The Gramm-Leach-Bliley Act of 1999
A) allowed the creating of financial holding companies.
B) set conditions under which an FHC can set up a merchant bank.
C) brings the U.S. closer to the universal banking model.
D) does all of the above.
The __________ policy dealt with the problem of the consequences of identification of
weak banks by changing the closure rule.
A) forbearance
B) setting of “firewalls”
C) prompt corrective action
D) risk-based capital ratio
Commercial paper is most commonly issued with a maturity of __________ days.
A) 5
B) 10
C) 30
D) 270
Eurobonds are bonds that are
A) sold outside the borrowing corporation’s home country.
B) sold in Europe.
C) money market instruments.
D) almost always underwritten by a single bank.
The equilibrium price for a British pound is $1.60. At a price of $1.55 per British
pound, there would be excess __________ the dollar and the dollar would __________.
A) supply of; appreciate
B) supply of; depreciate
C) demand for; appreciate
D) demand for; depreciate
If an individual earns $1,500 a month and spends it evenly throughout the month,
transaction balances will average
A) $50 per month.
B) $750 per month.
C) $1500 per month.
D) $3000 per month.
A weakness of the simple Keynesian model is that it does not recognize that because the
transactions demand for money __________ as income increases, the interest rate
__________ as income rises.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases
To the options buyer, the premium paid for the contract represents the
A) maximum return.
B) largest potential loss.
C) yield.
D) transaction cost.
The putting up of outside collateral is
A) one form of the moral hazard problem.
B) one form of the adverse selection problem.
C) a signal of a high-quality borrower.
D) a signal of a low-quality borrower.
The McFadden Act was passed to prevent
A) banks from competing on the basis of deposit rates.
B) foreign banks from operating in the United States.
C) large nationwide banks from forming.
D) banks from holding corporate stock as an asset.
Which of the following statements is true?
A) Convertible preferred stockholders receive quarterly interest payments.
B) Common stockholders receive a fixed dividend, and they are entitled to it before
preferred stockholders get anything.
C) Convertible preferred stock can be converted into preferred stock at a predetermined
price.
D) Many buyers of common stock are more interested in capital gains than in
dividends.
Most corporate bond trading takes place on the
A) New York Stock Exchange.
B) over-the-counter market.
C) Pacific Stock Exchange.
D) Nasdaq.
To make sure that no one group could dominate the direction of monetary policy, the
1913 Federal Reserve Act diffused power in all of the following ways except
A) geographically.
B) between the public and private sectors.
C) internationally.
D) within the government.
In the United States, money is backed by
A) gold.
B) gold and silver.
C) gold, silver, and Federal Reserve notes.
D) social convention and the legal system.
The two nations that have gone furthest with “universal banking” are
A) the United States and the United Kingdom.
B) the United Kingdom and Germany.
C) Germany and Japan.
D) the United States and Japan.