The problem with spinning is that it may ________ the cost of capital to a firm and thus
________ the efficiency of the capital market.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Before 1970, mutual funds invested almost solely in
A) corporate bonds.
B) corporate common stocks.
C) United States government bonds.
D) municipal bonds and money market securities.
When the financial institution is hedging interest-rate risk on its overall portfolio, then
the hedge is a
A) macro hedge.
B) micro hedge.
C) cross hedge.
D) futures hedge.
The limited memberships and high dollar minimums for hedge funds means that these
funds are
A) subject to weaker regulation than other mutual funds.
B) more stringently regulated for fear of collapse.
C) limited in the types of assets they can purchase.
D) under the control of the U.S. Treasury.
If the required reserve ratio is one-third, currency in circulation is $300 billion, and
checkable deposits are $900 billion, then the currency-deposit ratio is
A) 0.25.
B) 0.33.
C) 0.67.
D) 0.375.
A(n) ________ in the liquidity of corporate bonds will ________ the price of corporate
bonds and ________ the yield on corporate bonds, all else equal.
A) increase; increase; decrease
B) increase; decrease; decrease
C) decrease; increase; increase
D) decrease; decrease; decrease
In developing countries, it can be expensive and time-consuming for the poor to
legalize their property ownership. Without legal title, the property cannot be used as
________ to borrow funds.
A) collateral
B) points
C) interest
D) restrictive covenants
A criticism of the monetarist autonomous spending variable is that
A) some types of autonomous spending do not affect aggregate demand.
B) some types of autonomous spending affect aggregate demand before the spending
occurs. Some types of autonomous spending affect aggregate demand when they occur.
C) some types of autonomous spending affect aggregate demand only long after they
occur.
D) Keynesians do not think that autonomous spending affects aggregate demand.
Approaches to establishing central bank credibility include
A) inflation targeting.
B) nominal GDP targeting.
C) central bank independence.
D) appointment of a more conservative central banker.
E) all of the above.
Dodd-Frank addressed many of the issues that led to the financial crisis. Which of the
following was NOT addressed by Dodd-Frank regulations?
A) stricter consumer protection laws
B) privately owned, government-sponsored enterprises (GSEs) such as Fannie mae and
Freddie Mac
C) resolution authority over the large financial institutions
D) higher requirements on firms dealing in derivatives
Several features distinguish hedge funds from traditional mutual funds, including
A) mutual funds have a minimum investment requirement of $1,000 or more; hedge
funds have no minimum investment requirement.
B) hedge funds typically charge investors large fees relative to mutual funds.
C) hedge fund investors need not commit their money for more than a few weeks at a
time, explaining why they pay higher fees.
D) hedge funds are significantly less risky relative to mutual funds.
The Obama administration increased the tax on the top income tax bracket from 35% to
39%. Supply and demand analysis predicts the impact of this change was a ________
interest rate on municipal bonds and a ________ interest rate on Treasury bonds, all
else the same.
A) higher; lower
B) lower; lower
C) higher; higher
D) lower; higher
Bank ________ is/are listed on the liability side of the bank’s balance sheet.
A) reserves
B) capital
C) securities
D) cash items
Securitization is a process of asset transformation that involves a number of different
financial institutions working together. These financial institutions are known
collectively as the
A) transformers.
B) amalgamation.
C) movers and shakers.
D) shadow banking system.