Financial Markets And System

Financial Markets and System

Don't use plagiarized sources. Get Your Custom Essay on
Need an answer from similar question? You have just landed to the most confidential, trustful essay writing service to order the paper from.
Just from $11/Page
Order Now

Choose ALL that apply.

1 An individual walks to a local sandwich shop and uses a $10 bill to pay for a $6 sandwich, receiving $4 as change for this transaction. The $6 price of the sandwich:

is a precise measurement of the value of the sandwich.

represents the value the seller wants for the sandwich.

is the result of a bartered transaction.

 

2 The federal government tracks the amount of money that is in the system at any given time using which of the following measurements?

Only the amount of money in people’s savings accounts on January 1st.

The total amount of cash held in people’s bank accounts throughout the year.

The number of bills printed by the US Treasury in the previous year.

 

3 Choose the BEST answer.

The Federal Reserve raises the reserve requirement from 7 percent to 8 percent. Consequently banks must set aside more money and consequently have less money to lend. The result is that the banks will raise the interest rate they charge to their customers. These conditions make it harder and more expensive for people and businesses to borrow money. Because they can’t borrow as much, they can’t spend as much. If people aren’t spending as much, prices don’t go up. With this action, the Fed has lessened the likelihood of ________.

free market

recession

inflation

 

4 Choose the BEST answer.

Hometown Bank has made a significant number of loans to their customers, some of which have been very large. An audit of the bank’s records shows that as a result of this increased lending activity that the bank is now below the Federal Reserve’s minimum reserve requirement. A member bank, City Bank, has excess reserves, which Hometown Bank borrows. The rate of interest that Hometown Bank will pay to City Bank for the loan is the ________ rate.

intrabank

institutional

federal funds

Choose ALL that apply.

The purpose of a financial institution, such as a bank or credit union is to ________.

act as an intermediary between savers and borrowers

create financial products

direct the flow of funds between savers and borrowers

 

Choose ALL that apply.

A brokerage company is a nondepository institution. What are other nondepository institutions?

finance companies

insurance companies

commercial banks

 

7 Choose ALL that apply.

One technology gaining popularity is the mobile payment. It is sometimes known as tap-and-go or near field communications (NFC). This technology is:

requires an extended amount of time before the process has finished

detects and then enables technology in close proximity to communicate

a method of wireless data transfer

 

8 Choose ALL that apply.

Legal issues arise with digital or virtual currency such as Bitcoin. Laws which are affected by this technology include(s):

federal tax laws.

counterfeiting criminal statutes.

federal anti-money laundering laws.

 

9 hoose ALL that apply.

Bonds are:

debt.

a way to raise capital through borrowing (used by corporations and governments).

a formal contract to repay borrowed money with interest at fixed intervals.

 

10 Choose ALL that apply.

An exchange-traded fund (ETF) is:

a mutual fund that trades like a share of stock

executed at the market price

valued continuously throughout the day

 

11 Choose ALL that apply.

Investing can bring profits in both the long and short-term; however, there are also costs associated with investing in securities. Among these costs is/are:

the opportunity cost of using the cash and forgoing all uses of that cash until it is returned.

predictions on future performance.

the risk you take—the risk that you won’t get it all back.

 

12 Choose ALL that apply.

Returns are created when:

the investment creates income

the investment gains (or loses) value

the investment is originally made