Final Exam - Financial Institution

Topics: Monetary policy, Central bank, Federal Reserve System Pages: 9 (1365 words) Published: April 21, 2013
Financial Insitutions Closed book, Closed Notes 1.

Final Examination

Fall 2011 Roger Staiger III

What is the difference between the spot market and the futures market In the spot market, trades are executed immediately, i.e. real time. In the futures markets, which is a derivatives market, trades are agreed upon today but settled lat later dates in the future.

2.

What is the main difference between the money markets and capital markets? Money markets are for short-term security exchanges, i.e. less than 270 days. The capital markets are for long-term security exchanges, i.e. greater than one year.

3.

What are four requirements to transfer capital within an efficient market? a. b. c. d. e. f. Stable Government Low Inflation Savings (personal, corporate, fiscal) Competition Disclosure (transparency) Fair market rules (legal system)

4.

Draw the difference between direct and indirect capital formation process.

Business

Securities Dollars

Savers

Business
5.

Financial Intermed.

Savers

Describe the purpose of an investment banking house. a. Design Sellable Securities b. Buy securities from corporations c. Resell to ‘savers’ (broker transactions)

6.

Name two sources of funds for Financial Intermediaries. a. Deposits (lenders, credit unions, pension funds) b. Premiums (life insurance) c. Share issuance (mutual funds) Name four main roles for depository institutions. a. Offer deposit accounts

7.

All problems equally weighted

Page 1 of 7

Financial Insitutions Closed book, Closed Notes b. c. d. e. 8.

Final Examination

Fall 2011 Roger Staiger III

Repackage (warehouse) deposit accounts Underwrite risk on loans “Expertise” in quantifying creditworthiness Provide diversification for placed loans

What are the unique characteristics for a credit union separating it from other depository institutions? a. b. c. d. Not for profit All business restricted to members All members share a common bond (geography, employer) Small (relatively) depository institution

9.

Name two of the securities found in the Money Markets. a. Treasuries b. Commercial Paper

10.

Name two of the securities found in the Capital Markets. a. b. c. d. Fixed income securities Mortgages Securitized products Equity

11.

Define “Derivative”. An asset for which the value is derived from an underlying asset.

12.

A wife purchases insurance on her husband (the marriage is loving). What type of “trader” is the wife? A “hedger” as the wife is not purchasing the instrument to profit from the loss of her husband but to provide financial security should the husband expire. The strategy is loss-minimization and therefore a hedge.

13.

Name two large risks when investing abroad. a. Country Risk b. Foreign Exchange Risk c. Interest Rate Risk Note: B&C could be considered parallel due to interest rate parity.

All problems equally weighted

Page 2 of 7

Financial Insitutions Closed book, Closed Notes 14.

Final Examination

Fall 2011 Roger Staiger III

What is considered the leading Federal District Bank? New York Federal Reserve

15.

Name three operations performed by Federal District Banks. a. b. c. d. e. Clear Checks Replace old currency Provide loans through discount window) Collect economic data Research

16.

How many district banks are there in the Federal Reserve system? 12

17.

Name five sources of data used by the FOMC. a. b. c. d. e. f. g. h. i. j. k. l. m. Wages Consumer prices Unemployment GDP Business inventories Foreign Exchange Rates Interest Rates Financial Market Conditions Production Levels Business Investment Residential Construction International Trade International Economic Growth

18.

Why does the Federal Reserve perform Open Market Operations? a. Increase/decrease level of funds in market b. Offset impact of other conditions that affect level of funds, e.g. holiday traffic

19.

Why is the reserve requirement ratio important?...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay about ECO 372 Final Exam

    ...ECO 372 Final Exam 1).The largest source of household income in the U.S. is obtained from2) The market where business sell goods and services to households and the government is called the3) Real gross domestic product is best defined as4) Underemployment includes people5) The Bureau of Economic Analysis is responsible for which of the following6) The Federal Reserve provides which of the following data7) Consider if the government instituted a 10 percent income tax surcharge. In terms of the AS/AD model, this change should have8) If the depreciation of a countrys currency increases its aggregate expenditures by 20, the AD curve will9) Aggregate demand management policies are designed most directly to10) Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model11) According to Keynes, market economies12) The laissez-faire policy prescription to eliminate unemployment was to13) In the AS/AD model, an expansionary monetary policy has the greatest effect on the price level when it14) The Federal funds rate15) What tool of monetary policy will the Federal Reserve use to increase the federal funds rate from 1 to 1.2516) If the Federal Reserve increases the required reserves, financial institutions will likely lend out17) Suppose the money multiplier in the U.S. is 3. Suppose further that if...

    Read More
    1897 Words 5 Pages
  • FINANCIAL ACCOUNTING FINAL EXAM Essay

    ...MNGT-511 FINAL EXAM (Total points 100) Name: Rebecca Malandrino Chapter 7 1) Which of the following types of inventory usually is not held by a manufacturing business? (3P) C) Merchandise inventory 2) The following information was taken from the 2007 income statement of Cobra Company: Pretax income, $12,000; Total operating expenses, $20,000; Sales revenue, $120,000. Compute cost of goods sold. (5P) A) $88,000 (120,000 – 20,000 – 12,000) 12,000 (pre-tax income) + 20,000 (operating expenses) = 32,000 (gross margin) 120,000 (sales revenue) - 32,000 (gross margin) = 88,000 ( cost of goods sold) 3) Sheffield Company had the following information taken from its 2006 adjusted trial balance: Sales, $400,000; Sales Discounts, $12,000; Beginning Inventory, $20,000; and Purchases, $200,000. A physical count of the merchandise on hand at the end of the year showed $25,000. Compute the gross margin (gross profit) that would appear in the income statement. (10P) C) $193,000. $20,000 (beginning inventory) + $200,000 (purchases) = $220,000 (end inventory) $220,000 (end inventory) - $25,000 (inventory at end of year) = $195,000 (cost of goods sold) $400,000 (sales) - $12,000 (discounts) = $388,000 (net sales) $388,000 (net sales) - $195,000 (cost of goods) = $193,000 (gross profit margin) Use the following to answer questions 4 and 5 Cyclone Co. uses the periodic inventory system. The following information about their...

    Read More
    951 Words 7 Pages
  • HRM 595 Final Exam Essay

    ...CLICK TO DOWNLOAD HRM 595 Final Exam 1. Joe McDonald is the HR manager of ACME chemicals. His boss, Bill Jacobs, is concerned that the interactions between the various departments of the company are inconsistent and that there is too much competition between departments rather than cooperation. Bill has asked you about ways to improve the negotiations between business units. In your explanation to Bill, you need to explain the following: What are the three primary reasons that negotiations occur? What is the difference between bargaining and negotiation? Why must successful negotiations involve both tangible and intangible components? Do you think that ACME needs to pursue an integrative or a distributive approach to their future interdepartmental negotiations? 2. Define the term “conflict” and describe how it impacts the negotiation process. Your explanation should include the 4 levels of conflict and the dysfunctions that conflict can create. In your response, you need to also provide your opinion as to whether conflict is always a negative component in negotiations. If not, why? 3. Jack Johnson owns a 1998 Ford Mustang that he is looking to sell. He advertises in the Auto Trader. Mary Smith responds to his ad and expresses interest in purchasing the vehicle. Jack is asking $3500 for the car. Mary is looking to pay no more than $2500 for the vehicle. Would you describe this negotiation as a distributive or an...

    Read More
    894 Words 3 Pages
  • ACC 300 Final Exam Essay

    ...ACC 300 Final Exam Copy this link to your browser to download: http://www.finalexamguide.com/ACC-300-Final-Exam-1-200.htm 1. Which of the following is not an asset: 2. Amy Co. acquired $500 worth of supplies on credit. Which of the following journal entries would be recorded? 3. Baker Company earned $10,000 revenue for services provided. Which of the following is correct? 4. Candy Company collected $5,000 from a customer on account. What journal entry will Candy Company record? 5. Ernie Corporation capitalized a $20,000 automobile. Which of the following is mostly likely true? 6. Liabilities are generally classified on a balance sheet as 7. Office equipment is classified on the balance sheet as 8. The total dollar amount of assets to be classified as current assets is 9. The total dollar amount of assets to be classified as property, plant, and equipment is 10. The total dollar amount of assets to be classified as investments is 11. The total amount of working capital is 12. The current ratio is 13. Which of the following is a measure of liquidity? 14. Current assets divided by current liabilities is known as the 15. State the accounting equation: 16. On which of the following financial statements would you expect to find revenues and expenses? 17. On which of the following financial statements would you expect to find...

    Read More
    438 Words 3 Pages
  • ACC 422 Final Exam Essay

    ...ACC 422 Final Exam Copy this link to your browser and download http://www.finalexamguide.com/ACC-422-Final-Exam-3-WileyPlus-263.htm Question 2 Presented below is information related to Rembrandt Inc.'s inventory. (per unit) Skis Boots Parkas Historical Cost 273.79 152.75 76.37 Selling Price 312.70 208.95 106.27 Cost to distribute 27.38 11.53 3.60 Current replacement cost 292.52 151.31 73.49 Normal profit margin 46.11 41.79 30.62 Determine the following: Question 3 Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 67 units that cost $40 each. During June, the company purchased 202 units at $40 each, returned 8 units for credit, and sold 168 units at $67 each. Journalize the June transactions. Question 4 Amsterdam Company uses a periodic inventory system. For April, when the company sold 700 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the average cost method. Question 5 Amsterdam Company uses a periodic inventory system. For April, when the company sold 600 units, the following information is available. Compute the April 30 inventory and the April cost of goods sold using the FIFO method. Question 6 (FIFO, LIFO, Average Cost Inventory) Esplanade Company was formed on December 1, 2011. The following information is available from Esplanade's...

    Read More
    1420 Words 7 Pages
  • Accounting Final Exam Essay

    ... DOWNLOADACC 349 Final Exam 1) What is the best way to handle manufacturing overhead costs in order to get the most timely job cost information? 2) At the end of the year, manufacturing overhead has been over applied. What occurred to create this situation?3) Luca Company over applied manufacturing overhead during 2006. Which one of the following is part of the year end entry to dispose of the over applied amount assuming the amount is material4) Which of the following would be accounted for using a job order cost system?5) Which one of the following is NEVER part of recording the issuance of raw materials in a job order cost system?6. What is unique about the flow of costs in a job order cost system?7) Which one of the following costs would be included in manufacturing overhead of a lawn mower manufacturer?8) What broad functions do the management of an organization perform?9) Which of the following represents the correct order in which inventories are reported on a manufacturer’s balance sheet?10) In traditional costing systems, overhead is generally applied based on11) An activity that has a direct cause-effect relationship with the resources consumed is a(n)12) A well-designed activity-based costing system starts with13) Which of the following factors would suggest a switch to activity-based costing?14) All of the following statements are correct EXCEPT that15) What sometimes makes implementation of activity-based costing difficult in...

    Read More
    1123 Words 3 Pages
  • QNT 561 Final Exam Essay

    ... HYPERLINK "http://www.finalexamanswer.com/QNT-561-Final-Exam_p_61.html" DOWNLOAD ANSWERS QNT 561 Final Exam 1) Which of the following measures of central location is affected most by extreme values? A. MeanB. MedianC. Mode D. Geometric mean 2) A correlation matrix…A.Shows all simple coefficients of correlation between variablesB. shows only correlations that are zeroC. shoes the correlations that are positiveD. shows only the correlations that are statistically significant 3) In a set of observations, which measure of central tendency reports the value that occurs most often? A. Mean B. MedianC. ModeD. Geometric mean 4) Which level of measurement is required for the median? A. Nominal B. OrdinalC. IntervalD. Ratio 5) The mean and the variance are equal in…A. the normal distributionB. the binomial distributionC. the Poisson distributionD. the hypergeometric distribution 6) The difference between the sample mean and the population mean is called the…A. margin of errorB. population standard deviationC. standard error of the meanD. sampling error 7) A dummy variable or indicator variable… A. may assume only a value of 0 or 1B. is another term for the dependent variableC. is a quantitative variableD. is a variable at a ratio or interval level of measurement 8) A Type I error is…A. the correct decisionB. a value determined from the test statisticC. rejecting the null hypothesis when it is trueD. accepting the null hypothesis...

    Read More
    1360 Words 5 Pages
  • Essay about ECO 550 FINAL Exam

    ...CLICK TO DOWNLOAD ECO 550 FINAL Exam 1). Evidence from empirical studies of short-run cost-output relationships lends support to the: 2). Break-even analysis usually assumes all of the following except: 3). In determining the shape of the cost-output relationship only ____ depreciation is relevant. Answer 4). In the linear breakeven model, the breakeven sales volume (in dollars) can be found by multiplying the breakeven sales volume (in units) by: 5). A firm in pure competition would shut down when: Selected Answer: price is less than average variable cost Correct Answer: price is less than average variable cost 6). Buyers anticipate that the temporary warehouse seller of unbranded computer equipment will Answer 7). An "experience good" is one that: 8). Experience goods are products or services 9). The demand curve facing the firm in ____ is the same as the industry demand curve. 10). In the electric power industry, residential customers have relatively ____ demand for electricity compared with large industrial users. But contrary to price discrimination, large industrial users generally are charged ____ rates. 11). The practice by telephone companies of charging lower long-distance rates at night than during the day is an example of: 12). Of the following, which is not an economic rationale for public utility regulation? 13). If a cartel seeks to maximize profits, the market share (or quota) for each firm should be...

    Read More
    701 Words 3 Pages

Popular Essays

Become a StudyMode Member

Sign Up - It's Free