Fina 3386 Exam 2 OLD ONE - Exam 2 Financial Institutions...

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Exam 2 Financial Institutions and Markets (3386.01) Sping 2012 Exam 2 Fina 3386 Fall 2013 Name_________________________ ID____________________ Date_________________ Identify ONLY ONE choice that best completes the statement or answers the question. Please read CAREFULLY each question and answer before making a choice. Each question is worth of 2.5 points. *= Correct answer 1. ____ are sold at an auction at a discount from par value. a . Treasury bills* b . Repurchase agreements c. Banker's acceptances d . Commercial paper 2. Large corporations typically make ____ bids for T-bills so they can purchase larger amounts. a . Competitive* b . noncompetitive c. very small d . none of the above 3. Assume investors require a 5 percent annualized return on a six-month T-bill with a par value of $10,000. The price investors would be willing to pay is $____. a. 10,000 b . 9,524 c. 9,756* d . none of the above 4. Which of the following statements about money market securities are true? a. The interest rates on all money market instruments move very closely together over time. b. The secondary market for Treasury bills is extensive and well developed. c. There is no well-developed secondary market for commercial paper. d. All of the above are true.* e. Only A and B of the above are true. 5. Commercial paper has a maximum maturity of ____ days. 1
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Exam 2 Financial Institutions and Markets (3386.01) Sping 2012 2
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Exam 2 Financial Institutions and Markets (3386.01) Sping 2012 6. When a bank guarantees a future payment to a firm, the financial instrument used is called a. a repurchase agreement. b . a negotiable CD. c. a banker's acceptance.* d . commercial paper. 7. ____ is a short-term debt instrument issued only by well-known, creditworthy firms and is normally issued to provide liquidity or finance a firm's investment in inventory and accounts receivable. a. A banker's acceptance b . A repurchase agreement c. Commercial paper* d . A Treasury bill 8. Which of the following is true of money market instruments? a . Large banks participate in the money markets by selling large negotiable CDs.* b . They typically sell for par value when they are initially issued (especially T-bills and commercial paper). c. Treasury bills have the highest yield. d . They all make periodic coupon (interest) payments. e. A and B 9. Which money market transaction is most likely to represent a loan from one commercial bank to another? a. banker's acceptance b . negotiable CD c. federal funds* d .
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