At the beginning of the year the exchange rate between the Brazilian real and the U.S.
dollar was 2.2 reals per dollar. Over the year, Brazilian inflation was 12 percent and
U.S. inflation was 4 percent. If purchasing power parity holds, at year-end the exchange
rate should be approximately ________________ dollars per real.
A.2.3913
B.0.4895
C.2.8498
D.0.4182
E.0.3440
The type of swap most closely linked to the subprime mortgage crisis is the
____________.
A.interest rate swap
B.currency swap
C.equity linked swap
D.credit default swap
E.DIF swap
You bought a stock three years ago and paid $45 per share. You collected a $2 dividend
per share each year you held the stock and then you sold the stock for $47 per share.
What was your annual compound rate of return?
Use a financial calculator to solve for IRR as follows: CFO = -$45, CO1 = $2, FO1 = 1,
CO2 = $2, FO2 = 1, FO3 = $47, FO3 = 1 Compute for IRR = 5.82%.
A.8.89 percent
B.8.51 percent
C.5.84 percent
D.4.44 percent
E.2.96 percent
In comparison to small banks, larger banks typically have
A.more equity capital.
B.more core deposits.
C.more off-balance-sheet activities.
D.larger net interest margins.
E.all of the options.
The major asset of the Federal Reserve is
A.U.S. Treasury securities.
B.depository institution reserves.
C.currency outside banks.
D.vault cash of commercial banks.
E.gold and foreign exchange.
You can add coverage under your auto insurance policy to protect the driver and
passengers in your car that is hit by an uninsured driver.
a.True
b.False
Refer to Figure 14-2. What is Sudsy Soap’s dividend yield?
Figure 14-2
Toni and Felix are considering buying stock. They would like to purchase 600 shares of
Sudsy Soap stock at $35 a share. Sudsy Soap had the following figures for the past
year:
NARREND
a.1.4%
b.1.6%
c.2.1%
d.3.0%
The bank’s ROA is
A.1.31 percent.
B.1.78 percent.
C.1.26 percent.
D.0.89 percent.
E.none of the options.
Refer to Figure 14-2. What is Sudsy Soap’s price-to-book ratio?
Figure 14-2
Toni and Felix are considering buying stock. They would like to purchase 600 shares of
Sudsy Soap stock at $35 a share. Sudsy Soap had the following figures for the past
year:
NARREND
a.0.5
b.0.9
c.1.5
d.2.0
A checking account that does not pay interest is called a
a.savings account.
b.money-market deposit account.
c.NOW account.
d.demand-deposit account.
A T-bond with a $1,000 par is quoted at 97:14 bid, 97:15 ask. The clean price for you to
buy this bond is
A.$974.38.
B.$975.42.
C.$974.69.
D.$975.77.
E.none of the options.
Which one of the following entities is an actual government agency dealing with
mortgages?
A.GNMA
B.FNMA
C.FHLMC
D.PIP
E.CMO