A financial contract that obligates one party to exchange a set of payments it owns for
another set of payments owned by another party is called a
A) hedge.
B) call option.
C) put option.
D) swap.
When the yield curve is flat or downward-sloping, it suggest that the economy is more
likely to enter
A) a recession.
B) an expansion.
C) a boom time.
D) a period of increasing output.
In the FOMC’s “Statement on Long-Run Goals and Monetary Policy Strategy,”the
FOMC agreed to a single numerical value of the inflation objective, 2% on the
________.
A) PCE deflator
B) GDP deflator
C) CPI
D) PPI
As default risk increases, the expected return on corporate bonds ________, and the
return becomes ________ uncertain, everything else held constant.
A) increases; less
B) increases; more
C) decreases; less
D) decreases; more
If the dollar appreciates from 1.5 Brazilian reals per dollar to 2.0 reals per dollar, the
real depreciates from ________ per real to ________ per real.
A) $0.67; $0.50
B) $0.33; $0.50
C) $0.75; $0.50
D) $0.50; $0.67
E) $0.50; $0.75
If you bought a long futures contract you hope that bond prices
A) rise.
B) fall.
C) are stable.
D) fluctuate.
Which of the followings is NOT true about the word “autonomous” that economists
use?
A) Changes in autonomous components are associated with movements along a curve.
B) Changes in autonomous components are associated with shifts of a curve.
C) The autonomous component of a variable is exogenous.
D) The autonomous component of a variable is independent of other variables in the
model.
When the policy rate hits its lower bound and inflation keeps falling, this portion of the
aggregate demand curve is
A) downward sloping.
B) upward sloping.
C) flat.
D) undetermined.
If you purchase a $100,000 interest-rate futures contract for 110, and the price of the
Treasury securities on the expiration date is 106, your ________ is ________.
A) profit; $4000
B) loss; $4000
C) profit; $6000
D) loss; $6000
If a security pays $55 in one year and $133 in three years, its present value is $150 if
the interest rate is
A) 5 percent.
B) 10 percent.
C) 12.5 percent.
D) 15 percent.
Of the remedies for conflicts of interest, which one is the most intrusive?
A) regulate for transparency
B) separation of functions
C) supervisory oversight
D) socialization of information production
If, for a $1000 premium, you buy a $100,000 call option on bond futures with a strike
price of 110, and at the expiration date the price is 114, your ________ is ________.
A) profit; $4000
B) loss; $4000
C) profit; $3000
D) loss; $3000
If there isn’t sufficient information available, then which of the following approaches to
reduce conflicts of interest will have the lowest probability of working?
A) leave it to the market
B) supervisory oversight
C) separation of functions
D) socialization of information production
Conflicts of interest may arise within the credit rating agencies because
A) the investors pay the credit agencies for ratings.
B) the issuers of debt securities pay the credit agencies for ratings.
C) the credit rating agencies provide auditing services to issuers of debt securities.
D) the credit rating agencies are involved in offering credit counseling to investors.
Another name for a consol is a ________ because it is a bond with no maturity date.
The owner receives fixed coupon payments forever.
A) perpetuity
B) discount bond
C) municipality
D) high-yield bond
Property and casualty insurance companies are organized
A) both as stock and mutual companies.
B) only as stock companies.
C) only as mutual companies.
D) primarily as cooperatives.
To promote an economic expansion and an exit from the deflationary environment that
the Japanese
had been experiencing for the past fifteen years, the “Abenomics” aims at
A) increasing inflation target.
B) increasing inflation expectations.
C) purchasing long-term bonds.
D) all of the above.
E) none of the above.
If the required reserve ratio is 10 percent, currency in circulation is $400 billion,
checkable deposits are $1000 billion, and excess reserves total $1 billion, then the
currency-deposit ratio is
A) 0.25.
B) 0.50.
C) 0.40.
D) 0.05.