Question 1

Explain why the money markets are referred to as wholesale markets.

Accepted Answer

The money markets are referred to as who...

Question 2

Government securities dealers frequently engage in repos to

Accepted Answer

A)  manage liquidity.
B)  take advantage of anticipated changes in interest rates.
C)  lend or borrow for a day or two with what is essentially a collateralized loan.
D)  do all of the above.
E)  do only A and B of the above.F) A) and E)
G) All of the above

Question 3

What are the main characteristics of money market securities?

Accepted Answer

The answer of What are the main characteristics of money...

Question 4

The U.S. Treasury Department is the single most influential participant in the U.S. money market.

Accepted Answer

A) True 
 B)False

Question 5

The size of the asset-backed commercial paper market nearly doubled between 2004 and 2007 to about $1 trillion.

Accepted Answer

A) True 
 B)False

Question 6

Explain why money market interest rates move so closely together over time.

Accepted Answer

The answer of Explain why money market interest rates move...

Question 7

The advantage of mutual funds is that they

Accepted Answer

A)  require no cash up front.
B)  give investors with relatively small amounts of cash to invest access to large-denomination securities.
C)  always yield the highest returns.
D)  both A and B of the above.E) B) and C)
F) C) and D)

Question 8

The most influential participant(s) in the U.S. money market

Accepted Answer

A)  is the Federal Reserve.
B)  is the U.S. Treasury Department.
C)  are the large money center banks.
D)  are the investment banks that underwrite securities.E) A) and B)
F) None of the above

Question 9

Money market securities are short-term instruments with an original maturity of less than one year.

Accepted Answer

A) True 
 B)False

Question 10

If the Fed wants to lower the federal funds interest rate, it will ________ the banking system by ________ securities.

Accepted Answer

A)  add reserves to; selling
B)  add reserves to; buying
C)  remove reserves from; selling
D)  remove reserves from; buyingE) A) and C)
F) None of the above

Question 11

Activity in money markets increased significantly in the late 1970s and early 1980s because of

Accepted Answer

A)  rising short-term interest rates.
B)  regulations that limited what banks could pay for deposits.
C)  both A and B of the above.
D)  neither A nor B of the above.E) None of the above
F) A) and D)

Question 12

Two important characteristics of any financial market are flexibility and

Accepted Answer

A)  risk.
B)  innovation.
C)  tolerance.
D)  capital.E) All of the above
F) A) and B)

Question 13

Money markets are referred to as retail markets because small individual investors are the primary buyers of money market securities.

Accepted Answer

A) True 
 B)False

Question 14

A banker's acceptance is

Accepted Answer

A)  used to finance goods that have not yet been transferred from the seller to the buyer.
B)  an order to pay a specified amount of money to the bearer on a given date.
C)  a relatively new money market security that arose in the 1960s as international trade expanded.
D)  all of the above.
E)  only A and B of the above.F) A) and E)
G) A) and D)

Question 15

Explain how the Federal Reserve can influence the federal funds interest rate.

Accepted Answer

The Federal Reserve can influence the fe...

Question 16

The primary function of large diversified brokerage firms in the money market is to

Accepted Answer

A)  sell money market securities to the Federal Reserve for its open market operations.
B)  make a market for money market securities by maintaining an inventory from which to buy or sell.
C)  buy money market securities from corporations that need liquidity.
D)  buy T-bills from the U.S. Treasury Department.E) A) and D)
F) C) and D)

Question 17

The term money market is actually a misnomer, because liquid securities are traded in these markets rather than money.

Accepted Answer

A) True 
 B)False

Question 18

Unlike most money market securities, commercial paper

Accepted Answer

A)  is not generally traded in a secondary market.
B)  usually has a term to maturity that is longer than a year.
C)  is not popular with most money market investors because of the high default risk.
D)  all of the above.
E)  only A and B of the above.F) A) and B)
G) A) and C)

Question 19

The main purpose of federal funds is to provide banks with an immediate infusion of reserves should they be short.

Accepted Answer

A) True 
 B)False

Question 20

Banks are unusual participants in the money market because they buy, but do not sell, money market instruments.

Accepted Answer

A) True 
 B)False

Exam 11: The Money Markets

Explain why money market interest rates move so closely together over time.

Correct AnswerverifiedShow Answer

The term money market is actually a misnomer, because liquid securities are traded in these markets rather than money.

Correct AnswerverifiedShow Answer

The size of the asset-backed commercial paper market nearly doubled between 2004 and 2007 to about $1 trillion.

Correct AnswerverifiedShow Answer

The most influential participant(s) in the U.S. money market

Correct AnswerverifiedShow Answer

The U.S. Treasury Department is the single most influential participant in the U.S. money market.

Correct AnswerverifiedShow Answer

The primary function of large diversified brokerage firms in the money market is to

Correct AnswerverifiedShow Answer

Government securities dealers frequently engage in repos to

Correct AnswerverifiedShow Answer

Activity in money markets increased significantly in the late 1970s and early 1980s because of

Correct AnswerverifiedShow Answer

The main purpose of federal funds is to provide banks with an immediate infusion of reserves should they be short.

Correct AnswerverifiedShow Answer

Money market securities are short-term instruments with an original maturity of less than one year.

Correct AnswerverifiedShow Answer

Two important characteristics of any financial market are flexibility and

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Unlike most money market securities, commercial paper

Correct AnswerverifiedShow Answer

Explain how the Federal Reserve can influence the federal funds interest rate.

Correct AnswerAnswered by ExamLex AIThe Federal Reserve can influence the fe...View AnswerShow Answer

A banker's acceptance is

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What are the main characteristics of money market securities?

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Explain why the money markets are referred to as wholesale markets.

Correct AnswerAnswered by ExamLex AIThe money markets are referred to as who...View AnswerShow Answer

Money markets are referred to as retail markets because small individual investors are the primary buyers of money market securities.

Correct AnswerverifiedShow Answer

The advantage of mutual funds is that they

Correct AnswerverifiedShow Answer

Banks are unusual participants in the money market because they buy, but do not sell, money market instruments.

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If the Fed wants to lower the federal funds interest rate, it will ________ the banking system by ________ securities.

Correct AnswerverifiedShow Answer

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The Federal Reserve can influence the fe...
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Answered by ExamLex AI
The money markets are referred to as who...
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If the Fed wants to lower the federal funds interest rate, it will the banking system by securities.

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