Please help me for the ECONOMICS OF MONEY AND BANKING class.

Preview Test: Homework 2 Test Information Description Instructions Multiple Attempts This test allows 2 attempts. This is attempt number 1. Force Completion This test can be saved and resumed later. Question Completion Status: Save All Answers Question 1 Close Window Save and Submit 5 points Save Answer If an asset has a 0.7 probability of yielding 10 percent and a 0.3 probability of yielding 20 percent, the expected yield of the asset is 30 percent. 20 percent. 13 percent. 10 percent. Question 2 5 points Save Answer 5 points Save Answer In a world of certainty, the interest rate reflects the degree of risk. differing time patterns of individuals' consumption preferences. economic growth. qualifications of borrowers. Question 3 Risk aversion implies that individuals will not take on risk. investors must be compensated for about half of the risk they take on. investors must be compensated for the risk they take on. None of these. Question 4 5 points Save Answer 5 points Save Answer 5 points Save Answer Portfolio diversification is ineffective when assets in the portfolio have precisely the same pattern of returns. assets in the portfolio have negative correlations. assets in the portfolio are uncorrelated. Portfolio diversification is ineffective in each of the above scenarios. Question 5 If asset returns are less than perfectly correlated, portfolio diversification reduces systematic risk. reduces nonsystematic risk. increases systematic yields. reduces systematic yields. Question 6 A venture capital fund wants to invest $1000 in each of one thousand mad scientists. The first scientist applying to the fund is working on the legendary pill that turns water into gasoline, and the second scientist is working on the even more legendary perpetual motion machine. The smart venture capitalist here will back the pill and look for 999 other scientists working on the same pill. back the machine and look for 999 other scientists working on the same machine. look for 500 scientists working on the pill and 500 working on the machine. back the pill, the machine, and 998 other different projects. Question 7 5 points Save Answer 5 points Save Answer Which of the following U.S. government securities are nonmarketable? Treasury bills Treasury notes Treasury bonds Savings bonds Question 8 The main difference between a repo and federal funds transaction is that the repo transaction uses the securities for collateral while the federal funds transaction does not have collateral. the federal funds transaction uses securities for collateral while the repo transaction does not have collateral. the repo transaction has an agreed upon interest rate while the federal funds transaction has a spread between the sale and purchase price of securities. the federal funds transaction is normally overnight while the typical repo agreement is for 90 to 180 days. Question 9 5 points Save Answer 5 points Save Answer 5 points Save Answer 5 points Save Answer 5 points Save Answer A one-year Treasury bill with a face value of $1,000 and an annual yield of 5 percent sells for approximately $1,005. $995. $952. $948. Question 10 The rate at which banks will lend Eurodollars is the prime rate. LIBOR. the discount rate. LIBID. Question 11 Moody's gives junk bonds a rating below Aaa. Aa. A. Baa. Question 12 For investors, commercial paper is a close substitute for U.S. Treasury bills. U.S. Treasury bonds. corporate bonds. municipal bonds. Question 13 __________ bonds are municipal bonds that are backed by the general taxing power of the state or local government. General obligation Revenue Tax-anticipation Bond-anticipation Question 14 5 points Save Answer A stock is expected to pay a dividend of $2.50 per share indefinitely. The stock is expected to generate a return of 8 percent in the foreseeable future. Based on this information, a fair price of this stock would be $25.00. $31.25. $20.00. Cannot be determined without additional information. Question 15 5 points Save Answer 5 points Save Answer 5 points Save Answer Another term for "don't put all your eggs in one basket" is moral hazard. indirect finance. asymmetric information. portfolio diversification. Question 16 Moral hazard is a problem peculiar to direct finance. peculiar to mutual funds. arising before a transaction is consummated. arising after a transaction is consummated. Question 17 If the problem of asymmetric information is so serious that a lender chooses not to lend to any potential small business borrower, then the problem is moral hazard. adverse selection. market failure. disintermediation. Question 18 Regulation Q put a ceiling on 5 points Save Answer bank loan rates. loan rates at all depository institutions. deposit rates. the proportion of a savings-and-loan's assets made up of loans other than mortgages. Question 19 5 points Save Answer The Financial Services Modernization Act effectively repealed the Glass-Steagall Act of 1933. increased restrictions on cross-ownership of different types of financial institutions. allowed mergers between commercial banks and investment banks, but not between commercial banks and insurance companies. All of these. Question 20 5 points Save Answer To avoid maturity mismatches, most financial intermediaries tend to have assets whose maturities on average exceed the maturities of their liabilities. have assets whose maturities on average are less than the maturities of their liabilities. have assets whose maturities on average mirror the maturities of their liabilities. hold primarily real assets. Save and Submit Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Close Window Save and Submit