1) Using the Gordon growth model, if D1 is $50, ke is 7%, and g is 5%, then the present
value of the stock is
A) $250
B) $25
C) $50
D) $4673
2) In the liquidity trap, monetary policy
A) has a large impact on interest rates
B) has a small impact on interest rates
C) has no impact on interest rates
D) has a proportionate impact on interest rates
3) Which of the following do not provide charters?
A) The Office of the Comptroller of the Currency
B) The Federal Reserve System
C) The National Credit Union Administration
D) State banking and insurance commissions
4) Sweep accounts which were created to avoid reserve requirements became possible
because of a change in
A) deposit ceilings
B) technology
C) government rules
D) bank mergers
5) The directive of prompt corrective action means that
A) the FDIC will intervene earlier and more vigorously when a bank gets into trouble
B) the banks must take actions quickly to resolve reserve disputes
C) bank failures cannot occur
D) there must be an immediate response to an increase in interest rates
6) An important function of the regional Federal Reserve Banks is
A) setting reserve requirements
B) clearing checks
C) determining monetary policy
D) setting margin requirements
7) Which of the following has not resulted from more active liability management on
the part of banks?
A) Increased bank holdings of cash items
B) Aggressive targeting of goals for asset growth by banks
C) Increased use of negotiable CDs to raise funds
D) An increased proportion of bank assets held in loans
8) A discount bond selling for $15,000 with a face value of $20,000 in one year has a
yield to maturity of
A) 3 percent
B) 20 percent
C) 25 percent
D) 333 percent
9) High unemployment is undesirable because it
A) results in a loss of output
B) always increases inflation
C) always increases interest rates
D) reduces idle resources
10) In the absence of regulation, banks would probably hold
A) too much capital, reducing the efficiency of the payments system
B) too much capital, reducing the profitability of banks
C) too little capital
D) too much capital, making it more difficult to obtain loans
11) The purpose of the disclosure requirements of the Securities and Exchange
Commission is to
A) increase the information available to investors
B) prevent bank panics
C) improve monetary control
D) protect investors against financial losses