If a Microsoft January 20 call option with a strike price of $20 were about to expire and
the market price of the underlying Microsoft stock was $25.62, the price of the call
option would have to be __________ to eliminate arbitrage opportunities.
a. $0.62
b. $5.62
c. $15.62
d. $25.62
e. none of the above.
Early chartered banks included:
a. the Bank of North America
b. the Bank of Massachusetts
c. the Bank of New York
d. All the above
_____________ costs are a function of quantity sold, not time.
a. fixed
b. depreciation
c. operating
d. variable
e. none of the above
Interest earned only on an investment’s principal or original amount is referred to as:
a. simple interest
b. compound interest
c. discount interest
d. annuity interest
Savings banks have nearly three quarters of their assets in the form of:
a. securities
b. cash
c. unsecured loans
d. real estate mortgages and mortgage-backed securities
The Board of Governors of the Federal Reserve System:
a. consists of 7 appointed members
b. sets reserve requirements
c. approves discount rates as part of monetary policy
d. all the above
e. none of the above
While the Chicago Board Options Exchange remains the main market for exchange
traded options, the ______________ exchange also deals in option contracts.
a. Miami
b. Indianapolis
c. San Francisco
d. all of the above
e. none of the above.
Which of the following statements is most correct?
a. Eurodollars are deposits placed in foreign banks that remain denominated in U.S.
dollars.
b. Treasury bills are actively traded in secondary money markets.
c. The most common trading unit for federal funds is $1 million.
d. All of the above statements are correct.
Most income for the Federal Government comes from:
a. corporate income taxes
b. individual income taxes
c. social insurance receipts
d. none of the above
A business that needs short-term credit in excess of its regular line of bank credit may:
a. sell common stock to the bank with a repurchase agreement
b. subordinate the interests of the owners to the bank’s additional loans
c. make limited use of overdrafts
d. pledge accounts receivable as specific collateral for an additional loan
A bond that can be changed into a specified number of shares of the issuer’s common
stock is called a:
a. retractable bond
b. convertible bond
c. callable bond
d. collateralized bond
When coins have an intrinsic value equal to the value of the metal they contain, they
arereferred to as:
a. full-bodied money
b. representative full-bodied money
c. token coins
d. all of the above
As interest rates rise, the prices of existing bonds will:
a. rise
b. stay the same
c. fall
d. either a or , depending on the state of the economy
Which of the following categories is not considered to be one of the basic economic
units in the U.S. financial system?
a. business firms
b. financial intermediaries
c. governments
d. not-for-profit organizations
The discount rate is:
a. the rate charged a bank€s best customers
b. the rate paid by large business with good credit
c. the rate a bank must pay to borrow from the Fed
d. none of the above
Which one of the following is not a marketable government security?
a. Treasury stock
b. Treasury bill
c. Treasury note
d. Treasury bond
Changes in the growth rates for money supply and money velocity affect the growth
rate in:
a. real economic activity
b. the rate of inflation
c. the turnover of goods and services
d. both a and
Of the following forms of organization, which businesses are the greatest in numbers?
a. proprietorships
b. partnerships
c. corporations
d. limited partnerships
The total capital ratio (TCR) can be computed as total capital divided by total assets
times 100.
The minimum amount of total reserves that depository institutions must hold are called
fractional reserves.
The most desirable form of business organization in terms of ease of start-up is a
proprietorship.
Whenever the net present value of a project is positive, the profitability index is greater
or equal to 1.0.
The U.S. Treasury has little power to influence money markets.
The federal debt of the United States is owned to a large extent by foreign institutions
and individuals.
The historical percentage return for a single financial asset is equal to any dividends
received minus the difference between the selling price and the purchase price, all
divided by the purchase price.