Question 7

Which of the following securities provisions created the Securities Exchange Commission (SEC) to enforce securities laws and regulate U.S. securities markets?

Select one:

A. The Securities Act of 1933

B. The Securities Exchange Act of 1934 C. Rule 415

D. Reg ATS

Question 8

Which of the following is true concerning commercial paper?

I. Commercial paper is offered in short-term maturities suitable for the money market

II. All public corporations qualify to issue commercial paper

III. The cost to the issuer of raising funds using commercial paper is usually lower than borrowing at the prime lending rate

Select one:

A. I and II only

B. I and III only

C. II and III only

D. I, II, and III

Question 9

Which of the following securities provisions required registration and full disclosure of new securities being issued in the U.S.?

Select one:

A. The Securities Act of 1933

B. The Securities Exchange Act of 1934

C. Rule 415 (shelf registration)

D. Reg ATS (alternative trading system)

Question 12

Federal agency securities are Select one:

A. only traded in the money market, not in the capital market.

B. issued by agencies sponsored by the U.S. government.

C. insured by the Federal Deposit Insurance Corporation up to $100,000 in value. D. typically used by U.S. corporations for short-term working capital financing.

Question 19

A firm will borrow long-term

Select one:

A. if short-term interest rates are expected to decline during the term of the debt.

B. if the extra interest cost of borrowing short-term due to rising interest rates does not exceed the expected premium that is paid for borrowing long term.

C. if the extra interest cost of borrowing long-term is less than the expected cost of rising interest rates before it retires its debt.

D. if long-term interest rates are expected to decline during the term of the debt.

Question 26

Which of the following is true of Electronic Communications Networks (ECNs)?

I. Transactions costs are lower for ECN trades

II. All unfilled orders are available for review by ECN traders

III. ECNs tend to work well for thinly-traded stocks

Select one:

A. I only

B. I and II only

C. I and III only

D. II and III only

Question 31

Which of the following are important ways in which mortgage markets differ from stock and bond markets?

Select one:

A. The usual borrowers in capital markets are government entities, whereas the usual borrowers in mortgage markets are small businesses.

B. The usual borrowers in capital markets are government entities and large businesses, whereas the usual borrowers in mortgage markets are small businesses.

C. The usual borrowers in capital markets are businesses and government entities, whereas the usual borrowers in mortgage markets are individuals.

D. The usual borrowers in capital markets are government entities and large businesses, whereas the usual borrowers in mortgage markets are small businesses and individuals.

Question 32

Which of the following are important ways in which mortgage markets differ from the stock and bond markets?

Select one:

A. Because mortgages are made for different amounts and different maturities, developing a secondary market has been more difficult.

B. Most mortgages are secured by real estate, whereas the majority of capital market borrowing is unsecured.

C. The usual borrowers in the capital markets are government entities and businesses, whereas the usual borrowers in the mortgage markets are individuals.

D. All of the above are important differences.

E. Only A and B of the above are important differences.

Question 37

When the value of the British pound changes from $1.50 to $1.25, then the pound has _________ and the dollar has _________.

Select one:

A. depreciated; appreciated B. depreciated; depreciated C. appreciated; appreciated D. appreciated; depreciated Question 38

When the exchange rate for the euro changes from $1.20 to $1.00, then, holding everything else constant, the euro has

Select one:

A. depreciated and American wheat sold in Germany becomes less expensive.

B. appreciated and German cars sold in the United States become more expensive.

C. appreciated and German cars sold in the United States become less expensive.

D. depreciated and American wheat sold in Germany becomes more expensive.

Question 39

Increased demand for a country's _________ causes its currency to appreciate in the long run, while increased demand for _________ causes its currency to depreciate.

Select one:

A. imports; exports

B. imports; imports

C. exports; imports

D. exports; exports

Question 40

An increase in the foreign interest rate causes __________ in the demand for __________ currency and the foreign currency to appreciate.

Select one:

A. an increase; domestic B. a decrease; foreign

C. an increase; foreign D. none of the above

Question 44

Which of the following causes a depreciation of the domestic currency?

I. A lower expected domestic inflation rate.

II. A decrease in the domestic money supply.

III. A decline in the domestic real interest rate.

Select one:

A. I only

B. II only

C. III only

D. I and II only E. II and III only Question 45

The starting point for understanding how exchange rates are determined is a simple idea called _________, which states that if two countries produce an identical good, the price of the good should be the same throughout the world no matter which country produces it.

Select one:

A. the law of one price

B. purchasing power parity

C. arbitrage

D. Gresham's law

Question 49

Under a pegged exchange rate system,

Select one:

A. an anchor country loses control over its monetary policy.

B. a country that ties its currency to that of another country acquires greater control over its monetary policy.

C. a country that ties its currency to that of another country loses control over its monetary policy.

D. a country that ties its currency to that of another country gains control of the other country's monetary policy.

Question 50

The official reserve transactions balance is referred to as

Select one:

A. the capital account.

B. the current account.

C. net change in government international reserves.

D. the trade balance.

Question 51

If a central bank does not want to see its currency rise in value, it may pursue _________ monetary policy to _________ the domestic interest rate, thereby weakening its currency.

Select one:

A. contractionary; lower B. expansionary; raise

C. expansionary; lower

D. contractionary; raise

Question 56

_________ is when the domestic currency is backed 100% by a foreign currency and in which the note- issuing authority establishes a fixed exchange rate to this foreign currency and stands ready to exchange domestic currency for the foreign currency at this rate whenever the public requests it.

Select one:

A. Revaluation

B. Currency board

C. Dollarization

D. Devaluation