1. Which type of short-term loan is secured with Treasury bills as collateral?
2. A.Repurchase agreements
3. B.Commercial paper
4. C.Federal funds
5. D.Certificates of deposit

QUESTION 2

1. Which of the following statements is NOT true?
2. A.The financial sector is one of the leastregulated industries in the US economy
3. B.Debt contracts tend to impose more restrictions on the actions of the borrower than the lender
4. C.Larger corporations have easier access to the securities market
5. D.Collateral is used to secure debt contracts

QUESTION 3

1. The author uses the term "bank"to describe several different types of financial institutions.Which of the following is NOT included under the group of firms called banks by Mishkin?
2. A.Credit union
3. B.Savings and loan institution
4. C.Commercial bank
5. D.Insurance company

QUESTION 4

1. Which type of information asymmetry explains why bad credit risks are more likely to seek bank loans?
2. A.Principal-agent problem
3. B.Adverse selection
4. C.Moral hazard

QUESTION 5

1. Do federal gold reserves count as M1 money?
2. A.No,gold is not part of M1money
3. B.No,but gold is included in M2money
4. C.Yes,gold is counted as part of checkable deposits
5. D.Yes,gold is counted as part of currency

QUESTION 6

1. Last month,you invested $5,000in a 10-year corporate bond to hold as an investment.If the Fed announces that they will increase interest rates next month,what is the expected impact on the value of your investment in the bond?
2. A.The bond will continue to pay the same coupon rate, so the bond price will not change
3. B.Bond price will increase due to the interest rate increase
4. C.Bond price will decline due to the interest rate increase

QUESTION 7

1. Which type of bonds will have more volatile prices and returns?
2. A.10-year Treasuries
3. B.30-year Treasuries

QUESTION 8

1. When a bond is sold below its face value,then we know that:
2. A.Yield to maturity is lower than the coupon rate
3. B.Yield to maturity is higher than the coupon rate

QUESTION 9

1. Which of the following events will NOT increase the demand for assets?
2. A.Increase in asset liquidity
3. B.Decrease in the asset riskiness relative to other assets
4. C.Decline in wealth
5. D.Increase in the asset return relative to other assets

QUESTION 10

1. What is the key advantage of using electronic payments instead of currency or checks?
2. A.Lower interest charges
3. B.Lower opportunity costs
4. C.Lower transaction costs

QUESTION 11

1. Which interest rate is used on very short-term loans from one bank to another?
2. A.Treasury bill rate
3. B.Fed funds rate
4. C.Commercial paper rate
5. D.Prime interest rate

QUESTION 12

1. Where are most interest rates determined in the US economy?
2. A.Foreign exchange market
3. B.US Department of the Treasury
4. C.Stock market
5. D.Bond market

QUESTION 13

1. Why do larger financial intermediaries tend to have lower transaction costs?
2. A.Economies of scale
3. B.Diseconomies of scale

QUESTION 14

1. Which type of bond has interest payments that are exempt from federal income taxes?
2. A.Treasury bonds
3. B.Certificates of deposit
4. C.Municipal bonds
5. D.Corporate bonds

QUESTION 15

1. Before the financial crisis,mortgage-backed securities were considered to be very safe investments.Later, the underlying risks associated with these securities were fully realized, and they were found to be much riskier than initially thought.What impact does this new information have on the demand for these assets?
2. A.Quantity demand increased
3. B.Quantity demand did not change
4. C.Quantity demand declined