FIN 350 Week 2 Quiz

7/25/2019 FIN 350 Week 2 Quiz

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FIN 350 Week 2 Quiz – Strayer

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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#.



7/25/2019 FIN 350 Week 2 Quiz


. 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#.

7/25/2019 FIN 350 Week 2 Quiz


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#.

7/25/2019 FIN 350 Week 2 Quiz


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#.


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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#


7/25/2019 FIN 350 Week 2 Quiz


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


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#

7/25/2019 FIN 350 Week 2 Quiz


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

7/25/2019 FIN 350 Week 2 Quiz


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


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#.

7/25/2019 FIN 350 Week 2 Quiz


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

7/25/2019 FIN 350 Week 2 Quiz


. 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

7/25/2019 FIN 350 Week 2 Quiz


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

7/25/2019 FIN 350 Week 2 Quiz


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


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#.


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

7/25/2019 FIN 350 Week 2 Quiz


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%


. (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

7/25/2019 FIN 350 Week 2 Quiz


. 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%


7/25/2019 FIN 350 Week 2 Quiz


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##


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


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#.

7/25/2019 FIN 350 Week 2 Quiz


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.

7/25/2019 FIN 350 Week 2 Quiz


. 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#

7/25/2019 FIN 350 Week 2 Quiz


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

7/25/2019 FIN 350 Week 2 Quiz


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

7/25/2019 FIN 350 Week 2 Quiz


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*

7/25/2019 FIN 350 Week 2 Quiz


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

7/25/2019 FIN 350 Week 2 Quiz


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


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


7/25/2019 FIN 350 Week 2 Quiz


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#.

7/25/2019 FIN 350 Week 2 Quiz


a. Fi#her e''et

b. !%anab!e 'und# the%ry

. rea! intere#t rate


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 !%$


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#


7/25/2019 FIN 350 Week 2 Quiz


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


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

7/25/2019 FIN 350 Week 2 Quiz


. 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


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

7/25/2019 FIN 350 Week 2 Quiz


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

7/25/2019 FIN 350 Week 2 Quiz


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

7/25/2019 FIN 350 Week 2 Quiz


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

7/25/2019 FIN 350 Week 2 Quiz


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

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FIN 350 Week 2 Quiz