Fin 308 test 1 answer key

Acceptance answer a page 134 level easy 15 a time

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Unformatted text preview: e competitive bidder is guaranteed a _____ and a noncompetitive bidder is guaranteed a _____. A) Minimum price; maximum price B) Maximum price; minimum price C) Maximum price; given quantity D) Minimum price; maximum quantity E) None of the above Answer: C Page: 124-125 Level: Medium Saunders, Financial Markets and Institutions, 2/e 35 17. A dealer is quoting a $10,000 face 60 day T-Bill quoted at 3.22 bid, 3.14 ask. You could buy this bill at _____ or sell it at _____. A) $9,947.67 , $9,946.33 B) $9,678.00 , $9,686.00 C) $9,686.00 , $9,678.00 D) $9,946.33 , $9,947.67 E) None of the above Answer: A Page: 129 Level: Medium Response: Buy at 10,000 v [1-(0.0314v60/360)] ; Sell at 10,000 v [1-(0.0322v60/360)] 18. Rates on federal funds and repurchase agreements are stated A) On a bond equivalent basis with a 360 day year B) On a bond equivalent basis with a 365 day year C) As a discount yield with a 360 day year D) As an EAR E) As a discount yield with a 365 day year Answer: A Page: 130,134 Level: Medium 19. The discount yield on a T-Bill differs from a bond equivalent yield (BEY) because A) The discount yield is a percentage of face value instead of price B) A 360 day year is used on the discount yield instead of 365 days C) The discount yield is without compounding, the BEY is with compounding D) Both A and B E) A, B and C are all reasons for the difference Answer: D Page: 128-130 Level: Medium 20. The typical spread on prime quality commercial paper and medium grade commercial paper has been about ______ basis points. A) 200 B) 22 C) 33 D) 86 E) 12 Answer: B Page: 136 Level: Medium 36 Saunders, Financial Markets and Institutions, 2/e Chapter 1 Introduction 21. The rate of return on a repo is A) Determined by the rate of return on the underlying collateral B) Strongly affected by the current Fed funds rate at the time of the repo C) Determined at the time of the repo D) A and C E) B and C Answer: E Page: 134 Level: Medium 22. All but which one of the following statements about commercial paper is true? Commercial paper A) Is an unsecured short term promissory note B) Has a maximum maturity of 270 days C) Is virtually always rated by at least one ratings agency D) Has no secondary market E) Carries above prime interest rates Answer: E Page: 134-135 Level: Medium 23. A negotiable CD A) Is a bank issued transactions deposit B) Is a registered instrument C) Is a bank issued time deposit D) Has denominations ranging from $50,000 to $10 million E) Pays discount interest Answer: C Page: 138 Level: Medium 24. A 90 day $1 million CD has a 4% annual rate quote. If you buy the CD, how much will you collect in 90 days? A) $1,040,000 B) $1,009,863 C) $1,000,000 D) $1,015,012 E) $1,010,000 Answer: E Page: 139 Level: Medium Response: $1 mill v [1 + (0.04 v 90/360)] Saunders, Financial Markets and Institutions, 2/e 37 25. A banker's acceptance is A) A time draft drawn on the exporter's bank B) A method to help importers evaluate the creditworthiness of exporters C) A...
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This note was uploaded on 09/23/2013 for the course FIN 308 taught by Professor Spivey during the Fall '08 term at Clemson.

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