Quiz 3 with Answers | Fixed Income Securities | FIN 4224, Quizzes of Finance

Download Quiz 3 with Answers | Fixed Income Securities | FIN 4224 and more Quizzes Finance in PDF only on Docsity! Virginia Polytechnic Institute and State University The Pamplin College of Business Department of Finance FIN 4224 – Fixed Income Securities (Schneller-Fall ’08) Quiz 3 Question 1: Yesterday (September 16), the federal fund rate went as high as 4.25%. This is the day in which the Fed announced its intention to keep the target for this rate at 2.00%. This huge deviation from the target can be explained by the fact that a. banks don’t trust each other b. there aren’t too many banks with excess reserves out there c. the fed did not aggressively interfere in the fed funds market d. all of the above e. none of the above Answer: d Question 2: Keynesian call for the use of fiscal stimuli when a. the monetary base is expanding fast b. the monetary base is not expanding c. monetary policy fails to expand the money supply d. None of the above Answer: c Question 3: Monetarists object to the use of fiscal stimuli because a. They may cause inflation (at least in the short run) b. Government spending may be accompanied by political favoritism. c. Some fiscal stimuli (such as tax rebates) should not work where investors are rational. d. All of the above Answer: d Question 4: The Federal Reserves Bank is currently attempting to end the credit crunch by a. opening the discount window to investment banks b. removing the stigma associated with commercial bank borrowing from the discount window c. keeping the federal funds rate at 2.00% despite inflation worries d. All of the above Answer: d Question 5: Repurchase agreements are in essence a. Short-term secured lending agreements b. Long-term unsecured lending agreements c. Agreements to repurchase securities sold in the past d. None of the above Answer: a