MidtermQuestionsFall2009Fin353

MidtermQuestionsFall2009Fin353 - Fin 353 Midterm Questions...

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Fin 353 Midterm Questions Fall 2009 1. In US, the discount rate has been set to be higher than the federal funds rate since 2003, emphasizing the lender of last resort function of the Federal Reserve. a) True b) False 2. Both the assets and liabilities of Federal Reserve Bank will increase if the reserve requirement increases from 10% to 15%. a) True b) False 3. The balance sheets of financial firms have deposits on the liabilities side. a) True b) False 4. When the Fed follows an expansionary policy one of the probable effects on the economy is that interest rates increase. a) True b) False 5. When the Fed follows an expansionary policy one of the possible effects on the economy is that inflation increases. a) True b) False 6. The yield curve (treasury spread) is currently downward sloping. a) True b) False 7. The forward rate for a two-period loan that matures at time 12 if yield_12=6.5% and yield_10=5.5% is=? a) 10.6% b) 11.6% c) 12.6% d) 13.6% 8. Which one of the following is not a utility based theory of term structure of interest rates? a) Pure Expectations Theory b) Market Segmentation Theory c) Liquidity Preference Theory d) Arbitrage Pricing Theory 1
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9. Which one of the following is not on the assets side of the current Federal Reserve Balance Sheet? a) Treasury Currency
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MidtermQuestionsFall2009Fin353 - Fin 353 Midterm Questions...

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