Federal agency issues are obligations of the U.S. Treasury and are readily accepted as low-risk securities. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which one of the following would be an answer to why the forward exchange rate is an unbiased predictor of the future spot rate? A) The forward rate is greater than the conditional expectation of the future spot rate. B) The forward rate equals than the conditional expectation of the future spot rate. C) The […]
Date: September 19th, 2020
Commercial paper is a short-term loan issued by commercial banks that have variable yields based on size, maturity, and prevailing money market conditions. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
To construct the uncertain yen-denominated return from investing one yen in the Swiss franc, what is your first step? A) convert from yen into Swiss francs in the spot market B) convert from Swiss francs into yen in the forward market C) invest in the Swiss money market D) convert from Swiss francs into yen […]
Date: September 19th, 2020
A major decision confronting a business firm when purchasing marketable securities involves a trade-off between the opportunity to earn a return on idle funds during the holding period and the brokerage costs associated with the purchase and sale of marketable securities. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
If investors ________, we would assume that do not make systematic mistakes when forecasting exchange rates. A) have rational expectations B) have complete knowledge of all possible bid and ask quotes C) know that interest rate differentials provide information about the intensity of devaluations D) anticipate events that occur ANSWER Answer: A
Date: September 19th, 2020
The ________ holds that it is the covariance of an asset’s return with that of the market portfolio that determines the asset’s risk premium. A) Law of One Price B) Law of Iterated Expectations C) Capital Asset Pricing Model D) Interest Rate Parity Model ANSWER Answer: C
Date: September 19th, 2020
Controlled disbursing involves the strategic use of mailing points and bank accounts to lengthen mail float and clearing float, respectively. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Controlled disbursing is a method of consciously anticipating the mail, processing, and clearing time involved with the payment process. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
What is the name given to the risk associated with an asset’s return arising from the covariance of the return on a large, well-diversified portfolio? A) covariance B) systematic risk C) idiosyncratic risk D) risk premium ANSWER Answer: B
Date: September 19th, 2020
