Section 3

Which of the following best describes annual percentage rate (APR)?

A standardized measure for interest rates and other loan costs

Which event led to the establishment of the FDIC?

Bank failures during the Great Depression

Which of the following would the FDIC most likely insure?

Certificates of deposit

Which of the following is classified as the least liquid on the scale?

Institutional money market funds

The ease with which an asset is converted to cash is called ______.

Liquidity

Which interest rate do banks use to offer consumer loans?

Prime rate

Long- and short-term debt instruments are called ______.

Securities

Unit of account, medium of exchange, and what other factor define money?

Store of value

Which agency regulates FHLBanks?

The Federal Housing Finance Authority

What program allowed the U.S. Treasury to spend hundreds of billions of dollars to stabilize our financial system, boost credit markets, help families avoid foreclosure, and promote economic growth?

Troubled Asset Relief Program

A Treasury bond is a Treasury security ______.

With a maturity term of 30 years

Which of the following is a likely effect when the discount window is closed?

Banks don't have access to additional funds.

Which agency is responsible for the production of paper currency?

Bureau of Engraving and Printing

The rate at which a bank can obtain a loan from its Federal Reserve bank when using commercial paper as collateral is called the ______ rate.

Discount

Which government entity oversees open-market operations?

Federal Open Market Committee

The two most common insolvency methods put in place when a bank fails are the purchase and assumption method and the ______ method.

Payout Most commonly, the purchase and assumption and payout methods are used when a bank becomes insolvent.

Roger has a sufficient income, has never missed a loan or credit payment, and has an adequate credit history. His credit score makes him a very creditworthy consumer. When obtaining a loan, which rate will he most likely get?

Prime rate

The two most common methods used when a bank fails are the payout method and the ______ method.

Purchase and assumption

What is the purpose of the Federal Reserve System?

The Fed regulates the U.S. depository institutions.

Which of the following describes the prime rate?

The rate at which a bank or lender may loan money to its most creditworthy borrowers