Financial Markets: Sample Quiz

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1. A corporate bond held by Jane Smith is:

a liability to both the corporation and Jane.
 an asset to both the corporation and Jane.
 a liability to the corporation and an asset to Jane.
 an asset to the corporation and a liability to Jane.

2. The interest rate that the Federal Reserves charges banks when it loans reserves to them is called the:

prime rate.
 federal-funds rate.
 discount rate.
 reserve ratio.

3. When economists talk about liquidity they are referring to the:

riskiness of an asset.
 ease of converting an asset to cash.
 amount of debt that consumers owe.
 moral hazard problem created by deposit insurance.

4. An example of a financial intermediary is:

a Federal Reserve note.
 a credit union.
 the New York Stock Exchange.
 a speculator.

5. If a camera costs 250 marks, and a mark costs $.50, then the dollar cost of the camera is:

$125.
 $250.
 $300.
 $500.

6. The U.S. government agency in charge of regulating stock and bond markets is the:

FDIC
 SEC
 ICC
 Commerce Department.

7. Which of the following is the least liquid asset?

Real estate
 A savings account
 Diamonds
 A college education

8. Which of the following is expected to have the lowest interest rate? An asset that is:

very liquid and risky.
 very liquid with little risk.
 illiquid and risky.
 illiquid with little risk.

9. If the size of an asset increases on a balance sheet, then:

the size of another asset must decrease.
 the size of something on the liability-net-worth side must decrease.
 the size of something on the liability-net-worth side must increase.
 either a or b.
 either a or c.

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Copyright Robert Schenk