1 How do we classify the depository intermediaries? What are the bases for the distinction between the...
Question:
| 1 | How do we classify the depository intermediaries? What are the bases for the distinction between the various depository intermediaries? Explain the features of these intermediaries in terms of the bases for distinction. | |
| 2 | Why and how are banks able to create money? Does the ability of banks to create money have important implications for public policy? Please Explain. | |
| 3 | Consider a bond that has a current price of 90; that is, if the par value of the bond is $1,000, the bond’s price is 90% of $1,000 or $900. And suppose that this bond has five years remaining to maturity and an 8% coupon rate. With five years remaining to maturity, the bond has 10 six-month periods remaining. | |
| 4 | What is the money market? What are the broad objectives of the money market? Explain why there is a critical need for money market instruments. | |
| 5 | Describe the structure of interest rates in the money market. What are the common money market instruments? Which instrument anchors the market and appears to be the foundation for other interest rates? Can you explain why this is so? |
Part II. Choose the best answer
1. The Major securities traded in the capital markets are
a. Stocks and bonds.
b. Bonds and commercial paper.
c. Commercial paper and Treasury bills.
d. Treasury bills and certificates of deposit.
2. One is not the right place to “park” for funds that are needed in a shorter time period usually one year or less.
a. Call money market.
b. Commercial bills market.
c. Acceptance market.
d. Stocks market.
3. Which one of the following is not considered as economic role/function/ of financial system?
a. Price discovery role.
b. Reduction of transaction cost role.
c. Risk transformation role.
d. None
4. Of the following one is not a financial asset?
a. Insurance policy.
b. Deposit in the bank.
c. Bonds
d. Stock.
e. Petroleum
- 5. An institution charged with the responsibility of managing the expansion and contraction of the volume of money in the interest of general public welfare is?
a. Central Bank
b. commercial bank
c. savings bank
d. credit union
Expert Answer:
1 The basis for distinction of depository intermediaries is on the basis of those that accept deposit from customers and then use it to make loans such as commercial banks savings bank and credit unio... View the full answer
