debt (money market debt) SIE EXAM

Which of the following statements are TRUE regarding overnight repurchase agreements?

A dealer who needs cash will "sell" some of its inventory overnight to another dealer, and the investment has interest rate risk

All of the following securities are quoted on a yield basis EXCEPT:

American depositary receipts

Which of the following money market instruments is rated on a "P" scale?

Commercial Paper

Which of the following money market instruments are deposits denominated in dollars held in bank branches outside the U.S.?

Eurodollars

Trades of all of the following will settle in Fed Funds EXCEPT:

Prime Commercial Paper

Which of the following are money market instruments?

REPO's, BAs, and CDs (NOT ADRs)

Which of the following statements are TRUE about overnight repurchase agreements entered into between the Federal Reserve and primary U.S. Government dealers?

The Federal Reserve buys "eligible" securities from the dealer with an agreement to sell back the securities the next day, and there is virtually no credit risk involved

Eurodollars are:

U.S. dollar deposits held in foreign branches of U.S. banks or foreign banks

Which of the following statements are TRUE regarding Brokered CDs?

any call features could affect the maturity of the instrument, and how the instrument is titled can determine whether FDIC insurance covers the investment

A customer wishes to buy a $50,000 certificate of deposit offered by your firm. The customer wishes to know if the CD is FDIC insured. As the broker handling the account, you should tell the customer that:

as long as the CD is titled in the customer's name and the customer does not have accounts at the issuing bank totaling more than $200,000, then the CD is FDIC insured

The effective Fed Funds Rate is the:

averaged rate of member banks throughout the United States

Which money market instruments are marginable?

bankers' acceptances, treasury bills, and commercial paper

All of the following securities are eligible for trading by the Federal Reserve EXCEPT:

bond anticipation notes

To loosen credit the Federal Reserve will:

buy U.S. Government securities from bank dealers with an agreement to sell them back at a later date

In order to determine whether a Brokered CD being recommended to a customer will qualify for FDIC insurance, the registered representative must know all of the following EXCEPT:

call dates of the CD

Which of the following can initiate repurchase agreements with government and agency securities as collateral?

commercial banks, federal reserve banks, and government securities dealers

A "blue chip" corporation experiencing a short term cash flow shortage could issue:

commercial paper

A prime bankers acceptance is one which is:

eligible for trading by the Federal Open Market trading desk

Which of the following is the shortest term money market instrument?

federal funds (made overnight)

All of the following statements are true about overnight repurchase agreements EXCEPT there is virtually no:

interest rate risk

A customer buys a Brokered CD for $100,000. Upon receipt of his next account statement, the customer sees that the market value of the CD is shown as $99,800. This would occur because:

interest rates have risen

All of the following statements are true about commercial paper EXCEPT commercial paper:

is a funded debt of the issuer

Commercial Paper:

is an exempt security, and has a maximum maturity of 270 days

On customer account statements, long-term negotiable certificates of deposit must be shown at:

market value

Which of the following statements are TRUE about commercial paper?

maximum maturity of 270 days, matures on a pre-set date at a pre-set price, is quotes on a. yield basis, and is an unsecured promissory note

The typical purchaser of a Banker's Acceptance is a(n):

money fund investor

Commercial paper is a(n):

money market instrument, and unfunded debt

Banker's Acceptances are:

money market instruments used to finance emerging country imports and exports

A repurchase agreement is effected between two U.S. Government securities dealers. The interest charged under the agreement is the:

repo" rate, paid by the seller of the securities to the buyer

Which of the following disclosures must be made to customers who wish to purchase long-term negotiable certificates of deposit?

sale prior to maturity can result in a price that is lower than the original purchase amount, trading in the secondary market is limited, step-down CD yields may not reflect the actual market interest rate, and callable CDs are subject to reinvestment risk

All of the following are true statements regarding short term negotiable certificates of deposit EXCEPT:

the minimum denomination is $10,000 (its $100,000)

Which statements are TRUE about commercial paper?

the most common maturity is 30 days, and the maximum is 270 days

Which statements are TRUE regarding repurchase agreements effected between the public and government securities dealers?

the public customer is the lender of monies, and the government dealer is the seller of the government securities

Which statements are TRUE regarding reverse repurchase agreements effected between the public and government securities dealers?

the public customer is the seller of the government securities, and the government dealer is the lender of the monies

Which of the following are TRUE statements regarding short term negotiable certificates of deposit?

trading of negotiable CDs occurs in the secondary market, and are non-callable

The purchase price of which of the following can be negotiated?

treasury bill, certificate of deposit, banker's acceptance, and commercial paper

Which of the following securities are eligible for Fed trading?

treasury bonds, prime banker's acceptances, and treasury bills

Money market discounts are quoted on a:

yield basis

If the Federal Reserve enters into repurchase agreements with member banks, the:

Federal Reserve is loosening credit availability, and the federal funds rate is likely to go down

Which of the following items is NOT true about Jumbo Certificates of Deposit?

Jumbo CDs are fully insured by the Federal Deposit Insurance Corporation

Which of the following money market instruments trades at par plus accrued interest?

Jumbo certificates of deposit

The interest rate charged on Eurodollar loans between major international banks is:

LIBOR

LIBOR stands for:

London Interbank Offered Rate

Which of the following are risks that should be disclosed to customers when recommending the purchase of a CD sold through a brokerage firm?

if interest rates have risen after issuance and the CD is sold prior to maturity, the investor may experience a loss of principal, the secondary market is limited, so that the sale prior to maturity can incur higher than normal transaction costs

All of the following statements are true regarding repurchase agreements EXCEPT:

investors in repurchase agreements have no interest rate risk

Which statements are TRUE regarding a "step-down" certificate of deposit?

the interest payment may be reduced, and the principal amount is fixed