1. A financial instrument is a financial asset of the one who _______?
a. Issued it
b. Owns it
c. Is obligated to pay future dollars
d. None of the above
2. When you enter into a futures contract you _________ you will carry out your end of the deal?
a. Hedge the contractual obligation that
b. Guarantee that
c. Attempt to cover the contractual obligation with derivative instruments
d. None of the above
3. Banks are highly leveraged financial institutions, which means that most of their funds come from ________.
a. Deposits
b. Foreign exchange operations
c. Capital gains on the securities they have transacted in
d. Borrowing
4. In defining primary capital for commercial banks we would include ______.
a. Common stock
b. Retained earnings
c. Undivided profit and reserves established for loan losses
d. All of the above
e. None of the above
5. The thrifts had their origins in the early 1800s except for the credit unions which began in the early 1900s. All of them were established to provide a place where small savers could place their savings and the pooled savings could be used to finance ___________.
a. Stock purchased by small investors and investment clubs
b. Capital construction projects by towns and villages
c. Automobile and other consumer durables
d. All of the above
e. None of the above
6. In recent years, the money multipliers have been ________.
a. Stable
b. Unstable
c. Predictable to a level that has increased the Fed's influence on the monetary base
d. 12%
7. Which of the following statements is true?
a. Anything which is generally acceptable as a medium of exchange for goods and services and for other assets can be considered as liquidity
b. The narrowest definition of money -the one which includes the smallest number of and the most highly liquid components - is called M0.
c. The monetary base includes total stock market capitalization
d. The M2 and M3 definitions of the money supply include components which are not true money because they are not immediately spendable in their present form.
8. The term ________ has been applied to theories and economists who espouse the theories which focus on the importance of the quantity of money and the changes in the quantity of money in influencing the price level.
a. Classicists
b. Monetarist
c. Keynesian
d. None of the above
9. Even the most developed and smoothly functioning secondary markets fall short of being perfect in the economically theoretical meaning of the term. Actual markets tend to have numerous frictions which affect __________.
a. Prices
b. Investors' behavior
c. Corporate cash flows
d. Both a and b
e. None of the above