Beruflich Dokumente
Kultur Dokumente
TheMoneyMarkets
.1
1.
Activityinmoneymarketsincreasedsignificantlyinthelate1970sandearly1980s
becauseof
(a) risingshortterminterestrates.
(b) regulationsthatlimitedwhatbankscouldpayfordeposits.
(c) both(a)and(b).
(d) neither(a)nor(b).
Answer: C
2.
Moneymarketsecuritieshaveallthefollowingcharacteristicsexcepttheyarenot
(a) shortterm.
(b) money.
(c) lowrisk.
(d) veryliquid.
Answer: B
3.
Moneymarketinstruments
(a) areusuallysoldinlargedenominations.
(b) havelowdefaultrisk.
(c) matureinoneyearorless.
(d) arecharacterizedbyalloftheabove.
(e) arecharacterizedbyonly(a)and(b)oftheabove.
Answer: D
4.
Thebankingindustry
(a) shouldhaveanefficiencyadvantageingatheringinformationthatwouldeliminate
theneedforthemoneymarkets.
(b) existsprimarilytomediatetheasymmetricinformationproblembetweensaver
lendersandborrowerspenders.
(c) issubjecttomoreregulationsandgovernmentalcoststhanarethemoneymarkets.
(d) alloftheabovearetrue.
(e) only(a)and(b)oftheabovearetrue.
Answer: D
5.
Insituationswhereasymmetricinformationproblemsarenotsevere,
(a) themoneymarketshaveadistinctcostadvantageoverbanksinprovidingshort
termfunds.
(b) themoneymarketshaveadistinctcostadvantageoverbanksinprovidinglong
termfunds.
(c) bankshaveadistinctcostadvantageoverthemoneymarketsinprovidingshort
termfunds.
(d) themoneymarketscannotallocateshorttermfundsasefficientlyasbankscan.
Answer: A
6.
Brokeragefirmsthatofferedmoneymarketsecurityaccountsinthe1970shadacost
advantageoverbanksinattractingfundsbecausethebrokeragefirms
(a) werenotsubjecttodepositreserverequirements.
(b) werenotsubjecttothedepositinterestrateceilings.
(c) werenotlimitedinhowmuchtheycouldborrowfromdepositors.
(d) hadtheadvantageofalltheabove.
(e) hadtheadvantageofonly(a)and(b)oftheabove.
Answer: E
7.
Whichofthefollowingstatementsaboutthemoneymarketaretrue?
(a) Notallcommercialbanksdealfortheircustomersinthesecondarymarket.
(b) Moneymarketsareusedextensivelybybusinessesbothtowarehousesurplusfunds
andtoraiseshorttermfunds.
(c) ThesinglemostinfluentialparticipantintheU.S.moneymarketistheU.S.
TreasuryDepartment.
(d) Alloftheabovearetrue.
(e) Only(a)and(b)oftheabovearetrue.
Answer: E
8.
Whichofthefollowingstatementsaboutthemoneymarketsaretrue?
(a) Mostmoneymarketsecuritiesdonotpayinterest.Insteadtheinvestorpayslessfor
thesecuritythanitwillbeworthwhenitmatures.
(b) Pensionfundsinvestaportionoftheirassetsinthemoneymarkettohavesufficient
liquiditytomeettheirobligations.
(c) Unlikemostparticipantsinthemoneymarket,theU.S.TreasuryDepartmentis
alwaysademanderofmoneymarketfundsandneverasupplier.
(d) Alloftheabovearetrue.
(e) Only(a)and(b)oftheabovearetrue.
Answer: D
9.
Whichofthefollowingaretruestatementsaboutparticipantsinthemoneymarkets?
(a) LargebanksparticipateinthemoneymarketsbysellinglargenegotiableCDs.
(b) TheU.S.governmentandcorporationsborrowinthemoneymarketsbecausecash
inflowsandoutflowsarerarelysynchronized.
(c) TheFederalReserveisthesinglemostinfluentialparticipantintheU.S.money
market.
(d) Alloftheabovearetrue.
(e) Only(a)and(b)oftheabovearetrue.
Answer: D
10. Themostinfluentialparticipant(s)intheU.S.moneymarket
(a) istheFederalReserve.
(b) istheU.S.TreasuryDepartment.
(c) arethelargemoneycenterbanks.
(d) aretheinvestmentbanksthatunderwritesecurities.
Answer: A
11.
TheFedisanactiveparticipantinmoneymarketsmainlybecauseofitsresponsibility
to
(a) lowerborrowingcoststoencouragecapitalinvestment.
(b) controlthemoneysupply.
(c) increasetheinterestincomeofretireesholdingmoneymarketinstruments.
(d) assisttheSecuritiesandExchangeCommissioninregulatingthebehaviorother
moneymarketparticipants.
Answer: B
12.
Commercialbanksarelargeholdersof_________andarethemajorissuerof
_________.
(a) negotiablecertificatesofdeposit;U.S.governmentsecurities
(b) U.S.governmentsecurities;negotiablecertificatesofdeposit
(c) commercialpaper;Eurodollars
(d) Eurodollars;commercialpaper
Answer: B
13.
Theprimaryfunctionoflargediversifiedbrokeragefirmsinthemoneymarketisto
(a) sellmoneymarketsecuritiestotheFederalReserveforitsopenmarketoperations.
(b) makeamarketformoneymarketsecuritiesbymaintaininganinventoryfrom
whichtobuy
orsell.
(c) buymoneymarketsecuritiesfromcorporationsthatneedliquidity.
(d) buyTbillsfromtheU.S.TreasuryDepartment.
Answer: B
14.
Financecompaniesraisefundsinthemoneymarketbyselling
(a) commercialpaper.
(b) federalfunds.
(c) negotiablecertificatesofdeposit.
(d) Eurodollars.
Answer: A
15.
Financecompaniesplayauniqueroleinmoneymarketsby
(a) givingconsumersindirectaccesstomoneymarkets.
(b) combiningconsumersinvestmentstopurchasemoneymarketsecuritiesontheir
behalf.
(c) borrowingincapitalmarketstofinancepurchasesofmoneymarketsecurities.
(d) assistingthegovernmentinitssalesofU.S.Treasurysecurities.
Answer: A
16. Wheninflationroseinthelate1970s,
(a) consumersmovedmoneyoutofmoneymarketmutualfundsbecausetheirreturns
didnotkeeppacewithinflation.
(b) bankssolidifiedtheiradvantageovermoneymarketsbyofferinghigherdeposit
rates.
(c) brokeragehousesintroducedhighlypopularmoneymarketmutualfunds,which
drewsignificantamountsofmoneyoutofbankdeposits.
(d) consumerswereunabletotakeadvantageofhigherratesinmoneymarketsbecause
oftherequirementoflargetransactionsizes.
Answer: C
17.
Whichofthefollowingisthelargestborrowerinthemoneymarkets?
(a) commercialbanks
(b) largecorporations
(c) theU.S.Treasury
(d) U.S.firmsengagedinforeigntrade
Answer: C
18.
MoneymarketinstrumentsissuedbytheU.S.Treasuryarecalled
(a) Treasurybills.
(b) Treasurynotes.
(c) Treasurybonds.
(d) Treasurystrips.
Answer: A
19.
TheTreasuryauctions91dayand182dayTreasurybillsonceaweek.Itauctions52
weekbills
(a) onceamonth.
(b) onceevery13weeks.
(c) onceayear.
(d) everytwoweeks.
Answer: A
20.
WhichofthefollowingstatementsaretrueofTreasurybills?
(a) ThemarketforTreasurybillsisextremelydeepandliquid.
(b) Occasionally,investorsfindthatearningsonTbillsdonotcompensatethemfor
changesinpurchasingpowerduetoinflation.
(c) Byvolume,mostTreasurybillsaresoldtoindividualswhosubmitnoncompetitive
bids.
(d) Alloftheabovearetrue.
(e) Only(a)and(b)oftheabovearetrue.
Answer: E
21.
Supposethatyoupurchasea91dayTreasurybillfor$9,850thatisworth$10,000
whenitmatures.Thesecuritysannualizedyieldifheldtomaturityisabout
(a) 4percent.
(b) 5percent.
(c) 6percent.
(d) 7percent.
Answer: C
22. Supposethatyoupurchasea182dayTreasurybillfor$9,850thatisworth$10,000
whenitmatures.Thesecuritysannualizedyieldifheldtomaturityisabout
(a) 1.5%
(b) 2%
(c) 3%
(d) 6%
Answer: C
23.
Treasurybillsdonot
(a) payinterest.
(b) haveamaturitydate.
(c) haveafaceamount.
(d) haveanactivesecondarymarket.
Answer: A
24.
IfyourcompetitivebidforaTreasurybillissuccessful,thenyouwill
(a) certainlypaylessthanifyouhadsubmittedanoncompetitivebid.
(b) probablypaymorethanifyouhadsubmittedanoncompetitivebid.
(c) paytheaverageofpricesofferedinothersuccessfulcompetitivebids.
(d) paythesameasothersuccessfulcompetitivebidders.
Answer: B
25.
IfyournoncompetitivebidforaTreasurybillissuccessful,thenyouwill
(a) certainlypaylessthanifyouhadsubmittedacompetitivebid.
(b) certainlypaymorethanifyouhadsubmittedacompetitivebid.
(c) paytheaverageofpricesofferedinothernoncompetitivebids.
(d) paythesameasothersuccessfulnoncompetitivebidders.
Answer: D
26.
Federalfunds
(a) areshorttermfundstransferredbetweenfinancialinstitutions,usuallyforaperiod
ofoneday.
(b) actuallyhavenothingtodowiththefederalgovernment.
(c) providebankswithanimmediateinfusionofreserves.
(d) arealloftheabove.
(e) areonly(a)and(b)oftheabove.
Answer: D
27.
Federalfundsare
(a) usuallyovernightinvestments.
(b) borrowedbybanksthathaveadeficitofreserves.
(c) lentbybanksthathaveanexcessofreserves.
(d) alloftheabove.
(e) only(a)and(b)oftheabove.
Answer: D
28. TheFedcaninfluencethefederalfundsinterestratebyadjustingthelevelofreserves
availabletobanks.TheFedcan
(a) lowerthefederalfundsinterestratebyaddingreserves.
(b) raisethefederalfundsinterestratebyremovingreserves.
(c) removereservesbysellingsecurities.
(d) doalloftheabove.
(e) doonly(a)and(b)oftheabove.
Answer: D
29.
TheFederalReservecaninfluencethefederalfundsinterestratebybuyingsecurities,
which_________reserves,thereby_________thefederalfundsrate.
(a) adds;raising
(b) removes;lowering
(c) adds;lowering
(d) removes;raising
Answer: C
30.
TheFedcanlowerthefederalfundsinterestrateby_________securities,thereby
_________reserves.
(a) selling;adding
(b) selling;lowering
(c) buying;adding
(d) buying;lowering
Answer: C
31.
IftheFedwantstolowerthefederalfundsinterestrate,itwill_________thebanking
systemby_________securities.
(a) addreservesto;selling
(b) addreservesto;buying
(c) removereservesfrom;selling
(d) removereservesfrom;buying
Answer: B
32.
IftheFedwantstoraisethefederalfundsinterestrate,itwill_________securitiesto
_________thebankingsystem.
(a) sell;addreservesto
(b) sell;removereservesfrom
(c) buy;addreservesto
(d) buy;removereservesfrom
Answer: B
33.
Governmentsecuritiesdealersfrequentlyengageinreposto
(a) manageliquidity.
(b) takeadvantageofanticipatedchangesininterestrates.
(c) lendorborrowforadayortwowithwhatisessentiallyacollateralizedloan.
(d) doalloftheabove.
(e) doonly(a)and(b)oftheabove.
Answer: D
34.
Reposare
(a) usuallylowriskloans.
(b) usuallycollateralizedwithTreasurysecurities.
(c) lowinterestrateloans.
(d) alloftheabove.
(e) only(a)and(b)oftheabove.
Answer: D
35.
Anegotiablecertificateofdeposit
(a) isatermsecuritybecauseithasaspecifiedmaturitydate.
(b) isabearerinstrument,meaningwhoeverholdsthecertificateatmaturityreceives
theprincipalandinterest.
(c) canbeboughtandsolduntilmaturity.
(d) alloftheabove.
(e) only(a)and(b)oftheabove.
Answer: D
36.
Negotiablecertificatesofdeposit
(a) arebearerinstrumentsbecausetheirholdersearntheinterestandprincipalat
maturity.
(b) typicallyhaveamaturityofonetofourmonths.
(c) areusuallydenominatedat$100,000.
(d) arealloftheabove.
(e) areonly(a)and(b)oftheabove.
Answer: E
37.
Commercialpapersecurities
(a) areissuedonlybythelargestandmostcreditworthycorporations,astheyare
unsecured.
(b) carryaninterestratethatvariesaccordingtothefirmslevelofrisk.
(c) neverhaveatermtomaturitythatexceeds270days.
(d) alloftheabove.
(e) only(a)and(b)oftheabove.
Answer: D
38.
Unlikemostmoneymarketsecurities,commercialpaper
(a) isnotgenerallytradedinasecondarymarket.
(b) usuallyhasatermtomaturitythatislongerthanayear.
(c) isnotpopularwithmostmoneymarketinvestorsbecauseofthehighdefaultrisk.
(d) alloftheabove.
(e) only(a)and(b)oftheabove.
Answer: A
39. Abankersacceptanceis
(a) usedtofinancegoodsthathavenotyetbeentransferredfromthesellertothe
buyer.
(b) anordertopayaspecifiedamountofmoneytothebeareronagivendate.
(c) arelativelynewmoneymarketsecuritythataroseinthe1960sasinternational
tradeexpanded.
(d) alloftheabove.
(e) only(a)and(b)oftheabove.
Answer: E
40.
Bankersacceptances
(a) canbeboughtandsolduntiltheymature.
(b) areissuedonlybylargemoneycenterbanks.
(c) carrylowinterestratesbecauseoftheverylowdefaultrisk.
(d) arealloftheabove.
(e) areonly(a)and(b)oftheabove.
Answer: D
41.
Eurodollars
(a) aretimedepositswithfixedmaturitiesandare,therefore,somewhatilliquid.
(b) mayoffertheborroweralowerinterestratethancanbereceivedinthedomestic
market.
(c) arelimitedtoLondonbanks.
(d) arealloftheabove.
(e) areonly(a)and(b)oftheabove.
Answer: E
42.
Whichofthefollowingstatementsaboutmoneymarketsecuritiesaretrue?
(a) Theinterestratesonallmoneymarketinstrumentsmoveverycloselytogetherover
time.
(b) ThesecondarymarketforTreasurybillsisextensiveandwelldeveloped.
(c) Thereisnowelldevelopedsecondarymarketforcommercialpaper.
(d) Alloftheabovearetrue.
(e) Only(a)and(b)oftheabovearetrue.
Answer: D
.2
True/False
1.
Moneymarketsecuritiesareshortterminstrumentswithanoriginalmaturityofless
thanoneyear.
Answer:
2.
MoneymarketsecuritiesincludeTreasurybills,commercialpaper,federalfunds,
repurchaseagreements,negotiablecertificatesofdeposit,bankersacceptances,and
Eurodollars.
Answer:
3.
TRUE
ThemarketforU.S.Treasurybillsisashallowmarketbecausesofewindividual
investorsbuy
Tbills.
Answer:
10.
FALSE
Moneymarketsareusedextensivelybybusinessesbothtowarehousesurplusfundsand
toraiseshorttermfunds.
Answer:
9.
TRUE
Banksareunusualparticipantsinthemoneymarketbecausetheybuy,butdonotsell,
moneymarketinstruments.
Answer:
8.
FALSE
TheU.S.TreasuryDepartmentisthesinglelargestborrowerintheU.S.moneymarket.
Answer:
7.
FALSE
TheU.S.TreasuryDepartmentisthesinglemostinfluentialparticipantintheU.S.
moneymarket.
Answer:
6.
TRUE
Moneymarketsarereferredtoasretailmarketsbecausesmallindividualinvestorsare
theprimarybuyersofmoneymarketsecurities.
Answer:
5.
TRUE
Thetermmoneymarketisactuallyamisnomer,becauseliquidsecuritiesaretradedin
thesemarketsratherthanmoney.
Answer:
4.
TRUE
FALSE
TheTbillisnotaninvestmenttobeusedforanythingbuttemporarystorageofexcess
fundsbecauseitbarelykeepsupwithinflation.
Answer:
TRUE
11.
Themainpurposeforfederalfundsistoprovidebankswithanimmediateinfusionof
reservesshouldtheybeshort.
Answer:
TRUE
12. TheFedcaninfluencethefederalfundsratebyadjustingthelevelofreservesinthe
bankingsystem.
Answer:
13.
Commercialpapersecuritiesareunsecuredpromissorynotes,issuedbycorporations,
thatmatureinnomorethan270days.
Answer:
14.
TRUE
Interestratesonbankersacceptancesarelowbecausetheriskofdefaultisverylow.
Answer:
16.
TRUE
Abankersacceptanceisanordertopayaspecifiedamountofmoneytothebeareron
agivendate.Bankersacceptanceshavebeenusedsincethetwelfthcentury.
Answer:
15.
TRUE
TRUE
Ingeneral,moneymarketinstrumentsarelowrisk,highyieldsecurities.
Answer:
FALSE
.3
Essay
1.
Explainwhybanks,whichwouldseemtohaveacomparativeadvantageingathering
information,havenoteliminatedtheneedforthemoneymarkets.
2.
ExplainhowtheFederalReservecaninfluencethefederalfundsinterestrate.
3.
Explainwhythemoneymarketsarereferredtoaswholesalemarkets.
4.
Explainwhymoneymarketinterestratesmovesocloselytogetherovertime.
5.
HowareTreasurybillssold?Howdocompetitiveandnoncompetitivebidsdiffer?
6.
Whatarethemaincharacteristicsofmoneymarketsecurities?
7. Whatarethemajortypesofsecuritiesandwhoarethemajorparticipantsinthemoney
markets?