1. Derivatives can only be used to hedge.
2. True
3. False

2 points

QUESTION 33

1. Settlement date refers to
2. When a lawsuit settlesWhen a commodity is deliveredWhen an investor can get their money backNone of the above

2 points

QUESTION 34

1. Options are a type of derivative that
2. Is comprised of callsIs comprised of putsDerives their value based on an underlying assetAll of the above

2 points

QUESTION 35

1. The Big Mac Index determines
2. Whether Big Macs are an international asset classWhich countries enjoy the most Big MacsWhether a currency is over/under valuedNone of the above

2 points

QUESTION 36

1. Forwards and futures contracts are exactly the same thing.
2. True
3. False

2 points

QUESTION 37

1. The Theory of Purchasing Power Parity has been proven to be absolutely true.
2. True
3. False

2 points

QUESTION 38

1. An increase in demand for dollars
2. Shifts the demand curve for dollars leftShifts the demand curve for dollars rightShifts the demand curve for dollars upShifts the demand curve for dollars down

2 points

QUESTION 39

1. Exchange rate risk is the risk of
2. Receiving counterfeit currencyPaying too much in bank fees when exchanging currencyReceiving losses due to currency fluctuationsNone of the above

2 points

QUESTION 40

1. Credit rationing is the limiting of credit to a borrower.
2. True
3. False

2 points

QUESTION 41

1. Collateral is what is pledged in order to receive credit.
2. True
3. False

2 points

QUESTION 42

1. Moral hazard is avoided by asymmetric information.
2. True
3. False

2 points

QUESTION 43

1. Net Worth equals Assets + Liabilities.
2. True
3. False

2 points

QUESTION 44

1. Balance sheets reflect the income of a company.
2. True
3. False

2 points

QUESTION 45

1. Typically, one finds all of the following on a bank's balance sheet except
2. DepositsLoansBuildingsLetters of credit

2 points

QUESTION 46

1. Commercial banks engage in the business of
2. Taking depositsMaking loansBoth a and bNeither a nor b

2 points

QUESTION 47

1. Investment banks are in the business of
2. Mortgage loansBond underwritingTaking depositsCar loans

2 points

QUESTION 48

1. Glass-Stegall Act eliminated all risk of financial crises.
2. True
3. False

2 points

QUESTION 49

1. Dodd-Frank replaced Glass-Stegall.
2. True
3. False

2 points

QUESTION 50

1. There are 13 districts with the Federal Reserve System.
2. True
3. False

2 points

QUESTION 51

1. All banks are member banks of the Federal Reserve.
2. True
3. False

2 points

QUESTION 52

1. The Fed chairman is mandated to
2. Follow the direction of the presidentFollow the direction of CongressFollow the directions of the Supreme CourtNone of the above

2 points

QUESTION 53

1. All of the following are tools of the Fed except
2. Open Market OperationsDiscount PolicyReserve RequirementsTax Policy

2 points

QUESTION 54

1. Balance of Payments includes
2. The current accountThe financial accountOfficial settlementsAll of the above

2 points

QUESTION 55

1. Foreign exchange intervention is the deliberate influencing of exchange rates.
2. True
3. False

2 points

QUESTION 56

1. Unsterilized foreign exchange alters the money supply.
2. True
3. False

2 points

QUESTION 57

1. Sterilized foreign exchange alters the money supply.
2. True
3. False

2 points

QUESTION 58

1. Pegging a currency to another currency poses no possible risks.
2. True
3. False

2 points

QUESTION 59

1. The Exchange Rate Regime is the group located in Brussels that determine current exchange rates.
2. True
3. False

2 points

QUESTION 60

1. The fixed exchange rate has been proven to be the most stable exchange rate.
2. True
3. False