If the consumer price index was 100 in 1984 and 244 in 2015, how much did prices
increase during this period?
a.36 percent
b.72 percent
c.144 percent
d.244 percent
A current account deficit implies that
A.more goods and services are exported than are imported.
B.the country borrowed from abroad more than it loaned and/or sold off some of its
assets.
C.there is excessive consumption of foreign financial assets.
D.the value of the dollar will rise.
E.the country is going bankrupt.
Banks differ from other types of depository institutions in that
I. banks have more diversified asset portfolios.
II. banks obtain funds from more different types of sources.
III. the average size bank is larger than other depository institutions.
A.I only
B.I and II only
C.I and III only
D.II and III only
E.I, II, and III
Convenience use of credit is common.
a.True
b.False
A bond investor has a 99 percent chance of receiving all of her promised payments on a
particular bond issue in the first year of holding the bond, but only a 98 percent chance
in the second year, and a 97 percent chance in the third year and beyond. What is the
cumulative default probability over the first three years she holds the bond?
A.3.75 percent
B.4.24 percent
C.5.89 percent
D.6.85 percent
E.7.33 percent
You can save money on your cost of premiums for your employer-based health care
plan by selecting a high-deductible health plan (HDHP).
a.True
b.False
Refer to Figure 3-1. Calculate Maria and John’s investment assets-to-total assets ratio.
a.35 percent
b.50 percent
c.63 percent
d.27 percent
Compare the cost of the following leasing agreement with the finance charge on a loan
for the same time period: The value of the car is $15,000 at the beginning of the lease
period, and its projected residual value at the end of three years is $4,000. The lease
requires a $500 down payment.
Other things being equal, one would want to finance this car rather than take this lease
if the finance cost were ____ or less.
a.$790
b.$1,290
c.$1,790
d.$2,390
When a customer uses a debit card to pay for a purchase, funds must be paid as of the
next due date on the account.
a.True
b.False
For individuals age 50 and above, the largest permissible yearly IRA contribution is
a.20 percent of AGI.
b.$5,500.
c.$1,000.
d.$6,500.
Mortgage lock-ins have a 30- or 60-day limit. For a fee you can buy more time through
a
a.a settlement extension.
b.lock extension.
c.contingency clause.
d.rate hold.
Liability claims related to their car, which could require them to pay for other person’s
losses
When Robert and Louisa prioritize their insurance choices, ____ would be categorized
as important, but not necessary.
a.health and disability insurance
b.auto collision and comprehensive insurance
c.auto liability insurance
d.All of the losses should be categorized as necessary.
Commercial paper is
A.a time draft payable to a seller of goods, with payment guaranteed by a bank.
B.a loan to an individual or business to purchase a home, land, or other real property.
C.short-term funds transferred between financial institutions usually for no more than
one day.
D.a marketable bank issued time deposit that specifies the interest rate earned and a
fixed maturity date.
E.a short-term unsecured promissory note issued by a company to raise funds for a
short time period.
The levels of foreign currency assets and liabilities at banks have ___________ in
recent years, and the level of foreign currency trading has ____________.
A.increased; increased
B.decreased; decreased
C.increased; decreased
D.decreased; increased
E.decreased; stayed the same
A bank has an interest rate spread of 150 basis points on $30 million in earning assets
funded by interest-bearing liabilities. However, the interest rate on its assets is fixed and
the interest rate on its liabilities is variable. If all interest rates go up 50 basis points, the
bank’s new pretax net interest income will be __________.
A.$600,000
B.$450,000
C.$300,000
D.$250,000
E.$175,000
An MBB differs from a CMO or a pass-through in that
I. the MBB does not result in the removal of mortgages from the balance sheet.
II. a MBB holder has no prepayment risk.
III. cash flows on a MBB are not directly passed through from mortgages.
A.I, II, and III
B.I and II only
C.II and III only
D.I and III only
E.I only
Bank A has a higher ROA than Bank B. Both banks have similar interest income to
asset ratios and noninterest income to asset ratios. We know that
I. Bank A has a higher profit margin than Bank B
II. Bank A has a higher AU ratio than Bank B
III. Bank A must have a higher PLL/OI ratio
A.I only
B.II only
C.I and II only
D.III only
E.I, II, and III
If the consumer price index was 100 in 1984 and 244 in 2015, the purchasing power of
the dollar
a.fell 144 percent.
b.fell 59 percent.
c.rose 144 percent.
d.rose 59 percent.
The person assigned to manage your loan application through the process is the
a.real estate agent.
b.loan processor.
c.mortgage server.
d.loan officer.