econ423midterm

econ423midterm - Midterm Exam Econ 423, Summer 2009 Lauren...

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Midterm Exam Econ 423, Summer 2009 Lauren Heller PID___________________________________ By writing my PID above, I certify that I have not received any outside assistance whatsoever in the completion of this exam, and that all work is my own. There are 130 points possible on this exam. MULTIPLE CHOICE (2 points each). Choose the one alternative that best completes the statement or answers the question. 1) The small - firm effect refers to the observation that small firms' stocks A) sell for lower prices than do large firms' stocks. B) follow a random walk but large firms' stocks do not. C) have earned abnormally low returns given their greater risk. D) have earned abnormally high returns even taking into account their greater risk. E) none of the above. 1) 2) The unusual structure of the Federal Reserve System is perhaps best explained by A) the traditional American distrust of moneyed interests. B) Americans' fear of centralized power. C) Americans' desire to remove control of the money supply from the U.S. Treasury. D) all of the above. E) only A and B of the above. 2) 3) According to the January effect, stock prices A) follow a random walk during January. B) experience an abnormal price rise from December to January. C) set the pattern for the entire year in January. D) experience an abnormal price decline from December to January. 3) 4) According to the market segmentation theory of the term structure, A) bonds of one maturity are not substitutes for bonds of other maturities; therefore, interest rates on bonds of different maturities do not move together over time. B) the interest rate for bonds of one maturity is determined by supply and demand for bonds of that maturity. C) investors' strong preference for short - term relative to long - term bonds explains why yield curves typically slope downward. D) only A and B of the above are true. E) all of the above are true. 4) 5) Banks subject to reserve requirements set by the Federal Reserve System include A) only banks with less than $500 million in assets. B) only nationally chartered banks. C) only banks with less than $100 million in assets. D) only state chartered banks. E) all banks whether or not they are members of the Federal Reserve System. 5) 1
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Midterm Exam, Econ 423 6) The Federal Open Market Committee consists of A) the seven members of the board of governors and seven presidents of the regional Fed banks B) the five senior members of the seven - member board of governors. C) the twelve regional Fed bank presidents and the chairman of the board of governors. D) the seven members of the board of governors and five presidents of the regional Fed banks. 6) 7) The chairman of the Board of Governors of the Federal Reserve System exercises a high degree of control over the board A) through his role as spokesman for the Fed with the President and before Congress. B) through his ability to set the agenda of the board and the FOMC.
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econ423midterm - Midterm Exam Econ 423, Summer 2009 Lauren...

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