A advantage of using swaps to hedge interest-rate risk is that swaps
A) are less costly than futures.
B) can be written for long horizons.
C) are not subject to default risk.
D) are more liquid than futures.
Assuming initially that the required reserve ratio = 10%, the currency-deposit ratio =
75%, and the excess reserve ratio = 156%, an increase in the excess reserve ratio to
200% causes the M1 money multiplier to ________, everything else held constant.
A) increase from 0.15 to 0.33
B) decrease from 0.73 to 0.61
C) increase from 0.54 to 0.67
D) decrease from 1.67 to 1.54
Options on futures contracts are referred to as
A) stock options.
B) futures options.
C) American options.
D) individual options.
The federal agency that ensures that potential security purchasers are well informed is
the
A) FCC.
B) FTC.
C) NRC.
D) SEC.
Brokers, in contrast to security dealers
A) hold inventories of securities.
B) make their income through commissions.
C) make their living on the spread between the bid price and the asked price.
D) buy and sell securities at given prices.
The lon-run aggregate supply curve can be expressed by
A) output as a function of potential output.
B) inflation as a function of past inflation.
C) inflation as a function of past inflation and output gap.
D) output as a function of inflation and output gap.
An example of permanent insurance is ________ insurance, and an example of
temporary insurance is ________ insurance.
A) term; variable life
B) whole life; variable life
C) whole life; term
D) term; whole life
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 included
which of the following provisions to deal with conflicts of interest in the credit-rating
Industry?
1.Created an Office of Credit Ratings at the SEC with its own staff and the authority to
fine credit-rating agencies and to deregister an agency if it produces bad ratings.
2.Forced credit-rating agencies to provide reports to the SEC when their employees go
to work for a company that has been rated by them in the last twelve months.
3.Prohibited compliance officers from being involved in producing or selling credit
ratings.
4.Required the SEC to prevent issuers of asset-backed securities from choosing the
credit-rating agencies that will give them the highest rating and supported earlier
initiatives by the SEC.
5.Authorized investors to bring lawsuits against credit-rating agencies for a reckless
failure to get the facts when providing a credit rating.
A) 1, 2, 3, and 4.
B) 2, 3, 4, and 5.
C) none.
D) 1, 2, 3, 4, and 5.
According to the expectations theory of the term structure
A) when the yield curve is steeply upward sloping, short-term interest rates are
expected to remain relatively stable in the future.
B) when the yield curve is downward sloping, short-term interest rates are expected to
remain relatively stable in the future.
C) investors have strong preferences for short-term relative to long-term bonds,
explaining why yield curves typically slope upward.
D) yield curves should be equally likely to slope downward as slope upward.
From 2004 to 2007, the growth rates of M1 and M2
A) were identical.
B) both increased but at different rates.
C) both decreased but at different rates.
D) moved in opposite directions.
Social Security is a
A) fully funded pension plan.
B) federally insured private pension plan.
C) government sponsored private pension plan.
D) “pay-as-you-go” system.
A $100 deposit into my checking account at My Bank increases my checkable deposits
by $100, and the bank’s ________ by $100.
A) reserves
B) loans
C) capital
D) securities