Question
1) Which of the following is an example of a financial market? 1) _______ A) A central bank used for raising taxes and borrowing on
1) Which of the following is an example of a financial market? 1) _______
A) A central bank used for raising taxes and borrowing on behalf of the government.
B) An electronic network used for buying and selling textbooks.
C) A bank that only accepts deposits and issues loans.
D) A local coffeehouse where people regularly buy and sell financial instruments.
2) In a barter system people: 2) _______
A) are less likely to specialize as extensively as they would in a monetary economy.
B) must be self sufficient.
C) cannot specialize because they never know what goods will be desired.
D) have to specialize in order to have goods to trade.
3) A derivative instrument: 3) _______
A) should be purchased prior to purchasing the underlying security.
B) gets its value and payoff from the performance of the underlying instrument.
C) is a low-risk financial instrument used by highly risk-averse savers.
D) comes into existence after the underlying instrument is in default.
4) The future value of $100 at a 5% per year interest rate at the end of one year is: 4) _______
A) 107.50 B) $97.50 C) $95.00 D) $105.00
5) Which of the following best expresses the payment a saver receives for investing their money for two years? 5) _______
A) PV + PV B) PV(1 + i)2
C) 2PV(1 + i) D) PV + PV(1 + i)
6) The decimal equivalent of a basis point is: 6) _______
A) 0.0001 B) 0.001 C) 0.01 D) 1.00
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