. b%rr%$er# $i!! demand m%re 'und# at the ei#tin, e7ui!ibrium intere#t rate.
21. I' in'!ati%n turn# %ut t% be !%$er than epeted
a. #a&er# bene'it.
b. b%rr%$er# bene'it $hi!e #a&er# are n%t a''eted.
. #a&er# and b%rr%$er# are e7ua!!y a''eted.d. #a&er# are ad&er#e!y a''eted but b%rr%$er# bene'it.
22. I' the e%n%my $eaken#9 there i# 8888 pre##ure %n intere#t rate#. I' the Federa! e#er&e
inrea#e# the m%ney #upp!y there i# 8888 pre##ure %n intere#t rate# )a##ume that
in'!ati%nary epetati%n# are n%t a''eted*.
a. up$ard up$ard
b. up$ard d%$n$ard
. d%$n$ard up$ard
d. d%$n$ard d%$n$ard
23. What i# the ba#i# %' the re!ati%n#hip bet$een the Fi#her e''et and the !%anab!e 'und#
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the%ry
a. the #a&erC# de#ire t% maintain the ei#tin, rea! rate %' intere#t
b. the b%rr%$erC# de#ire t% ahie&e a p%#iti&e rea! rate %' intere#t
. the #a&erC# de#ire t% ahie&e a ne,ati&e rea! rate %' intere#t
d. > and
24. <##ume that '%rei,n in&e#t%r# $h% ha&e in&e#ted in +.S. #euritie# deide t% derea#e their
h%!din,# %' +.S. #euritie# and t% in#tead inrea#e their h%!din,# %' #euritie# in their %$n
%untrie#. (hi# #h%u!d au#e the #upp!y %' !%anab!e 'und# in the +nited State# t% 8888 and
#h%u!d p!ae 8888 pre##ure %n +.S. intere#t rate#.
a. derea#e up$ard
b. derea#e d%$n$ard
. inrea#e d%$n$ard
d. inrea#e up$ard
25. <##ume that '%rei,n in&e#t%r# $h% ha&e in&e#ted in +.S. #euritie# deide t% inrea#e their
h%!din,# %' +.S. #euritie#. (hi# #h%u!d au#e the #upp!y %' !%anab!e 'und# in the +nited
State# t% 8888 and #h%u!d p!ae 8888 pre##ure %n +.S. intere#t rate#.
a. derea#e up$ard
b. derea#e d%$n$ard
. inrea#e d%$n$ard
d. inrea#e up$ard
2. I' the 'edera! ,%&ernment need# t% b%rr%$ additi%na! 'und#9 thi# b%rr%$in, re'!et# a)n*
8888 in the #upp!y %' !%anab!e 'und#9 and a)n* 8888 in the demand '%r !%anab!e 'und#.
a. inrea#e n% han,e
b. derea#e n% han,e
. n% han,e inrea#e
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d. n% han,e derea#e
2. I' the 'edera! ,%&ernment redue# it# bud,et de'iit9 thi# au#e# a)n* 8888 in the #upp!y %'
!%anab!e 'und#9 and a)n* 8888 in the demand '%r !%anab!e 'und#.
a. inrea#e n% han,e
b. derea#e n% han,e
. n% han,e inrea#e
d. n% han,e derea#e
2. ue t% epetati%n# %' hi,her in'!ati%n in the 'uture9 $e $%u!d typia!!y epet the #upp!y
%' !%anab!e 'und# t% 8888 and the demand '%r !%anab!e 'und# t% 8888.
a. inrea#e derea#e
b. inrea#e inrea#e
. derea#e inrea#e
d. derea#e derea#e
2. ue t% epetati%n# %' !%$er in'!ati%n in the 'uture9 $e $%u!d typia!!y epet the #upp!y
%' !%anab!e 'und# t% 8888 and the demand '%r !%anab!e 'und# t% 8888.
a. inrea#e derea#e
b. inrea#e inrea#e
. derea#e inrea#e
d. derea#e derea#e
30. I' the rea! intere#t rate i# epeted by a partiu!ar per#%n t% be%me ne,ati&e9 then the
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purha#in, p%$er %' hi# %r her #a&in,# $%u!d be 88889 a# the in'!ati%n rate i# epeted t%
be 8888 the ei#tin, n%mina! intere#t rate.
a. derea#in, !e## than
b. derea#in, ,reater than
. inrea#in, ,reater than
d. inrea#in, !e## than
31. I' e%n%mi epan#i%n i# epeted t% inrea#e9 then demand '%r !%anab!e 'und# #h%u!d
8888 and intere#t rate# #h%u!d 8888.
a. inrea#e inrea#e
b. inrea#e derea#e
. derea#e derea#e
d. derea#e inrea#e
32. I' e%n%mi epan#i%n i# epeted t% derea#e9 the demand '%r !%anab!e 'und# #h%u!d 8888
and intere#t rate# #h%u!d 8888.
a. inrea#e inrea#e
b. inrea#e derea#e
. derea#e derea#e
d. derea#e inrea#e
33. I' the rea! intere#t rate $a# #tab!e %&er time9 thi# $%u!d #u,,e#t that there i# 8888
re!ati%n#hip bet$een in'!ati%n and n%mina! intere#t rate m%&ement#.
a. a p%#iti&e
b. an in&er#e
. n%
d. an unertain )ann%t be determined 'r%m in'%rmati%n ab%&e*
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34. I' in'!ati%n and n%mina! intere#t rate# m%&e m%re !%#e!y t%,ether %&er time than they didin ear!ier peri%d#9 thi# $%u!d 8888 the &%!ati!ity %' the rea! intere#t rate m%&ement# %&er
time.
a. inrea#e
b. derea#e
. ha&e an e''et9 $hih ann%t be determined $ith ab%&e in'%rmati%n9 %n
d. ha&e n% e''et %n
35. anada and the +.S. are maA%r tradin, partner#. I' anada eperiene# a maA%r inrea#e in
e%n%mi ,r%$th9 it %u!d p!ae 8888 pre##ure %n anadian intere#t rate# and 8888
pre##ure %n +.S. intere#t rate#.
a. up$ard up$ard
b. up$ard d%$n$ard
. d%$n$ard d%$n$ardd. d%$n$ard up$ard
3. I' in&e#t%r# #hi't 'und# 'r%m #t%k# int% bank dep%#it#9 thi# 8888 the #upp!y %' !%anab!e
'und#9 and p!ae# 8888 pre##ure %n intere#t rate#.
a. inrea#e# up$ard
b. inrea#e# d%$n$ard
. derea#e# d%$n$ard
d. derea#e# up$ard
3. When Hapane#e intere#t rate# ri#e9 and i' ehan,e rate epetati%n# remain unhan,ed9 the
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m%#t !ike!y e''et i# that the #upp!y %' !%anab!e 'und# pr%&ided by Hapane#e in&e#t%r# t% the
+nited State# $i!! 88889 and the +.S. intere#t rate# $i!! 8888.
a. inrea#e inrea#e
b. inrea#e derea#e
. derea#e derea#e
d. derea#e inrea#e
3. Whih %' the '%!!%$in, $i!! pr%bab!y n%t re#u!t in an inrea#e in the bu#ine## demand '%r
!%anab!e 'und#
a. an inrea#e in p%#iti&e net pre#ent &a!ue )NDE* pr%Aet#
b. a reduti%n in intere#t rate# %n bu#ine## !%an#
. a ree##i%n
d. n%ne %' the ab%&e
3. I' the a,,re,ate demand '%r !%anab!e 'und# inrea#e# $ith%ut a %rre#p%ndin, 8888 in
a,,re,ate #upp!y9 there $i!! be a 8888 %' !%anab!e 'und#.
a. inrea#e #urp!u#
b. inrea#e #h%rta,e
. derea#e #urp!u#
d. derea#e #h%rta,e
40. < 8888 'edera! ,%&ernment de'iit inrea#e# the 7uantity %' !%anab!e 'und# demanded at
any pre&ai!in, intere#t rate9 au#in, an 8888 #hi't in the demand #hedu!e.
a. hi,her in$ard
b. hi,her %ut$ard
. !%$er %ut$ard
d. n%ne %' the ab%&e
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41. Whih %' the '%!!%$in, i# n%t true re,ardin, '%rei,n intere#t rate#
a. (he !ar,e '!%$ %' 'und# bet$een %untrie# au#e# intere#t rate# in any ,i&en %untry t%
be%me m%re #u#eptib!e t% intere#t rate m%&ement# in %ther %untrie#.
b. (he epetati%n# %' a #tr%n, d%!!ar #h%u!d au#e a '!%$ %' 'und# t% the +.S.
. <n inrea#e in a '%rei,n %untryC# intere#t rate# $i!! en%ura,e in&e#t%r# in that
%untry t% in&e#t their 'und# in %ther %untrie#.
d. <!! %' the ab%&e are true re,ardin, '%rei,n intere#t rate#.
42. Whih %' the '%!!%$in, i# !ea#t !ike!y t% a''et h%u#eh%!d demand '%r !%anab!e 'und#
a. a derea#e in ta rate#
b. an inrea#e in intere#t rate#
. a reduti%n in p%#iti&e net pre#ent &a!ue )NDE* pr%Aet# a&ai!ab!e
d. <!! %' the ab%&e are e7ua!!y !ike!y t% a''et h%u#eh%!d demand '%r !%anab!e 'und#.
43. Whih %' the '%!!%$in, #tatement# i# in%rret
a. (he FedC# m%netary p%!iy i# intended t% %ntr%! the e%n%mi %nditi%n# in the +.S.
b. (he FedC# m%netary p%!iy a''et# the #upp!y %' !%anab!e 'und#9 $hih a''et# intere#t
rate#.
. >y in'!uenin, intere#t rate#9 the Fed i# ab!e t% in'!uene the am%unt %' m%ney that
%rp%rati%n# and h%u#eh%!d# are $i!!in, t% b%rr%$ and #pend.
d. <!! %' the #tatement# ab%&e are true.
44. (he 8888 #u,,e#t# that the market intere#t rate i# determined by 'at%r# that %ntr%! the#upp!y %' and demand '%r !%anab!e 'und#.
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a. Fi#her e''et
b. !%anab!e 'und# the%ry
. rea! intere#t rate
d. n%ne %' the ab%&e
45. Whih %' the '%!!%$in, $i!! pr%bab!y n%t re#u!t in an inrea#e in the bu#ine## demand '%r
!%anab!e 'und#
a. an inrea#e in p%#iti&e net pre#ent &a!ue )NDE* pr%Aet#
b. a reduti%n in intere#t rate# %n bu#ine## !%an#
. a ree##i%n
d. <!! %' the ab%&e $i!! re#u!t in an inrea#e in the bu#ine## demand '%r !%anab!e 'und#.
4. Gther thin,# bein, e7ua!9 a 8888 7uantity %' +.S. 'und# $%u!d be demanded by '%rei,n
,%&ernment# and %rp%rati%n# i' their d%me#ti intere#t rate# $ere 8888 re!ati&e t% +.S.rate#.
a. #ma!!er hi,h
b. !ar,er hi,h
. !ar,er !%$
d. n%ne %' the ab%&e
4. (he 'edera! ,%&ernment demand '%r 'und# i# #aid t% be intere#t ine!a#ti9 %r 8888 t%
intere#t rate#.
a. #en#iti&e
b. in#en#iti&e
. re!ati&e!y #en#iti&e a# %mpared t% %ther #et%r#
d. n%ne %' the ab%&e
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4. I' the a,,re,ate demand '%r !%anab!e 'und# inrea#e# $ith%ut a %rre#p%ndin, 8888 in
a,,re,ate #upp!y9 there $i!! be a 8888 %' !%anab!e 'und#.
a. inrea#e #urp!u#
b. inrea#e #h%rta,e
. derea#e #urp!u#
d. derea#e #h%rta,e
4. (he epeted impat %' an inrea#ed epan#i%n by bu#ine##e# i# an 8888 #hi't in the
demand #hedu!e and 8888 in the #upp!y #hedu!e.
a. in$ard an in$ard #hi't
b. in$ard an %ut$ard #hi't
. %ut$ard an in$ard #hi't
d. %ut$ard n% %b&i%u# han,e
50. Whih %' the '%!!%$in, i# a &a!id repre#entati%n %' the Fi#her e''et
a. i E ) INF * J i R
b. i R E ) INF * J i
. E ) INF * i J i R
d. n%ne %' the ab%&e
51. (he rea! intere#t rate an be '%rea#ted by #ubtratin, the 8888 'r%m the 8888 '%r that
peri%d.
a. n%mina! intere#t rate epeted in'!ati%n rate
b. prime rate n%mina! intere#t rate
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. epeted in'!ati%n rate n%mina! intere#t rate
d. prime rate epeted in'!ati%n rate
52. <%rdin, t% the Fi#her e''et9 epetati%n# %' hi,her in'!ati%n au#e #a&er# t% re7uire a
8888 %n #a&in,#.
a. hi,her n%mina! intere#t rate
b. hi,her rea! intere#t rate
. !%$er n%mina! intere#t rate
d. !%$er rea! intere#t rate
53. < 8888 'edera! ,%&ernment de'iit inrea#e# the 7uantity %' !%anab!e 'und# demanded at
any pre&ai!in, intere#t rate9 au#in, an 8888 #hi't in the demand #hedu!e.
a. hi,her in$ard
b. hi,her %ut$ard
. !%$er %ut$ard
d. n%ne %' the ab%&e
54. (he 'edera! ,%&ernment# demand '%r 'und# i# 888888889 and muniipa! ,%&ernment#
demand '%r 'und# i# #%me$hat 888888888888.
a. intere#t-ine!a#ti intere#t-ine!a#ti
b. intere#t-e!a#ti intere#t-e!a#ti
. intere#t-ine!a#ti intere#t-e!a#ti
d. intere#t-e!a#ti intere#t-ine!a#ti
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55. (he #ub#tantia! de!ine in intere#t rate# durin, the redit ri#i# i# attributed t% $hih %' the
'%!!%$in, han,e# in the market '%r !%anab!e 'und#
a.a. an inrea#e in b%th the #upp!y %' and the demand '%r !%anab!e 'und#
b.a. a derea#e in b%th the #upp!y %' and the demand '%r !%anab!e 'und#
.a. a derea#e in the #upp!y %' !%anab!e 'und# and an inrea#e in the demand '%r !%ana b!e'und#
d.a. an inrea#e in the #upp!y %' !%anab!e 'und# and a derea#e in the demand '%r !%anab!e
'und#
5. (he r%$din,-%ut e''et %ur# $hen:
a.a. '%rei,n in&e#t%r# r%$d %ut +.S. in&e#t%r# in the market '%r !%anab!e 'und#.
b.a. the 'edera! ,%&ernment# demand '%r !%anab!e 'und# due t% a hi,her bud,et de'iit
r%$d# %ut the pri&ate demand in the market '%r !%anab!e 'und#.
.a. in#tituti%na! in&e#t%r# r%$d %ut indi&idua! in&e#t%r# in the market '%r !%anab!e 'und#.
d.a. 'irm# and muniipa! ,%&ernment# r%$d %ut h%u#eh%!d# in the market '%r !%anab!e
'und#.
/).F!LS
5. <%rdin, t% the !%anab!e 'und# the%ry9 market intere#t rate# are determined by the 'at%r#
that %ntr%! the #upp!y %' and demand '%r !%anab!e 'und#.
a. (rue
b. Fa!#e
5. (he #upp!y %' !%anab!e 'und# in the +.S. i# part!y determined by the m%netary p%!iy
imp!emented by the Federa! e#er&e Sy#tem.
a. (rue
b. Fa!#e
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5. <t any p%int in time9 h%u#eh%!d# and bu#ine##e# demand a ,reater 7uantity %' !%anab!e
'und# at !%$er rate# %' intere#t.
a. (rue
b. Fa!#e
0. (he bu#ine## demand '%r 'und# re#u!tin, 'r%m #h%rt-term in&e#tment# i# in&er#e!y re!ated
t% the number %' pr%Aet# imp!emented and in&er#e!y re!ated t% the intere#t rate.
a. (rue
b. Fa!#e
1. Gther thin,# bein, e7ua!9 a #ma!!er 7uantity %' +.S. 'und# $%u!d be demanded by '%rei,n
,%&ernment# and %rp%rati%n# i' their d%me#ti intere#t rate# $ere hi,h re!ati&e t% +.S.
rate#.
a. (rue
b. Fa!#e
2. I' '%rei,n intere#t rate# 'a!!9 '%rei,n 'irm# and ,%&ernment# $%u!d !ike!y redue their
demand '%r +.S. 'und#.
a. (rue
b. Fa!#e
3. Sine the a,,re,ate demand '%r !%anab!e 'und# i# the #um %' the 7uantitie# demanded by
the #eparate #et%r#9 and #ine m%#t %' the#e #et%r# are !ike!y t% demand a !ar,er 7uantity
%' 'und# at !%$er intere#t rate# )%ther thin,# bein, e7ua!*9 the a,,re,ate demand '%r
!%anab!e 'und# i# p%#iti&e!y re!ated t% intere#t rate# at any p%int in time.
a. (rue
b. Fa!#e
4. In ,enera!9 #upp!ier# %' !%anab!e 'und# are $i!!in, t% #upp!y m%re 'und# i' the intere#t rate
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i# hi,her.
a. (rue
b. Fa!#e
5. I' the a,,re,ate demand '%r !%anab!e 'und# inrea#e# $ith%ut a %rre#p%ndin, inrea#e in
a,,re,ate #upp!y9 there $i!! be a #urp!u# %' !%anab!e 'und#.
a. (rue
b. Fa!#e
. (he re!ati%n#hip bet$een intere#t rate# and epeted in'!ati%n i# %'ten re'erred t% a# the
!%anab!e 'und# the%ry.
a. (rue
b. Fa!#e
. <%rdin, t% the Fi#her e''et9 i' the rea! intere#t rate i# zer%9 the n%mina! intere#t ratemu#t be e7ua! t% the epeted in'!ati%n rate.
a. (rue
b. Fa!#e
. (% '%rea#t intere#t rate# u#in, the Fi#her e''et9 the rea! intere#t rate '%r an up%min,
peri%d an be '%rea#ted by #ubtratin, the epeted in'!ati%n rate %&er that peri%d 'r%m
the n%mina! intere#t rate 7u%ted '%r that peri%d.a. (rue
b. Fa!#e
. <%rdin, t% the Fi#her e''et9 $hen the in'!ati%n rate i# !%$er than antiipated9 the rea!
intere#t rate i# re!ati&e!y !%$.
a. (rue
b. Fa!#e
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0. F%rea#ter# #h%u!d %n#ider 'uture p!an# '%r %rp%rate epan#i%n and the 'uture #tate %' the
e%n%my $hen '%rea#tin, bu#ine## demand '%r !%anab!e 'und#.a. (rue
b. Fa!#e