MONEY, BANKING AND MONETARY POLICY1. The process by which investors seek to profit by simultaneously selling an asset with a lower rate of return and buying an otherwise identical asset with a higher rate of return is known as A. hedging the market. B. passive fund management. C. arbitrage. D. portfolio balancing. 2. Which one of the following statements about open-market operations is correct? A. Open-market operations refer to the purchase or sale of government securities by the Fed. B. Open-market operations refer to purchases of stocks in the New York Stock Exchange. C. Open-market operations refer to central bank lending to commercial banks. D. Open-market operations refer to the specifying of loan maximums on stock purchases. 3. The federal funds market is the market in which A. banks borrow reserves from one another on an overnight basis. B. banks borrow from the Federal Reserve Banks. C. U.S. securities are bought and sold. D. Federal Reserve Banks borrow from one another.4. Commercial banks monetize claims when they A. borrow from the Federal Reserve Banks. B. accept repayment of outstanding loans. C. collect checks through the Federal Reserve System. D. make loans to the public.5. Wally owns 100 shares of stock in Mammoth Corporation that he purchased for $20 per share. Every year he has received, from company profits, $1 for each share he owns. If Wally sells all his shares at a price of $30 per share, he'll receive a A. a capital gain of $30 per share. B. total capital gain of $10. C. dividend of $10 per share. D. total capital gain of $1,000.6. What concept describes how quickly an investment increases in value when interest is paid not only on the original amount invested, but also on the accumulated interest payments? A. Present value B. Real rate of interest C. Compound interest D. Future value7. Which one of the following statements about the Fed is correct? A. The Fed directly sets the prime interest rate but not the federal funds rate. B. The Fed directly sets both the federal funds rate and the prime interest rate. C. The Fed directly sets the discount rate and the prime interest rate. D. The Fed directly sets neither the federal funds rate nor the prime interest rate. 8. A bank temporarily short of required reserves may be able to remedy this situation by A. borrowing funds in the federal funds market. B. buying bonds from the public. C. granting new loans. D. shifting some of its vault cash to its reserve account at the Federal Reserve. 9. The line that depicts the relationship between the average expected rate of return and the risk level of a financial asset is known as the A. Beta Line. B. Risk-Return Line. C. Security Market Line. D. Risk Premium Line.10. Other things equal, if the supply of money is reduced, A. the interest rates will fall. B. investment spending will increase. C. the demand for money will increase. D. bond prices will fall.11. Michelle buys a bond for $5,000. Every year that she holds the bond, she'll receive interest payments of $250. The interest rate on the bond is A. 40 percent. B. 20 percent. C. 2 percent. D. 5 percent.12. Which one of the following financial assets is considered to be essentially risk-free? A. Stock in Fortune 500 companies B. Short-term U.S. government bonds C. Gold D. Real estate13. Denny buys a rare coin for $200 and sells the coin 1 year later for $220. Denny's rate of return is A. 110 percent. B. 20 percent. C. 10 percent. D. 91 percent.14. The Security Market Line depicts the relationship between the A. average expected rate of return on stocks and the average expected rate of return on bonds. B. risk level of a financial asset and the prime interest rate. C. average expected rate of return of a financial asset and the discount rate. D. average expected rate of return and risk level of a financial asset.15. Which one of the following is presently a major deterrent to bank panics in the United States? A. The legal reserve requirement B. The fractional reserve system C. The gold standard D. Deposit insurance 16. To say that the Federal Reserve Banks are quasi-public banks means that A. they deal only with banks of foreign nations and don't have direct business contact with U.S. banks. B. they're publicly owned, but privately managed. C. they're privately owned, but managed in the public interest. D. they deal only with commercial banks, and not the public.17. If the economy were encountering a severe recession, proper monetary and fiscal policies would call for A. buying government securities, reducing the reserve ratio, reducing the discount rate, increasing reserves available through the term auction facility, and a budgetary deficit. B. buying government securities, reducing the reserve ratio, raising the discount rate, reducing reserves available through the term auction facility, and a budgetary deficit. C. buying government securities, raising the reserve ratio, raising the discount rate, reducing reserves available through the term auction facility, and a budgetary surplus. D. selling government securities, raising the reserve ratio, lowering the discount rate, increasing reserves available through the term auction facility, and a budgetary surplus. 18. Other things equal, an excessive increase in the money supply will A. reduce the price level. B. increase the purchasing power of each dollar. C. have no impact on the purchasing power of the dollar. D. decrease the purchasing power of each dollar.19. Which one of the following statements about risky investments is correct? A. Riskier investments tend to sell for higher prices; that is why they are considered to be riskier. B. Riskier investments tend to sell for prices directly correlated with expected rates of return. C. Riskier investments tend to sell for higher prices so they provide a higher expected rate of return to compensate for risk. D. Riskier investments tend to sell for lower prices so they provide a higher expected rate of return to compensate for risk.20. Which one of the following statements about the money supply is correct? A. The money supply is backed dollar-for-dollar with gold bullion. B. The money supply is backed dollar-for-dollar with gold and silver. C. The money supply is backed by government bonds. D. The money supply is backed by the government's ability to control the supply of money and therefore to keep its value relatively stable.
When is your deadline for this exam. Is this a PF exam?
Yes, it is 2 hours.
Hi Chris are you working on it
I temporally lost my internet connection as I was working on this (and lost the answers). Do you still need help?
Yes but give me 20 minute
Okay, I'm waiting.
go head please do it
THIS ANSWER IS LOCKED!You can view this answer by clicking here to Register or Login and paying $3. If you've already paid for this answer, simply Login.
Master's Degree, strong math and writing skills, experience in one-on-one tutoring (college English)