1. Austin thinks the Mets are going to be good this year, AND he thinks the system that allows investment in equity shares is called the

a. Financial System

b. Financial asset

c. Secondary market

d. Financial intermediary

2. Which of the following is role of financial market.

a. Preparing budget

b. Managing function of a company

c. Imposing income tax

d. Determining prices of securities

3. Which of the following is an example of money market instruments?

a. Equity shares

b. Term loan

c. Bond

d. T-Bills

[The MONEY MARKET is a financial market that trades U.S. Treasury bills, commercial paper and other short-term financial instruments. This market is often used by businesses when they need short-term funds to bridge the gap between paying operating costs and collecting revenue from product sales. As such, the term "money" in money market indicates that businesses are using highly liquid instruments to raise the money need for operating expenses. ]

4. A dealer sells securities (usually T-bills) to another dealer and agrees to purchase them back at a specific time, at a specific price. Lender receives difference between purchase and sale. Most repos are overnight.

a. T-bill.

b. T-Note

c. T-Bond

d. Repurchase Agreement

5. Time deposits Issued by Banks and SL's that carry fixed rates of interest that mature after a certain period. Min of 7 days. Insured up to $250k by FDIC.

a. T-bill.

b. T-Note

c. Certificate of Deposits

d. Negotiable Certificate of Deposits

6. $100 minimum and have a maturity of 2-10 years. Pay fixed rate of interest semi-annually and the investor receives face value upon maturity

a. T-bill.

b. T-Note

c. Certificate of Deposits

d. Negotiable Certificate of Deposits

7. Short term securities (1-month, 3-month, 6-month, 1 year) with a maturity of one year or less. They are always sold at a discount because they do not make interest payments.

a. T-bill.

b. T-Note

c. T-Bond

d. Repurchase Agreement

8. $100 minimum and have a maturity up to 30 years. Pay interest semiannually and investor receives face value at maturity.

a. T-bill.

b. T-Note

c. Certificate of Deposits

d. T-Bond

8. Allows investors to compare the yield on T- bills with the yield available on notes, bonds and other interest bearing securities. Equivalent yield is always greater than discount yield for T-Bills.

a. T-bill yield

b. T-Note yield

c. Discount yield

d. Bond equivalent yield

9. Issued by corporations in need of short term financing. Debt is unsecured and matures in 270 days or less and exempt from Act of 1933. Commonly issued at a discount. Rated by agencies. ( US context)

a. Commercial paper

b. Certificate of deposit

c. T-Bond

d. Repurchase Agreement

10. Principal value of these securities is inflation adjusted based on the CPI. Rate of interest is fixed, but principle may vary. It will pay at least par at maturity. Annual adjustment will be taxed as ordinary income each year an adjustment is made.

a. T-bill.

b. Treasury Inflation Protected Securities (TIPS)

c. Certificate of Deposits

d. T-Bond

11. Have a maturity of less than one year and issued by US govt, govt agencies, banks and corporations. Provide an avenue for borrowing and lending (typically overnight to a few months)

a. Money market securities

b. T-Note

c. T-Bills

d. Certificate of Deposits

12. Suppose you could buy a 91-day T-bill at an asked price of $98.85 per $100 face value and you could sell to the dealer at a bid price of $98.35 per $100 face value.

Bond equivalent yield (BEY) =

a. 4.55%

b 4.67%

c. 6.53%

d. None of the above