1. What can the Federal Reserve do to grow the economy faster?

Multiple Choice

• Lobby the government to raise taxes and reduce spending
• Buy securities to lower the Federal Funds rate
• Sell securities to increase the Federal Funds rate
• Reduce the supply of money

2. Which is the interest rate paid by banks when they borrow excess reserve from another bank?

Multiple Choice

• Discount Rate
• Risk Free Rate
• Prime Rate
• Federal Funds Rate

In which role does the Federal reserve most directly work to prevent bank runs?

Multiple Choice

• Monetary policy
• Bank regulator
• Insurer of bank deposits
• Lender of last resort

This describes a racist and discriminatory practice when banks and mortgage lenders refuse to lend money to people in certain neighborhoods.

Multiple Choice

• Redining
• Greenwashing
• Community disinvestment
• Financial disintermediation

How did the Paul Volker's Fed fight inflation in the early 1980s?

Multiple Choice

• Limit the money supply
• Set price controls
• Reduce demand for loanable funds
• Buy securities to lower the Fed Funds rate

Determinants of Interest Rate for Individual Securities The Wall Street Journal reports that the rate on 3-year Treasury securities is 7.20 percent, and the 6-year Treasury rate is 7.45 percent. From discussions with your broker, you have determined that expected inflation premium is 2.70 percent next year, 2.95 percent in Year 2, and 3.15 percent in Year 3 and beyond. Further, you expect that real interest rates will be 3.60 percent annually for the foreseeable future. What is the maturity risk premium on the 6-year Treasury security?

Multiple Choice

0.90%

1.15%

0.45%

0.70%

Your company's revenue last year was $204000. Historically, revenues have had a compounded annualized growth rate of 8.9%. If this rate continues, how many years will it take for revenues to reach $882000? Round your answer to the nearest 0.01 years.

Which financial statement reports a firm's assets, liabilities, and equity at a particular point in time?

Multiple Choice

statement of cash flows

income statement

statement of retained earnings

balance sheet

This is cash flow available for payments to stockholders and debt holders of a firm after the firm has made investments in assets necessary to sustain the ongoing operations of the firm.

Multiple Choice

net income available to common stockholders

net cash flow

cash flow from operations

free cash flow

Determinants of Interest Rate for Individual Securities A 2-year Treasury security currently earns 4.50 percent. Over the next two years, the real interest rate is expected to be 2.02 percent per year and the inflation premium is expected to be 1.22 percent per year. What is the maturity risk premium on the 2-year Treasury security?

Multiple Choice

1.06%

.90%

1.26%

5.30%