Quiz_2_Review_Summer_2010[1] - Practice 6 Name MULTIPLE...

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Practice 6 Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Money market instruments issued by the U.S. Treasury are called 1) _______ A) Treasury bonds. B) Treasury notes. C) Treasury strips. D) Treasury bills. 2) Federal funds are 2) _______ A) borrowed by banks that have a deficit of reserves. B) usually overnight investments. C) lent by banks that have an excess of reserves. D) all of the above. E) only A and B of the above. 3) Commercial paper securities 3) _______ A) carry an interest rate that varies according to the firm's level of risk. B) are issued only by the largest and most creditworthy corporations, as they are unsecured. C) never have a term to maturity that exceeds 270 days. D) all of the above. E) only A and B of the above. 4) When the exchange rate changes from 1.0 euros to the dollar to 1.2 euros to the dollar, then the euro has _________ and the dollar has _________. 4) _______ A) appreciated; depreciated B) depreciated; depreciated C) depreciated; appreciated D) appreciated; appreciated 5) If the dollar depreciates relative to the Swiss franc, 5) _______ A) American computers will become less expensive in Switzerland. B) Swiss chocolate will become more expensive in the United States. C) Swiss chocolate will become cheaper in the United States. D) both A and B of the above. 6) In the long run, a rise in a country's price level (relative to the foreign price level) causes its currency to _________, while a rise in the country's relative productivity causes its currency to _________ 6) _______ A) appreciate; appreciate. B) depreciate; depreciate. C) appreciate; depreciate. D) depreciate; appreciate. 7) According to the interest parity condition, if the domestic interest rate is 12 percent and the foreign interest rate is 10 percent, then the expected _________ of the foreign currency must be _________ percent. 7) _______
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This note was uploaded on 09/07/2011 for the course FIN 353 taught by Professor Cobus during the Spring '08 term at S.F. State.

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Quiz_2_Review_Summer_2010[1] - Practice 6 Name MULTIPLE...

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