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Quiz Econ #1
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Please note that there are 10 questions in this quiz. You will have 15 minutes to finish this quiz. If you get stuck with any of these questions, just make a GOOD guess and move onto the next question since every question's worth the same 1.5 points.
1. Investment banks facilitate the sale of securities in the a. Over-the-count market b. Primary market c. Secondary market d. Stock exchange
2. Before a loan is made, banks screen their prospective loan customers to avoid the problem of a. Risk sharing b. Moral hazard c. Adverse selection d. Asset transformation
3. Adam Jackson just received an auto loan for $4,000. After he received the loan, he decided to gamble with the money at a nearby casino instead of buying a car. This is an example of a. Moral hazard b. Diversification c. Asset transformation d. Adverse selection
4. Which of the following is an example of money? a. A five dollar gold piece b. A twenty dollar bill c. Sea shells used as money in a primitive society d. Cigarettes in a POW camp e. All of the above
5. Which if the following is not included in the M1 monetary aggregate? a. Currency b. Demand deposits c. Money market deposit accounts d. NOW accounts e. Traveler's checks
6. A bond coupon with a face value of $1,000 that pays an annual coupon of $95 has a coupon rate of a. $100 b. $95 c. 10% d. 9.5% e. None of the above
7. Which of the following are the largest financial intermediaries in the U.S. economy? a. Banks b. Insurance companies c. Finance companies d. Mutual funs
8. Which of the following bonds has the lowest yields to maturity? a. A 20-year, $1,000 par, 5% coupon bond selling for $950 b. A 20-year, $1,000 par, 5% coupon bond selling for $1,000 c. A 20-year, $1,000 par, 5% coupon bond selling for $1,050 d. There is not enough information to answer this question.
9. What is the yield on a discount basis for a discount bond that matures in 90 days with a maturity value of 10,000, and the price today is ...