Which of the following futures contracts is available on the various commodity
exchanges in the United States?
A) Treasury bond futures
B) Investment-grade bonds
C) Over-the-counter stocks
D) U.S. savings bonds
Assume an asset has a 50 percent probability of yielding 10 percent and an equal
probability of yielding 6 percent. The standard deviation for this asset is
A) 10 percent.
B) 8 percent.
C) 6 percent.
D) 2 percent.
Proponents of the preferred habitat theory of term structure assume that a sharp
reduction in the supply of one-year securities will
A) decrease the yield on one-year securities.
B) shift the yield curve upward.
C) increase the yield on one year securities.
D) have no effect on the yield on one-year securities.
The __________ is a regulator of financial markets?
A) U.S. Treasury
B) SEC
C) FDIC
D) NCUA
When detailing the impact of monetary policy, a Keynesian econometric model is likely
to emphasize the link between
A) interest rates and investment.
B) the money supply and inflation.
C) velocity and economic growth.
D) aggregate supply and the money supply.
As credit card usage expands in usage, the likely effect will be to
A) increase the velocity of M1.
B) reduce the velocity of M1.
C) increase money demand.
D) increase the money supply.
If investment has a high sensitivity to the interest rate, the IS curve is rather
__________, so that monetary policy has a __________ effect on GDP.
A) flat; strong
B) flat; weak
C) steep; strong
D) steep; weak
In the Cambridge approach, if k is .5, total output is $50 billion, and the money supply
is $100 billion, the price level is
A) 0.5.
B) 4.0.
C) 3.0.
D) 10.0.
An increase in aggregate demand in the Classical model causes the price level to
A) rise but output remains constant.
B) fall but output remains constant.
C) rise but output to fall.
D) fall but output to rise.
A higher price level causes us to
A) move up along an aggregate demand curve.
B) move down along an aggregate demand curve.
C) shift the aggregate demand curve to the right.
D) shift the aggregate demand curve to the left.
If velocity and output are fixed at 5 and 400, respectively, and the price level is 2, then
the money supply is
A) 4,000.
B) 200.
C) 160.
D) 40.
Which of the following is considered by experts to have relatively little power within
the Federal Reserve?
A) The Board of Governors
B) The president of the New York Federal Reserve Bank
C) The economic staff of the Board of Governors
D) The Federal Advisory Council
Assume a portfolio in which there is equal investment in two assets that are perfectly
positively correlated, with equally expected returns of 10 percent and 6 percent for asset
A and 8 percent and 4 percent for asset B. The expected yield on this portfolio is
A) 8 percent.
B) 7 percent.
C) 6 percent.
D) 5 percent.
Peter Lemmings purchased a call option on XYZ Stock with a strike price of $50.
A) Peter will exercise the option if the price of XYZ Stock at expiration is $30.
B) Peter will exercise the option if the price of XYZ Stock at expiration is above $50.
C) Peter will let the option expire if the price of XYZ Stock at expiration is $60.
D) Peter will buy a put option to close out his position if the price of XYZ Stock at
expiration is above $60.
Which of the following interest rates is usually below other money market rates?
A) Discount rate
B) Prime rate
C) Federal funds rate
D) Treasury note rate