Question 1 of 20 5.0 Points

Your current bank is paying 6.25% simple interest rate. You can move your savings account to Harris Bank that pays 6.25% compounded annually or to First Chicago bank paying 6% compounded semi-annually. To maximize your return you would choose:
 A.your current bank  
 B.Harris Bank  
 C.First Chicago bank  
 D.you are indifferent, because the effective interest rate for all three banks is the same
Question 2 of 20 5.0 Points

In general, the effective rate of interest on a discount loan
 A.is lower than that on standard loan  
 B.is higher than that on a standard loan  
 C.is identical to that on a standard loan  
 D.none of the above
Question 3 of 20 5.0 Points

Reasons we study finance include all of the following except:
 A.To make informed economic decisions  
 B.To make informed personal and business investment decisions  
 C.To make informed career decisions based on a basic understanding of business finance  
 D.To make informed medical decisions  
 E.all of the above about reasons to study finance.
Question 4 of 20 5.0 Points

A saver who chooses securities as a savings medium and desires maximum safety of principal buys:
 A.public utility stocks  
 B.corporate stocks  
 C.high-grade corporate bonds  
 D.government bonds
Question 5 of 20 5.0 Points

The Second Bank of the United States was created to:
 A.replace the First Bank of the United States  
 B.appease political interests  
 C.restore order to chaotic banking conditions  
 D.all the above
Question 6 of 20 5.0 Points

Which of the following statements are correct?
 A.debit cards provide for the immediate direct transfer of deposit accounts  
 B.debit cards may be used for cash advances, even when there is not sufficient money in the account  
 C.debit cards may not be used to make cash withdrawals from automatic teller machines  
 D.all the above  
 E.none of the above
Question 7 of 20 5.0 Points

Briefly describe basic differences in how monetarists and Keynesians view the relationship between money supply and economic activity.

Question 8 of 20 5.0 Points

Which of the following financial institutions market “seasoned” instruments and securities?
 A.brokerage firms  
 B.finance companies  
 C.mortgage lenders  
 D.none of the above
Question 9 of 20 5.0 Points

If the interest rate is greater than 0%, then a dollar today is worth
 A.more than a dollar tomorrow  
 B.the same as a dollar tomorrow  
 C.less than a dollar tomorrow  
 D.there is not sufficient information to tell
Question 10 of 20 5.0 Points

Open market operations differ from discounting operations in that they are:
 A.initiated by member depository institutions  
 B.designed to be of significance only to large city banks  
 C.initiated by the Federal Reserve  
 D.initiated by the U.S. Treasury
Question 11 of 20 5.0 Points
Briefly answer the question: “What is finance?”


Question 12 of 20 5.0 Points

In an inflationary period, interest rates have a tendency to:
A.	rise  
 B.fall  
 C.stay the same  
 D.act erratically
Question 13 of 20 5.0 Points

The M1 definition of the money supply includes which of the following items?
 A.currency  
 B.demand deposits and other checkable deposits at depository institutions  
 C.travelers’ checks  
 D.all of the above
Question 14 of 20 5.0 Points

A ____________ is a short-term debt instrument issued by commercial banks in denominations of $100,000 or more with typical maturities ranging from one month to one year that have an active secondary market that allows short-term investors to easily match their cash or liquidity needs when they arise.
 A.negotiable certificate of deposit (NCD)  
 B.A repurchase agreement  
 C.government bond  
 D.money market security  
 E.none of the above
Question 15 of 20 5.0 Points

If annual GDP is $100 billion and the MS is $20 billion, the velocity of money (VM) is ________.
 A.2  
 B.5  
 C.20  
 D.50  
 E.none of the above
Question 16 of 20 5.0 Points

______________ is the tendency of prices, aided by union-corporation contracts, to rise during economic expansions and resist declines during recessions.
 A.Administrative inflation  
 B.Speculative inflation  
 C.Cost-push inflation  
 D.Demand-pull inflation
Question 17 of 20 5.0 Points

Finance has its origins in:
A.	economics and statistics  
 B.accounting and mathematics  
 C.management and operations  
 D.economics and accounting
Question 18 of 20 5.0 Points

Which of the following is not an asset of depository institutions?
 A.cash  
 B.unsecured loans  
 C.time deposits  
 D.U.S. government securities
Question 19 of 20 5.0 Points

The _________________ is primarily responsible for the amount of money that is created, although most of the money is actually created by depository institutions.
 A.Securities Exchange Commission  
 B.Federal Treasury  
 C.Federal Reserve System  
 D.Financial Asset Oversight Board
Question 20 of 20 5.0 Points

As interest rates fall, the prices of existing bonds will:
 A.rise  
 B.stay the same  
 C.fall  
 D.either a or b, depending on the state of the economy  
 E.none of the above