1.If you enter into an overnight reverse repurchase agreement, you are

A. borrowing Fed funds temporarily. B. selling a security now while agreeing to buy it back tomorrow. C. giving an unsecured loan to the counterparty. D. procuring a banker's acceptance. E. none of the above.

2. Which of the following is a feature of a banker's acceptance?

A. It is a time draft drawn on the exporter's bank. B. It is a method to help importers evaluate the creditworthiness of exporters. C. It is a liability of the importer and the importer's bank. D. Its interest is calculated as an add-on instrument. E. Its maturity is greater than one year.

3. A repo rate of return is

A. determined by the rate of return on the underlying collateral. B. strongly affected by the current Fed funds rate at the time of the repo. C. determined at the time of the repo. D. determined by the rate of return on the underlying collateral and determined at the time of the repo. E. strongly affected by the current Fed funds rate at the time of the repo and determined at the time of the repo.

4. In essence, a repo is a collateralized

A. banker's acceptance. B. certificate of deposit. C. Fed funds loan. D. commercial paper loan. E. Eurodollar deposit.

5. Which of the following descriptions does not apply to money market securities?

A. Short-term B. Low-risk C. Highly liquid D. Long maturity E. High denominations