QUESTION What happens when the Fed sells more bonds to the public? A) The money it takes in payment is withdrawn from circulation. B) The money supply increases. C) Government spending increases. D) The discount rate adjusts. E) Banks must put more of their money into the Fed. ANSWER Answer: A Explanation: A) When […]
Date: September 3rd, 2020
QUESTION The Federal Reserve is considering requiring banks to put a higher percentage of their money into the Fed. What’s the likely outcome? A) It reduces the money supply. B) Banks have more to lend to their customers. C) The Fed is able to spend more on government programs. D) Banks are allowed to reduce […]
Date: September 3rd, 2020
QUESTION What is the name for the rate at which the Federal Reserve makes short-term loans to member banks? A) federal rate B) discount rate C) interest rate D) primary rate E) reserve rate ANSWER Answer: B Explanation: B) The discount rate is the rate at which the Federal Reserve makes short-term loans to […]
Date: September 3rd, 2020
QUESTION What is another name sometimes given to a commercial bank? A) a local bank B) a state bank C) a federal bank D) a private bank E) a full-service bank ANSWER Answer: E Explanation: E) A commercial bank is sometimes called a full-service bank.
Date: September 3rd, 2020
QUESTION Lark argues that in another ten years, paper checks will be used only for ceremonial purposes. Which of the following is she assuming? A) Paper checks are easy and quick for the Fed to process, regardless of the number of banks involved. B) All banks have the same clearing process for checks. C) The […]
Date: September 3rd, 2020
QUESTION What is the name given to the rate of return a firm must earn to meet the lenders’ and shareholders’ expectations? A) collateral rate B) secured rate C) tax rate D) cost of capital E) venture capital ANSWER Answer: D Explanation: D) A financial manager must pay attention to the cost of capital, […]
Date: September 3rd, 2020
QUESTION Which of the following is TRUE of most traditional checking accounts? A) They are a place to deposit money and then make purchases against those deposits. B) They generally pay higher interest than savings accounts. C) They usually charge fees for falling below a minimum balance. D) They generally do not require a monthly […]
Date: September 3rd, 2020
QUESTION Which of the following is NOT an example of money? A) two dimes B) a ten-dollar bill C) a check for $50 D) a baseball card worth $10 E) an American Express credit card ANSWER Answer: D Explanation: D) Gold or precious stones might also be used as money. More commonly, though, people […]
Date: September 3rd, 2020
QUESTION Which type of banking account offers interest rates competitive with those of brokerage firm funds? A) standard checking account B) Super-NOW account C) savings account D) money market accounts E) certificates of deposit ANSWER Answer: D Explanation: D) Money market accounts are bank accounts that offer interest rates competitive with those of brokerage […]
Date: September 3rd, 2020
QUESTION How is a revolving credit agreement different from a line of credit? A) Only in a revolving credit agreement does the bank guarantee the loan and is the bank obligated to loan funds up to the credit limit. B) Only in a revolving credit agreement does the bank specify how much it is willing […]
Date: September 3rd, 2020
