Which of the following is not a technique for reducing the risk whenever you conduct
banking transactions on-line?
a.Avoid using someone else’s computer to manage your account.
b.Regularly change your password and keep it to yourself.
c.When finished, always hit the log off button at the top of the page instead of just
closing the browser window.
d.Leaving the browser window open when finished making transactions.
If a $10,000 par T-bill has a 3.75 percent discount quote and a 90-day maturity, what is
the price of the T-bill to the nearest dollar?
10,000 * [1-(0.0375 * 90/360)] = 9,906
A.$9,625
B.$9,906
C.$9,908
D.$9,627
E.none of the options
Which one of the following statements about commercial paper is NOT true?
Commercial paper issued in the United States
A.is an unsecured short-term promissory note.
B.has a maximum maturity of 270 days.
C.is virtually always rated by at least one ratings agency.
D.has no secondary market.
E.carries an interest rate above the prime rate.
A 15-payment annual annuity has its first payment in nine years. If the payment amount
is $1,400 and the interest rate is 7 percent, what is the most you should be willing to
pay today for this investment?
A.$6,416.67
B.$12,751.08
C.$6,935.74
D.$5,825.11
E.$7,421.24
The discount rate is the rate that
A.banks charge for loans to corporate customers.
B.banks charge to lend foreign exchange to customers.
C.banks charge each other on loans of excess reserves.
D.banks charge securities dealers to finance their inventory.
E.the Federal Reserve charges on loans to commercial banks.
Refer to Figure 3-1. Calculate and evaluate Maria and John’s debt -to-income ratio.
a.18 percent¾adequate income to repay debt
b.18 percent¾in the danger zone
c.25 percent¾adequate income to repay debt
d.25 percent¾in the danger zone
Which of the following could result in a negative NIM?
A.Growth in net interest income
B.Lower non-interest expense
C.Decline in net interest income
D.Higher non-interest income
E.Positive net interest spread
Eurodollar CDs would include Edollars deposited in Caribbean banks and dollars
deposited in Europe.
A.CDs denominated in euros.
B.dollar investments by European entities in the United States.
C.dollars deposited in Caribbean banks.
D.dollars deposited in Europe.
Residents of certain states such as Florida and Tennessee would be wise to add sinkhole
insurance to their homeowner€s insurance plan as it is typically not covered in the
standard policy.
a.True
b.False
If a bank has more purchased funds than the average bank, you would not be surprised
to see a higher than average ____________________ ratio.
A.provision for loan loss
B.tax
C.noninterest expense
D.interest expense
E.none of the options
Perry had four credit cards in his billfold when his wallet was stolen. He reported the
cards missing four days after he discovered the loss, but the following charges were
incurred before he reported the stolen cards:
How much is Perry’s maximum legal liability for the fraudulent charges on these cards?
a.$480
b.$400
c.$200
d.$185
An interest rate collar is
A.writing a floor and writing a cap.
B.buying a cap and writing a floor.
C.an option on a futures contract.
D.buying a cap and buying a floor.
E.none of the options.
Hanna has 100 shares of Barnes, Inc., which she purchased for $23 has been rising
recently and is currently selling for $25 a share. She places an order with her broker to
sell her Barnes shares when the price reaches $26.50 a share. This is an example of a
____ order.
a.stop
b.limit
c.market
d.month
You buy a principal STRIP maturing in five years. The price quote per hundred of par
for the STRIP is 75.75 percent. Using semiannual compounding, what is the promised
yield to maturity on the STRIP?
[(100/75.75)(1/(5×2)) – 1] x 2 = 5.632%
A.5.632 percent
B.5.712 percent
C.2.816 percent
D.2.945 percent
E.4.566 percent
Closing costs may vary from 2 percent of the mortgage loan amount up to 7 percent.
a.True
b.False
A homeowner can obtain a $250,000, 30-year fixed-rate mortgage at a rate of 6.0
percent with zero points or at a rate of 5.5 percent with 2.25 points. How long must the
owner stay in the house to make it worthwhile to pay the points if the payment saving is
invested monthly?
A.7.15 years
B.3.33 years
C.6.04 years
D.5.90 years
E.more than 30 years