Fin 308 test 1 answer key

Charge each other on loans of excess reserves e banks

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Unformatted text preview: s charge for loans to corporate customers B) Banks charge to lend foreign exchange to customers C) Banks charge each other on loans of excess reserves D) Banks charge securities dealers to finance their inventory E) The Federal Reserve charges on loans to commercial banks Answer: E Page: 101 Level: Medium 22. The Fed has traditionally offered three types of discount window loans. _____ credit is offered to small institutions with demonstrable patterns of financing needs, _____ credit is offered for short term temporary funds outflows, and _____ credit may be offered to institutions with more severe liquidity problems. A) Seasonal; extended; adjustment B) Extended; adjustment; seasonal C) Adjustment; extended; seasonal D) Adjustment; seasonal; extended E) Seasonal; adjustment; extended Answer: E Page: 103 Level: Medium 23. Federal Reserve discount window loans must be _____. A) Fully collateralized B) Over collateralized C) Partially collateralized D) Uncollateralized Answer: B Page: 105-106 Level: Easy 24. A decrease in reserve requirements could lead to a(n) A) Increase in bank lending B) Increase in the money supply C) An increase in the discount rate D) Both A and B E) Both A and C Answer: D Page: 105-107 Level: Medium 30 Saunders, Financial Markets and Institutions, 2/e Chapter 1 Introduction 25. Bank A has an increase in deposits of $10 million dollars and reserve requirements are 10%. Bank A loans out 90% of the increase. This amount winds up deposited in Bank B. Bank B lends out 90%, and this amount winds up deposited in Bank C. What is the total increase in deposits resulting from these three banks? A) $10.00 million B) $19.00 million C) $22.33 million D) $27.10 million E) $30.00 million Answer: D Page: 106-107 Level: Medium Response: 10 + (10 v 0.90) + (9 v 0.90) 26. The Fed changes reserve requirements from 10% to 8%, thereby creating $450 million in excess reserves. The total change in deposits (with no drains) would be A) $486 million B) $5.625 billion C) $0.489 billion D) $3.795 billion E) None of the above Answer: B Page: 106-107 Level: Medium Response: (1/0.08) v $450 mill 27. If the Fed wishes to stimulate the economy it could I. Buy U.S. government securities II. Raise the discount rate III. Lower reserve requirements A) I and III only B) II and III only C) I and II only D) II only E) I, II and III Answer: A Page: 99-105 Level: Medium Saunders, Financial Markets and Institutions, 2/e 31 28. Currently the Fed sets monetary policy by targeting A) The Fed funds rate B) The prime rate C) The level of nonborrowed reserves D) The level of borrowed reserves E) The stock market Answer: A Page: 98 Level: Easy 29. If the Federal Reserve were to buy dollars by selling yen the result would be to _____ the supply of U.S. dollars and _____ the exchange rate in terms of the number of yen per U.S. dollar. A) Increase, lower B) Increase, raise C) Decrease, lower D) Decrease; raise Answer: D Page: 114-115 Level: Medium 30. From October 1983 to July 19...
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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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