Wholesale CDs obtained from an investment house rather than directly from a customer
are referred to as brokered deposits.
A country with lower interest rates than another country is likely to see its currency
appreciate if parity holds.
Loans to consumers and to individuals are jointly termed C&I loans on a bank’s balance
sheet.
The Dow Jones Industrial Average is a price-weighted index of 30 stocks chosen to
represent the overall market.
The unbiased expectations hypothesis of the term structure posits that long-term interest
rates are unrelated to expected future short-term rates.
According to the market segmentation theory, short-term investors will not normally
switch to intermediate- or long-term investments.
Withdrawals of funds from a non-Roth tax-sheltered retirement plan prior to age 59are
always taxable income and are subject to a 10 percent penalty.
True
False
The largest category of mortgages by dollar volume is commercial mortgages.
Secondary markets are markets used by corporations to raise cash by issuing securities
for a short time period.
The number of credits you have earned determines your eligibility for Social Security
benefits.
True
False
A mutual fund’s ______ can allow investors to have amounts as low $25 per month
transferred from their bank account to purchase shares.
a.automatic investment program
b.exchange privilege
c.systematic withdrawal plan
d.beneficiary designation
Refer to Figure 10-1. Most of the landscaping located within 25 feet of the house was
also destroyed by either the fire or the fire trucks. What is the maximum amount of
coverage the couple has on their landscaping?
a.$12,000
b.$10,000
c.$9,000
d.$8,000
The largest single type of holder of common stock is
A.pension funds.
B.households.
C.mutual funds.
D.brokers and dealers.
E.life insurance firms.
College majors in science, technology, engineering and mathematics are
a.referred to a STEM majors.
b.declining in importance among employers.
c.are among only a few that pay good salaries upon college graduation today.
d.less attractive to employers than vague majors that imply a broad range of skills.
A corporate bond has a coupon rate of 10 percent and a required return of 10 percent.
This bond’s price is
A.$924.18.
B.$1,000.00.
C.$879.68.
D.$1,124.83.
E.not possible to determine from the information given.
Mortgage insurance is generally required on any mortgage loan where the initial
loan-to-value ratio is more than 70 percent.
a.True
b.False
The spot rate for the Argentine peso is $0.3600 per peso. Over the year, inflation in
Argentina is 10 percent and U.S. inflation is 4 percent. If purchasing power parity
holds, at year-end the exchange rate should be approximately ______________ dollars
per peso.
A.0.2987
B.0.3614
C.0.2875
D.0.3384
E.0.3015
Refer to Figure 10-1. Roberto and Denise had a new greenhouse located 15 feet from
their house that they had not even stocked with plants yet. The fire in the house caused
damages of $8,000 to the greenhouse. What will the insurance company pay for these
damages?
a.$800
b.$900
c.$8,000
d.$18,000
A technique used by an auto dealer whereby an offer for a traded-in vehicle is much
higher than its true value in order to get a buyer to accept a too high price for the
vehicle being purchased is called
a.a dealer holdback.
b.high-balling.
c.low-balling.
d.a rebate.
How can a depository intermediary afford to purchase long-term risky direct claims
from funds demanders and finance these purchases with safe, liquid, short-term,
low-denomination deposits? What can go wrong in this process?
A bondholder purchased a 9 percent coupon, $1,000 par three-year bond at a 9 percent
yield. Interest rates then immediately fell to 7 percent and his bond was called at a price
of $1,040. He reinvested his money and earned 7 percent on the $1,040 for three years.
Did the call help or hurt the bondholder? What was his three-year rate of return on his
original investment?
What are ECNs? How are they changing trading in the traditional markets?
Given the functions of the money markets, why is it necessary for money market
securities to have a maturity of one year or less and low default risk?
How does a repo differ from a Fed funds transaction? How do their rates compare?