11. The federal funds rate is the interest rate ______.2 s C$ j6 a, J) G
A. on overnight loans of reserves between banks/ |( l7 W2 I% J6 Y* j+ M
B. the government pays when borrowing from banks
5 x) v1 V& u) m+ B% L4 ~1 C7 y7 K C. on government debt5 [' o" L- B# v. Z0 b
D. both A and B* Q1 g0 L8 g @, x8 ]( X
12. A consumer's indifference curve shows ______.1 [9 I! m# J! Q! U' ^
A. all combinations of two products that a consumer can use- `6 l$ H( o) t- l
B. all combinations of two products that yield the same total satisfaction to the consumer0 [5 ]1 s0 i i& v) R* u
C. all combinations of two goods that the consumer can purchase with disposable persona income
% g( }4 z# m2 O/ K* T7 M D. equal income for consumption
1 ]) X) J3 b( T7 {1 H 13. The value of any investment is found by computing ______.* l3 ^& x2 S W% }2 Q4 r
A. the future value of all future expenses
7 N$ ^6 h- k( j8 }' G; m% [ B. the future value of all sales
, M7 e7 N7 g4 A: x, ^ C. the present value of all future liabilities( U7 ~/ H7 b J
D. the present value of all cash flows
- `! M" t- h8 @3 _: h3 u( c) Y 14. A "base" or "high-powered" money is distinguished from other types of money by the fact that it .2 d1 [* b& t* h I4 }6 q1 Z
A. always consists of central-bank liabilities
) g4 {# u( p8 j9 L B. always consists of assets that can serve as commercial bank cash reserves
2 e6 [3 B) q4 r/ ` C. always consists of gold coin- A) ~5 `: S2 w
D. must be a "fiat" money) @4 V) P6 @, Z0 k7 H6 J& M3 C
15. The relationship between interest rates on various bonds, and the time to (heir maturity is called the ______ structure of interest rates.
; V0 S9 q, u# | A. chronological
6 ^. h& s1 i) G, W- i8 d, b B. term
2 C# H3 E0 {- q) w, g C. risk' h% f' E8 m* ?+ \1 |
D. liquidity+ H5 S$ {2 W1 Y$ E$ o; G
16. An example of an investment pool is ______.% Z6 K- H; N& J
A. a savings and loan association
! n+ A; c. s& p8 j& D% M B. a life insurance company
. s1 ^1 }0 z1 l- q1 f k' [ C. a finance company
3 w- \8 }0 D' l D. a mutual fund
, Q" B+ ]& v: H, ]- i 17. Sustained downward movements in the business cycle are referred to as ______.
9 I' f+ Y/ H+ d% n5 m A. recessions
5 D4 i7 G$ T% Z B. economic recoveries
) A, y8 \7 I( w8 _7 K; z# h C. inflation- \8 h# U0 P5 R7 `& Z8 i# E
D. expansions
% I; n4 V3 I! p5 b0 o+ y# ? 18. _____ offers a wide spectrum of personal services to wealthy clients who may have little knowledge of how to handle their own financial affairs or who are too busy.; @; q- J5 ^% G4 t ^
A. A private bank
4 F* u- h. D( [! H# I B. Private banking* P" D4 @9 R2 _5 s* ]) E% Y" h8 w
C. Personal banking
( }8 P+ ], {! P0 _6 g) z D. Retail banking; v, O1 o, ?0 B+ Y: d5 A
19. Which of the following can be described as involving direct finance? ______.0 f& d% `' K" W% P4 q$ |/ K
A. A pension fund manager buys a short-term corporate security in the secondary market
0 H5 n3 D2 s+ Z1 H' ]4 | B. People buy shares in a mutual fund
6 x% u9 x$ V! s3 @6 u C. A corporation issues new shares of stock
7 x" R4 E! I* ^7 _$ s. V/ q. N D. An insurance company buys shares of common stock in the over-the-counter markets." u2 c; f- N: Y' _$ J
20. A call option gives the owner the right to ______.
1 Z% p0 b0 t6 F% m& w: d" E A. sell the underlying asset at a fixed price$ g2 ~' N% N0 h, t! w
B. buy the underlying asset at a fixed price
" z' y* y) v8 ^ C. convert the underlying asset at a fixed price* ~- l$ g3 ^: Z" u8 }
D. take delivery of the underlying asset at a fixed price |