need help with these 40 multiple choice questions please. due in 2.5 hours!

1. (TCO 1) Financial systems have efficiency when (Points : 4) borrowers are able to finance at the highest possible cost. surplus spending units are able to receive the lowest return on their savings. transaction and intermediation costs are low. lenders will have a limited choice of financial investments. Question 2.2. (TCO 1) Financial intermediaries are able to be profitable due to (Points : 4) economies of scale. the ability to manage credit risk. good control of transactions costs. All of the above Question 3.3. (TCO 1) The largest issuer of commercial paper are (Points : 4) commercial banks. finance companies. property-casualty insurance companies. pension funds. Question 4.4. (TCO 1) Federal agencies invest primarily in claims issued by (Points : 4) businesses that are "too big to fail". the U.S. Treasury to finance government deficits. agricultural or housing-related sectors which have limited access to private credit. foreign governments. Question 5.5. (TCO 1) Corporations list their securities on exchanges to increase (Points : 4) fees. liquidity. volume. asset size. Question 6.6. (TCO 2) Which of the following cannot be associated with original objectives of the Fed? (Points : 4) Coordinate an inefficient payments mechanism Provide an inelastic money supply Print currency Serve as a lender of last resort Question 7.7. (TCO 2) If the Fed buys government securities, this action will (Points : 4) not change the money supply. increase security prices. increase interest rates. decrease credit availability. Question 8.8. (TCO 2) Regulatory powers do not include (Points : 4) margin requirements. interest rate disclosures on deposits. prosecution of counterfeiting and money laundering. bank holding companies. Question 9.9. (TCO 2) Using the data below, what is the level of excess reserves? Total Reserves $100,000,000 Reserve Requirement 6% Total Deposits $750,000,000 (Points : 4) $ 55,000,000 $ 45,000,000 $ 100,000,000 Not ascertainable Question 10.10. (TCO 3) If reserve requirements decrease, we would expect (Points : 4) expenditures to fall. inflation expectations to fall. increases in the Fed Funds rate. excess reserves to increase. Question 11.11. (TCO 4) What factors influence the real rate of interest? (Points : 4) Investor's positive time preference The gold supply Return on capital investments Both investor's positive time preference and return on capital investments Question 12.12. (TCO 4) Interest rates will decrease if loanable funds demand (Points : 4) shifts to the left. shifts to the right. anticipates reduced growth in the economy. shifts to the left and anticipates reduced growth in the economy. Question 13.13. (TCO 4) Long-term bond prices are more likely to be adversely affected if there is (Points : 4) a a a a forecast forecast forecast forecast of of of of lower inflation in the future. a slower economy next year. higher inflation in the future. lower government budget deficits. Question 14.14. (TCO 4) The ______ equation indicates that nominal interest rates are influenced by changes in price levels and the real rate of interest. (Points : 4) Fisher Loanable funds Nominal rate Rate Question 15.15. (TCO 4) An investor received a 3% coupon rate last year on a $1,000 bond purchased at par. The inflation rate during the year was 4% and is expected to be 5% next year. The realized real rate earned by the investor last year was (Points : 4) 3% 4% 1% -1% Question 16.16. (TCO 5) In a fixed-rate bond, the variable which changes to determine market rate of return is _____. (Points : 4) price coupon rate coupon amount face value Question 17.17. (TCO 5) When a bond's coupon rate is greater than the market rate of interest, the bond will sell for (Points : 4) a discount. a premium. par. a variable rate. Question 18.18. (TCO 5) Which of the following risks will not affect zero coupon bonds? (Points : 4) Price risk Reinvestment risk Credit risk Default risk Question 19.19. (TCO 5) Bond A has a duration of 5.6 while bond B has a duration of 6.0. Bond B (Points : 4) will will will will have have have have greater price variability, given a change in interest rates, relative to bond A. a longer maturity than bond A. a higher coupon rate than bond A. less price variability, given a change in interest rates, relative to bond A. Question 20.20. (TCO 5) If market interest rates fall after a bond is issued, the (Points : 4) face value of the bond increases. investor will sell the bond. market value of the bond is increasing. market value of the bond is decreasing. 1. (TCO 5) The yield curve is a plot of (Points : 4) maturity changes as risk changes. yields of securities with different levels of default risk. yields by maturity of securities with similar default risk. interest rates over time. Question 2.2. (TCO 5) A downward sloping yield curve indicates that future short-term rates are expected to _____ and outstanding security prices will _____. (Points : 4) fall; rise fall; fall rise; rise rise; fall Question 3.3. (TCO 5) A two-year interest rate is 7% and a one-year forward rate one year from now is 8%. According to the expectations theory, what is the current one-year rate? (Points : 4) 6.0% 6.5% 7.0% 8.0% Question 4.4. (TCO 5) Which of the following statements about interest rates is true? (Points : 4) Interest rates generally do not tend to move together. The expected rate of inflation does not influence the level of interest rates. At the bottom of the business cycle, the yield curve is typically upward sloping. All the above are true. Question 5.5. (TCO 5) Borrowers that seek long-term funds to finance capital projects must pay lenders a _____ premium. (Points : 4) liquidity default interest market Question 6.6. (TCO 6) Investors in the money markets are generally not willing to take which of the following risks? (Points : 4) Default risk Interest rate risk Liquidity risk All of the above Question 7.7. (TCO 6) An example of a liability of a non-financial business corporation is (Points : 4) commercial paper. Federal Funds. Treasury securities. agency securities. Question 8.8. (TCO 6) Most issuers of commercial paper include (Points : 4) large financial and nonfinancial firms. firms with high credit risk. small banks. wealthy individuals. Question 9.9. (TCO 6) Which of the following securities are examples of a money market security? (Points : 4) Treasury bills Certificates of deposit Banker's acceptance All of the above Question 10.10. (TCO 6) Repurchase agreements have low risk because the (Points : 4) collateral is of equivalent dollar. transaction is permanent. security is of a short-term nature. collateral is of equivalent dollar and security is of a short-term nature. Question 11.11. (TCO 7) Capital markets received the largest supply of funds from (Points : 4) financial institutions. state and local governments. federal government. households. Question 12.12. (TCO 7) Corporations will typically use capital market financing for (Points : 4) new plant and equipment. seasonal inventory needs. a quarterly dividend payment. the sale of common stock. Question 13.13. (TCO 7) STRIPs are created by Treasury security dealers because (Points : 4) STRIPs are sold directly by the Treasury Department. when a STRIP is created, all interest payments become one security and the principal payment becomes the other. many small investors prefer STRIPs because they require a lower minimum investment than original Treasury notes and bonds. they expect to sell the created zero-coupon securities for more than what they paid for the original Treasury security. Question 14.14. (TCO 7) _____ would be least likely to purchase a tax-exempt municipal Bond. (Points : 4) Variables commercial bank Casualty insurance company Mutual funds Individuals in low tax brackets Question 15.15. (TCO 7) The demand for junk bonds came primarily from (Points : 4) life insurance companies. savings and loans association. individual investors. life insurance companies and savings & loans association. Question 16.16. (TCO 7) All of the following are reasons why the Eurocurrency market is an attractive place to store excess liquidity for corporations, countries, and individuals except (Points : 4) investors are allowed to hold debt securities in bearer form. automatic withholding of tax on interest earned. investments earn higher returns. high liquidity of Eurocurrency deposits. Question 17.17. (TCO 8) If mortgage interest rates are expected to decrease in the future, a mortgage lender approving ARMs would want (Points : 4) an interest rate "cap" on their loans. a second mortgage on the home. to lengthen the "adjusting" time period. no limits on the variability of the rates. Question 18.18. (TCO 8) The primary goal of private mortgage insurance (PMI) is to protect the (Points : 4) seller of the home. FHA. borrower. lender. Question 19.19. (TCO 8) Home equity line popularity increased as a result of The Tax Reform Act of 1986 because (Points : 4) tax deductibility of interest for homeowners was reduced. interest incurred under home equity lines was made tax deductible. banks and savings and loans were given tax incentives to make home equity lines of credit. credit card debt was made tax deductible. Question 20.20. (TCO 8) The Federal Home Loan Mortgage Corporation (Freddie Mac) had an original purpose to (Points : 4) make home loans to low income individuals. purchase the conventional mortgages from thrift institutions. purchase the insured conventional mortgages from financial institutions. purchase the government insured mortgages from thrift institutions