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| 1 | |
National City Bank sells some securities, making a simultaneous promise to buy them back, at a later time. National City has: |
| | A) | invested in a reverse repurchase agreement. |
| | B) | borrowed funds through the commercial paper market. |
| | C) | invested, through the federal funds market. |
| | D) | raised funds, through a repurchase agreement. |
| | E) | invested in a negotiable CD. |
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| 2 | |
General Electric borrows some money, by issuing securities with 90 days to maturity. This provides an example of the: |
| | A) | negotiable CD market. |
| | B) | repurchase agreement market. |
| | C) | commercial paper market. |
| | D) | LIBOR market. |
| | E) | corporate bond market |
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| 3 | |
A U.S. Treasury bill is selling at a price of $9,790. The face or par value is $10,000. The bill has 91 days to maturity. What is the bond equivalent rate on this bill? |
| | A) | 2.10% |
| | B) | 8.31% |
| | C) | 2.15% |
| | D) | 8.60% |
| | E) | 8.89% |
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| 4 | |
Dollar denominated deposits, held in banks outside the U.S. are referred to as: |
| | A) | Eurocommercial paper |
| | B) | Eurodollar deposits |
| | C) | reverse repurchase agreements |
| | D) | federal funds |
| | E) | repos |
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| 5 | |
The ______________ market is a bank-to-bank market, for short-term, unsecured loans. |
| | A) | commercial paper |
| | B) | corporate bond |
| | C) | Federal funds |
| | D) | bankers' acceptance |
| | E) | municipal bond |
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| 6 | |
Mary is placing an order for new Treasury bills, at the upcoming auction. She is placing an order for a face value of $20,000, for her own personal account. She does not specify a price with her order. Mary is: |
| | A) | ordering a repo. |
| | B) | ordering a reverse repurchase agreement. |
| | C) | hoping to receive a banker's acceptance. |
| | D) | placing a non-competitive bid. |
| | E) | placing an order for federal funds. |
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| 7 | |
There is a bank-to-bank market, based in London, for very short-term Eurodollar funds. The interest rate in this market is: |
| | A) | the Euronote rate |
| | B) | LIBOR |
| | C) | the banker's acceptance rate |
| | D) | the federal funds rate |
| | E) | the T-bill auction rate |
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| 8 | |
Suppose a business borrows on a short-term basis by selling its own securities to investors. It does this on its own, without relying on a dealer network. The borrowing firm is: |
| | A) | operating in the "direct" part of the commercial paper market. |
| | B) | operating in the "competitive" part of the U.S. Treasury auction. |
| | C) | investing in repos. |
| | D) | participating in the federal funds market. |
| | E) | operating in the "indirect" part of the commercial paper market. |
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| 9 | |
Assume the data below for a particular U.S. Treasury bill. The "Bid" and "Asked" columns are "discount yields." Days to maturity | Bid | Asked | 120 | 3.4 | 3.5 |
What was the "asked" price for this T-bill—expressed as a percent of face value? |
| | A) | 96.600 |
| | B) | 96.500 |
| | C) | 98.833 |
| | D) | 99.900 |
| | E) | 98.867 |
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| 10 | |
Which of the following is not a money market transaction? |
| | A) | Purchase of a 91-day U.S. Treasury bill |
| | B) | Investment in a reverse repurchase agreement |
| | C) | Sale of 5-year U.S. Treasury notes |
| | D) | Sale of commercial paper, through a network of security dealers |
| | E) | Issuance of a one-month negotiable certificate of deposit |
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| 11 | |
Money market instruments: |
| | A) | generally have low risk of default |
| | B) | typically have monthly coupon payments |
| | C) | have no face value |
| | D) | are sold in very small denominations |
| | E) | are usually issued by high-risk borrowers, who are desperate for cash |
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| 12 | |
We see a bond equivalent yield of 3.30%, on a 126 day U.S. Treasury bill. What is the price, expressed as a percentage of face value? |
| | A) | 98.8450 |
| | B) | 99.9670 |
| | C) | 96.7000 |
| | D) | 98.8737 |
| | E) | 99.9886 |
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| 13 | |
Based on data in the text, which of the following is the money market category having the smallest outstanding dollar amount? |
| | A) | U.S. Treasury bills |
| | B) | Federal funds and repurchase agreements |
| | C) | Commercial paper |
| | D) | Negotiable CDs |
| | E) | Banker's acceptances |
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| 14 | |
National Bank purchased 91-day Treasury bills, having face value of $8 million. National Bank paid $7,875,000 for the T-bills. What is the discount yield on National Bank's investment? |
| | A) | 1.56% |
| | B) | 6.37% |
| | C) | 6.52% |
| | D) | 6.18% |
| | E) | 1.59% |
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| 15 | |
A negotiable CD issued by New National Bank will mature in 60 days. The CD's quoted annual interest rate, based on a 360-day year, is 4.80%. What is the effective annual interest rate on this CD? |
| | A) | 4.87% |
| | B) | 4.73% |
| | C) | 4.97% |
| | D) | 4.90% |
| | E) | 4.83% |
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| 16 | |
Data in the text show that, for commercial paper: |
| | A) | Dealer-placed paper exceeds directly-placed paper |
| | B) | Directly-placed paper exceeds dealer-placed paper |
| | C) | Most issuers have poor credit ratings |
| | D) | The better the issuer's credit rating, the higher the paper's interest rate |
| | E) | It has the smallest dollar amount outstanding, among money market categories. |
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| 17 | |
Institution X is buying some securities from Institution Y, and simultaneously promising to sell them back to Institution Y in 60 days. Institution X has engaged in: |
| | A) | a bankers' acceptance |
| | B) | a reverse repo |
| | C) | discount window operations |
| | D) | a commercial paper investment |
| | E) | open market operations |
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