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.   FALSE
B.   TRUE
Question #2
In the eye of banking regulation, commercial loans are riskier than mortgage loans.
A.   FALSE
B.   TRUE
Question #3
bank regulators are not concerned about ________.
A.   liquidity of the bank
B.   the nationality of the bank's owner
C.   the bank's asset quality and its riskiness
D.   competency of management 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.   small and then large
B.   smaller
C.   random
D.   larger
Question #5
The Basel Accord is ________________.
A.   a ski resort where international banking regulators meet
B.   an international banking regulatory act
C.   a banking conference in Italy
D.   a U.S. regulation.
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.   TRUE
B.   FALSE
Question #8
According to the Fisher Equation, the nominal interest is the real rate minus the inflation rate.
A.   FALSE
B.   TRUE
Question #9
Which from below is the most valuable?
A.   $1 million face value bond with a zero-coupon, 3-month maturity Treasury security
B.   $ 1 million worth of a promissory note due in 1 year
C.   $1 million cash now
D.   Your uncle's promised $1 m gift at your graduation
Question #10
According to the Term Structure of Interest Rates, the yield curve tends to slope _______.
A.   up
B.   down and then up
C.   up and then up
D.   down
Question #11
Choose the party who worry least about asymmetric information
A.   loan sharks
B.   federal credit union
C.   bank of america
D.   wells fargo
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.   5% Treasury coupon bond
B.   15% Treasury coupon bond
C.   15% corporate bond
D.   5% corporate bond
Question #14
Which is not represented by CAMELI in banking regulation?
A.   liquidity
B.   information
C.   management
D.   equity
E.   capital
Question #15
Choose the odd one out from below
A.   Random Walk
B.   EMH
C.   Rational Expectations
D.   Technical Analysis
Question #16
U.S. banks are chartered by different government agencies depending on whether they are national or state banks.
A.   FALSE
B.   TRUE
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.   2
C.   15
D.   10
Question #19
An yield curve helps predict future interest rates.
A.   FALSE
B.   TRUE
Question #20
Financial Crises are better explained by __________.
A.   the Term Structure
B.   Behavioral Economics
C.   the Federal Reserve
D.   EMH
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.   likely
B.   100 % likely
C.   not likely
D.   very 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.   Lucas
B.   Keynes
C.   Fisher
D.   Adam Smith
E.   Friedman
Question #25
When the class met this week, the 10 year Treasury yield was around 1.3%
A.   TRUE
B.   FALSE
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.   FALSE
B.   TRUE

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