Econ 3030 - Money, Banking and the Economy » Fall 2021 » Midterm 1

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Question #1
The Federal Reserve is expected to reduce its bond buying activities before the end of this year.
A.   TRUE
B.   FALSE
Question #2
In the eye of banking regulation, commercial loans are riskier than mortgage loans.
A.   TRUE
B.   FALSE
Question #3
bank regulators are not concerned about ________.
A.   competency of management of the bank
B.   the bank's asset quality and its riskiness
C.   the nationality of the bank's owner
D.   liquidity of the bank
Question #4
If you are optimistic about the future of the U.S. economy, your liquidity premium for long term maturity investments is likely to be ____________, since you are more confident about getting your money back from your investments in the future.
A.   random
B.   larger
C.   smaller
D.   small and then large
Question #5
The Basel Accord is ________________.
A.   a ski resort where international banking regulators meet
B.   a U.S. regulation.
C.   a banking conference in Italy
D.   an international banking regulatory act
Question #6
Which from below best describes the inverse relationship between bond prices and bond yields?
A.   as prices go down, yields go down
B.   as prices go up, yields go up
C.   as prices go up, yields go down
Question #7
Moral Hazard means one is held accountable for their bad (financial) misdeeds.
A.   FALSE
B.   TRUE
Question #8
According to the Fisher Equation, the nominal interest is the real rate minus the inflation rate.
A.   TRUE
B.   FALSE
Question #9
Which from below is the most valuable?
A.   $ 1 million worth of a promissory note due in 1 year
B.   Your uncle's promised $1 m gift at your graduation
C.   $1 million cash now
D.   $1 million face value bond with a zero-coupon, 3-month maturity Treasury security
Question #10
According to the Term Structure of Interest Rates, the yield curve tends to slope _______.
A.   up and then up
B.   up
C.   down
D.   down and then up
Question #11
Choose the party who worry least about asymmetric information
A.   loan sharks
B.   federal credit union
C.   wells fargo
D.   bank of america
Question #12
The banking industry is heavily regulated in the United States.
A.   TRUE
B.   FALSE
Question #13
Which is more valuable, if they all have the same maturity?
A.   15% corporate bond
B.   5% corporate bond
C.   5% Treasury coupon bond
D.   15% Treasury coupon bond
Question #14
Which is not represented by CAMELI in banking regulation?
A.   information
B.   management
C.   capital
D.   liquidity
E.   equity
Question #15
Choose the odd one out from below
A.   Technical Analysis
B.   Random Walk
C.   EMH
D.   Rational Expectations
Question #16
U.S. banks are chartered by different government agencies depending on whether they are national or state banks.
A.   TRUE
B.   FALSE
Question #17
Equity or stock represents ownership.
A.   FALSE
B.   TRUE
Question #18
In order to be classified as well capitalized, a bank needs to have a risk based capital (RBC) ratio of at least ___________%.
A.   8
B.   10
C.   15
D.   2
Question #19
An yield curve helps predict future interest rates.
A.   FALSE
B.   TRUE
Question #20
Financial Crises are better explained by __________.
A.   Behavioral Economics
B.   the Federal Reserve
C.   EMH
D.   the Term Structure
Question #21
Yield curves and interest rate graphs show the same data.
A.   TRUE
B.   FALSE
Question #22
If you believe in the Efficient Market Hypothesis, you are __________ to pay for investment advisors' newsletters.
A.   very likely
B.   not likely
C.   likely
D.   100 % likely
Question #23
The Federal Reserve is expected to reduce its bond buying activities before the end of this year.
A.   FALSE
B.   TRUE
Question #24
The economist closely related to the relationship between inflation, the nominal and real rates is
A.   Friedman
B.   Fisher
C.   Adam Smith
D.   Keynes
E.   Lucas
Question #25
When the class met this week, the 10 year Treasury yield was around 1.3%
A.   FALSE
B.   TRUE
Question #26
The yield curve may slope down if future rates are expected to go down.
A.   TRUE
B.   FALSE
Question #27
Interest rate graphs and yield curves are inter-changeable since they both look at interest rate movements.
A.   TRUE
B.   FALSE

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