1) The price paid for the rental of borrowed funds (usually expressed as a percentage of
the rental of $100 per year) is commonly referred to as the A) inflation rate. B) exchange rate. C) interest rate.
D) aggregate price level. Answer: C
2) Financial markets and institutions
A) involve the movement of huge quantities of money. B) affect the profits of businesses.
C) affect the types of goods and services produced in an economy. D) do all of the above.
E) do only (A) and (B) of the above. Answer: D
3) Which of the following can be described as involving direct finance? A) A corporation?s stock is traded in an over-the-counter market. B) People buy shares in a mutual fund.
C) A pension fund manager buys commercial paper in the secondary market.
D) An insurance company buys shares of common stock in the over-the-counter markets.
E) None of the above. Answer: E
4) The purpose of diversification is to A) reduce the volatility of a portfolio?s return. B) raise the volatility of a portfolio?s return. C) reduce the average return on a portfolio. D) raise the average return on a portfolio. Answer: A
5) When the interest rate on a bond is _________ the equilibrium interest rate, there is excess_________ in the bond market and the interest rate will _________. A) below; demand; rise B) below; demand; fall C) below; supply; rise D) above; supply; fall Answer: C
6) In a recession when income and wealth are falling, the demand for bonds _________ and the
demand curve shifts to the _________. A) falls; right
B) falls; left C) rises; right D) rises; left Answer: B
7) When people begin to expect a large stock market decline, the demand curve for bonds shifts to the _________ and the interest rate _________. A) right; falls B) right; rises C) left; falls D) left; rises Answer: A
8) The spread between interest rates on low quality corporate bonds and U.S. government bonds
_________ during the Great Depression. A) was reversed
B) narrowed significantly C) widened significantly D) did not change Answer: C
9) If income tax rates were lowered, then
A) the interest rate on municipal bonds would fall. B) the interest rate on Treasury bonds would rise. C) the interest rate on municipal bonds would rise. D) the price of Treasury bonds would fall. Answer: C
10) According to the expectations theory of the term structure,
A) yield curves should be equally likely to slope downward as to slope upward.
B) when the yield curve is steeply upward-sloping, short-term interest rates are expected to
rise in the future.
C) when the yield curve is downward-sloping, short-term interest rates are expected to remain relatively stable in the future. D) all of the above.
E) only A and B of the above. Answer:E
11) According to the efficient market hypothesis
A) one cannot expect to earn an abnormally high return by purchasing a security.
B) information in newspapers and in the published reports of financial analysts is already
reflected in market prices.
C) unexploited profit opportunities abound, thereby explaining why so many people get
rich by trading securities. D) all of the above are true.
E) only A and B of the above are true. Answer: E
12) To say that stock prices follow a ?random walk? is to argue that A) stock prices rise, then fall.
B) stock prices rise, then fall in a predictable fashion. C) stock prices tend to follow trends.
D) stock prices are, for all practical purposes, unpredictable. Answer:D
13) The efficient market hypothesis suggests that
A) investors should purchase no-load mutual funds which have low management fees. B) investors can use the advice of technical analysts to outperform the market. C) investors let too many unexploited profit opportunities go by if they adopt a ?buy and
hold? strategy.
D) only A and B of the above are sensible strategies. Answer: A
14) Which of the following is empirical evidence indicating that the efficient market hypothesis
may not always be generally applicable? A) Small-firm effect B) January effect
C) Market Overreaction D) All of the above Answer: D
15) An open market purchase of securities by the Fed will
A) increase assets of the nonbank public and increase assets of the banking system. B) decrease assets of the nonbank public and increase assets of the Fed. C) decrease assets of the banking system and increase assets of the Fed.
D) have no effect on assets of the nonbank public but increase assets of the Fed. E) increase assets of the banking system and decrease assets of the Fed. Answer: D
16) Under usual circumstances, an increase in the discount rate causes A) the federal funds rate to fall. B) the federal funds rate to rise.
C) no change in the federal funds rate.
D) the supply of reserves to increase. E) the supply of reserves to decrease. Answer: C
17) Which of the following is not an operating target? A) Nonborrowed reserves B) Monetary base
C) Federal funds interest rate D) Discount rate
E) All are operating targets. Answer: D
18) Money market instruments
A) are usually sold in large denominations. B) have low default risk. C) mature in one year or less.
D) are characterized by all of the above.
E) are characterized by only A and B of the above. Answer: D
19) If the Fed wants to lower the federal funds interest rate, it will _________ the banking system by _________ securities. A) add reserves to; selling B) add reserves to; buying
C) remove reserves from; selling D) remove reserves from; buying Answer: B
20) Money market transactions
A) do not take place in any one particular location or building.
B) are usually arranged purchases and sales between participants over the phone by traders
and completed electronically. C) both (a) and (b). D) none the the above. Answer: C
21) The primary reason that individuals and firms choose to borrow long-term is to reduce the risk that interest rates will fall before they pay off their debt. Answer：False
22) Typically, the interest rate on corporate bonds will be higher the more restrictions are
placed on management through restrictive covenants, because the bonds will be
considered safer by bondholders Answer: False
23) A change in the current yield always signals a change in the same direction of the yield to maturity. Answer: True
24) A bank?s balance sheet indicates whether or not the bank is profitable. Answer: False
25) Deposits that banks keep in accounts at the Federal Reserve less vault cash is called reserves. Answer: False 26) Since a bank?s assets exceed its equity capital, the return on assets always exceeds the return on equity. Answer: False
27) Adverse selection refers to those most at risk being most aggressive in their search for funds. Answer: True
28) Financial innovation has provided more options to both investors and borrowers. Answer: True
28) When the federal government?s budget deficit decreases, the demand curve for bonds shifts to the right.
Answer: False
29) An increase in the inflation rate will cause the demand curve for bonds to shift to the right.
Answer: False
30) A positive liquidity premium indicates that investors prefer long-term bonds over short-term bonds.
Answer: False
31) When yield curves are downward sloping, long-term interest rates are above short-term interest rates. Answer: False
32) In an efficient market, abnormal returns are not possible even using inside information. Answer: False
33) Technical analysis is a popular technique used to predict stock prices by studying past stock price data and search for patterns such as trends and regular cycles. Answer: True
34) An open market sale leads to an expansion of reserves and deposits in the banking system and hence to a decline in the monetary base and the money supply.
金融市场试卷(2) 金融考试题 西南财经大学天府学院
