Fin 308 test 1 answer key

1015012 e 1010000 answer e page 139 level medium

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Unformatted text preview: liability of the importer and the importer's bank D) An add on instrument E) For greater than 1 year maturity Answer: C Page: 140 Level: Medium 26. The most liquid of the money market securities are A) Commercial paper B) Banker's acceptances C) T-Bills D) Fed funds E) Repurchase agreements Answer: C Page: 141 Level: Easy 27. In dollars outstanding the largest money market security is A) Commercial paper B) Banker's acceptances C) T-Bills D) Fed funds E) Repurchase agreements Answer: A Page: 145 Level: Medium 28. The international version of the fed funds rate is called A) LIBOR B) The repo rate C) The Euro rate D) International dollar rate E) The exchange rate Answer: A Page: 146 Level: Easy 38 Saunders, Financial Markets and Institutions, 2/e Chapter 1 Introduction 29. LIBOR is generally _____ the Fed funds rate because foreign bank deposits are generally _____ than domestic bank deposits A) Greater than; less risky B) Less than; more risky C) The same as; equally risk D) Greater than; more risky E) Less than; less risky Answer: D Page: 146 Level: Medium 30. A U.S. exporter sells $50,000 of furniture to a Latin American importer. The exporter requires the importer to obtain a letter of credit. When the bank accepts the draft the exporter discounts the 90 day note at a 6% discount. What is the exporter's true effective annual financing cost (EAR)? A) 6.00% B) 6.18% C) 6.32% D) 6.24% E) 6.45% Answer: C Page: 140-141 Level: Difficult Response: 50,000 v [1 ± (0.06v90/360)] = 49,250 ; (50,000/49,250)(365 / 90) ± 1 Saunders, Financial Markets and Institutions, 2/e 39...
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