practice final - FIN 4243 Practice Final Exam Fall 2009...

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1 FIN 4243 Practice Final Exam Fall 2009 Part I. Multiple Choice. 3.5 points per question. (Total 70 pts) 1. A central bank’s monetary policy decision should least likely be: A. Driven by observable financial market data B. Communicated promptly to the markets C. Consistent with its stated long-term policy goals D. Arrived at through a process market participants understand 2. In order to be most effective and produces smooth implementation of policy decisions, it is least likely necessary that central bank monetary policy be: A. Credible B. Predictable C. Transparent D. Infrequently changed 3. The predictability of a central bank’s reactions to economic shocks can best be measured by: A. The standard deviation of the price of gold in the central bank’s home currency. B. The volatility of spread between straight and inflation-indexed bond yields. C. The difference between actual price inflation and economists’ mean inflation forecast. D. How well forward interest rates anticipate policy changes. 4. An investor holds $100,000 (par value) worth of Treasury Inflation Protected Securities (TIPS) that carry a 2.5% semiannual pay coupon. If the annual inflation rate is 3%, what is the inflation-adjusted principal value of the bond after six months? A. $100,000 B. $101,500 C. $102,500 D. $103,000 5. The face value of a $1,000,000 T-bill with 78 days to maturity is priced at $987,845. What is the bank discount yield quote for the T-bill? A. 5.160% B. 5.750% C. 5.610% D. 5.670%
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2 6. An investor is considering floating-rate debt and other investments to protect against unexpected increases in inflation. Her friend suggests TIPS because the coupon rate is adjusted for inflation semiannually. The friend also states on-the-run Treasury issues have narrower bid-ask spreads than other Treasury issues. Should the investor agree or disagree with the friend’s statements about TIPS and on-the-run issues? TIPS On-the-run issues A. Agree Agree B. Agree Disagree C. Disagree Agree D. Disagree Disagree 7. Of the following, the debt securities that are most often registered according to the requirements of SEC Rule 415 (shelf registration) are: A. Corporate bonds B. Medium-term notes
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This note was uploaded on 12/03/2009 for the course FIN 4243 taught by Professor Dudley during the Fall '08 term at University of Florida.

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practice final - FIN 4243 Practice Final Exam Fall 2009...

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