MONEY AND BANKING PRACTICE TEST PART 1
Which of the following is true? A) The purchaser of discount bond does not receive any coupon payment. B) Stock markets are important because interest rates are determined. C) Mutual fund is a part of depository institutions. D) In the U.S., securities markets are more important source for corporate finance than loans.
A) The purchaser of discount bond does not receive any coupon payment.
Which of the following are true for discount bonds? A) The purchaser receives the face value of the bond at the maturity date. B) A discount bond is bought at par. C) The purchaser receives the par value at maturity plus any capital gains. D) U.S. Treasury bonds and notes are examples of discount bonds.
A) The purchaser receives the face value of the bond at the maturity date.
Which of the following statements about the characteristics of debt and equities is true? A) They can both be long-term financial instruments. B) Bonds pay dividends. C) Bond holders are residual claimants. D) The income from bonds is typically more variable than that from equities.
A) They can both be long-term financial instruments.
Which of the following is UNLIKELY to occur when the market interest rates increase? A) bond price goes up B) stock price goes down C) wealth moves from borrowers to lenders D) firmsʹ investments decrease
A) bond price goes up
Which of the following is considered to be money? A) checking deposits B) savings bond C) a credit card D) cash inside ATM machine
A) checking deposits
Everything else held constant, if interest rates are expected to increase in the future, the demand for long-term bonds today ________ and the demand curve shifts to the ________. A) falls; left B) rises; right C) falls; right D) rises; left
A) falls; left
When the economy gets into a boom, normally the demand for bonds ________, the supply of bonds ________, and the interest rate ________, everything else held constant. A) increases; increases; rises B) decreases; increases; rises C) decreases; decreases; falls D) increases; decreases; falls
A) increases; increases; rises
Which of the following is true about the U.S. government securities? A) T-Notes are usually discount bonds. B) TIPS are coupon bonds. C) T-Bonds are no longer issued. D) T-Bills have maturities with more than 10 years
B) TIPS are coupon bonds.
Which of the following is an example of an intermediate-term debt? A) A Treasury bond. B) A sixty-month car loan. C) A six month T-Bill. D) A thirty-year mortgage.
B) A sixty-month car loan.
Which of the following instruments are traded in a money market? A) Corporate bonds. B) U.S. Treasury bills. C) State and local government bonds. D) U.S. government agency securities.
B) U.S. Treasury bills.
Ranking assets from most liquid to least liquid, the correct order is: A) house; savings bonds; currency. B) currency; savings bonds; house. C) currency; house; savings bonds. D) savings bonds; house; currency.
B) currency; savings bonds; house.
The yield to maturity is _______ than the _____ rate when the bond price is ________ its par value. A) greater; coupon; above B) greater; coupon; below C) less; perpetuity; below D) greater; perpetuity; above
B) greater; coupon; below
An important function of secondary markets is to A) create a market for newly constructed houses. B) make it easier to sell financial instruments to raise funds. C) make it easier for governments to raise taxes. D) raise funds for corporations through the sale of securities.
B) make it easier to sell financial instruments to raise funds.
Which of the following would you prefer to receive at the interest of 10% ? A) $90 three years from today B) $65 today C) $85 two years from today D) $75 one year from today
C) $85 two years from today
If the interest rates on all bonds rise from 5 to 6 percent over the course of the year, which bond would you prefer to have been holding? A) A bond with five years to maturity B) A bond with twenty years to maturity C) A bond with one year to maturity D) A bond with ten years to maturity
C) A bond with one year to maturity
Which of the following can be described as involving direct finance? A) An insurance company buys shares of common stock in the over-the-counter markets. B) A pension fund manager buys a short-term corporate security in the secondary market. C) A corporation issues new shares of stock. D) People buy shares in a mutual fund.
C) A corporation issues new shares of stock.
Which of the following is NOT a benefit from adopting digital currencies? A) Speed up transaction processing times. B) Lower transaction costs. C) Increase seigniorate. D) Reduce maintenance costs of currencies
C) Increase seigniorate.
Among the following celebs, who has not majored in economics? A) Tiger Woods B) Mick Jagger C) Regis Philbin D) Arnold Schwarzenegger
C) Regis Philbin
Which of the following government securities pay real interest rates? A) T-bills. B) T-Notes C) TIPS. D) T-bonds.
C) TIPS.
Which of the followings hold the most of U.S. government securities? A) Commercial Banks B) China C) The Fed D) Japan
C) The Fed
Which of the following are generally true of bonds? A) A rise in interest rates is associated with a fall in bond prices, resulting in capital gains on bonds whose terms to maturity are longer than the holding periods. B) The only bond whose return equals the initial yield to maturity is one whose time to maturity is the same as the holding period. C) The longer a bondʹs maturity, the smaller is the size of the price change associated with an interest rate change. D) Prices and returns for short-term bonds are more volatile than those for longer-term bonds.
C) The longer a bondʹs maturity, the smaller is the size of the price change associated with an interest rate change.
Which of the following is the most important source of external funds of nonfinancial firms in U.S.? A) bonds B) stocks C) loans D) eurodollar
C) loans
A discount bond A) pays all interest and the face value at maturity. B) pays the bondholder a fixed amount every period and the face value at maturity. C) pays the bondholder the face value at maturity. D) pays the face value at maturity plus any capital gain.
C) pays the bondholder the face value at maturity.
Which of the following bonds would you prefer to selling? A) A $10,000 face-value security with a 10 percent coupon selling for $10,000 B) A $10,000 face-value security with a 9 percent coupon selling for $10,000 C) A $10,000 face-value security with a 10 percent coupon selling for $9,000 D) A $10,000 face-value security with a 7 percent coupon selling for $10,000
D) A $10,000 face-value security with a 7 percent coupon selling for $10,000
Which of the following countries has NOT experienced hyperinflation? A) Denmark B) Brazil C) Germany D) Zimbabwe
I think A
Which of the following is not a form of e-money? A) a debit card B) a stored-value card C) a smart card D) a credit card
I think A
Which of the following is NOT money? A) Checking deposits B) Travelersʹ check C) Cash inside ATM machine D) Coins in your pocket
I think B
In which of the following situations would you prefer to be lending? A) The interest rate is 13 percent and the expected inflation rate is 15 percent. B) The interest rate is 9 percent and the expected inflation rate is 7 percent. C) The interest rate is 4 percent and the expected inflation rate is 1 percent. D) The interest rate is 25 percent and the expected inflation rate is 50 percent
I think C
When the inflation rate is expected to increase, the ________ for bonds falls, while the ________ curve shifts to the right, everything else held constant. A) supply; supply B) supply; demand C) demand; supply D) demand; demand
I think C
Which of the following countries has declared to adopt digital currencies? A) Canada B) China C) Brazil D) Zambia
I think C