Fall2008FinalsAanswer

Fall2008FinalsAanswer - ECON 423 Fall 2008 Final Exam A On...

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ECON 423: Fall 2008 Final Exam A On my honor, I have neither given nor received unauthorized aid on this test: _______________________ Name:____________________________________ SECTION I: Multiple Choice Questions (2 points each) 1. Commercial banks were forbidden to engage in investment banking by a. Glass- Steagall Act b. Gramm-Leach-Bliley Act c. Federal Reserve Act d. Sarbanes-Oxley Act 2. A 8% coupon bond with a face value of $1000 and with a maturity date of 2012 is likely to be sold at the following price today: a. $1,000 b. $1,100 c. $920 d. $80 3. Liabilities on a bank’s balance sheet will include: a. Consumer loans b. Discount loans c. Reserves d. Federal funds loaned to other banks. 1
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4. If the interest rate on U.S. dollar denominated assets is 3%, and if the U.S. dollar is expected to depreciate by 1% with respect to the Euro, the interest rate on Euro assets must be a. 1% b. 2% c. 3% d. 4% 5. A municipal bond yields 8%. If the debt issued by Southeastern Corporation has the same risk as the municipal bond, and the income rate is 20%, the interest rate on the debt issued by Southeastern Corporation must be a.6.4% b. 10% c. 9.6% d. 1.6% 6. The price of a Big Mac is $3.50 in the U.S. and Aus$5.00 in Australia. If the actual exchange rate is $1 = Aus$1.40 a. The Australian dollar is overvalued and it will appreciate with respect to the U.S. dollar. b. The Australian dollar is overvalued and it will depreciate with respect to the U.S. dollar. c. The Australian dollar is undervalued and it will appreciate with respect to the U.S. dollar. d. The Australian dollar is undervalued and it will depreciate with respect to the U.S. dollar. 7. Which of the following is NOT true? a. There are twelve Federal Reserve District Banks. b. There are twelve members in the Board of Governors. c. There are twelve members in the Federal Open Market Committee. d. The New York Fed President has a permanent seat in FOMC. 8. An upward sloping yield curve CANNOT imply which of the following? a. Rising short term interest rates in the future according to liquidity preference theory. b. Rising short term interest rates in the future according to expectations theory. c. Constant short term interest rates in the future according to liquidity preference theory. d. Constant short term interest rates in the future according to expectations theory. 9. If a central bank wants to decrease money supply by $100 million, and the required reserve ratio is 0.20, the bank will a. Sell securities worth $20 million. b.
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This note was uploaded on 02/13/2012 for the course ECON 423 taught by Professor Vd during the Spring '08 term at UNC.

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Fall2008FinalsAanswer - ECON 423 Fall 2008 Final Exam A On...

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