Midterm2Solutions_mb_fa09 - Money and Banking Midterm...

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Money and Banking Midterm Exam #2 November 18, 2009 Aditi Thapar Name _______________________________________ NetID _________________________ THE EXAM IS WORTH 74 POINTS, YOU HAVE 75 MINUTES THE POINTS REFLECT HOW LONG IT SHOULD TAKE YOU TO ANSWER ANY QUESTION KEEP NO MORE THAN I MINUTE PER POINT Please Note: 1. There are three parts to the exam. Part 1: Fill-in-Blank 5 questions 2 points each = 10 points Part 2: Short Answer 5 questions 8 points each = 40 points Part 3: Numerical Questions 3 questions 8 points each = 24 points 2. Answer all of the questions. In some cases partial answers may receive some credit. Blank answers will not. 3. The explanation is a very important part of the short answer questions. Better explanations will receive more points. 5. NO credit will be given for just stating the correct answer. A correct answer accompanied by a completely wrong explanation will not get any credit either. 6. The academic conduct code of the College of Arts and Sciences will be strictly enforced. 7. Grades will be posted on Course Compass. 8. Graphing calculators are not allowed.
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PART 1: Fill-in-the-blanks 1. Suppose financial market participants expect a corporation to gain $5 per share, but the corporation gains only $4 per share. Holding everything else constant, according to the efficient markets hypothesis, the price of the stock will ( increase / decrease / be unchanged ) when the $4 per share gain is announced. 2. An increase in discount loans, holding everything else constant, would lead to ( an increase in / a decrease in / have an ambiguous effect on / have no effect on ) the money supply. 3.
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Midterm2Solutions_mb_fa09 - Money and Banking Midterm...

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