Test Bank For Financial Markets and Institutions, 7th Edition: Frederic S. Mishkin Download PDF Full Chapter
Test Bank For Financial Markets and Institutions, 7th Edition: Frederic S. Mishkin Download PDF Full Chapter
Test Bank For Financial Markets and Institutions, 7th Edition: Frederic S. Mishkin Download PDF Full Chapter
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Test Bank for Financial Markets and Institutions, 7th
Edition: Frederic S. Mishkin
Full download link at: https://testbankbell.com/product/test-bank-for-financial-markets-
and-institutions-7th-edition-frederic-s-mishkin/
Financial Markets and Institutions, 7e (Mishkin)
Chapter 1 Why Study Financial Markets and Institutions?
3) Markets in which funds are transferred from those who have excess funds available to those who have
a shortage of available funds are called
A) commodity markets.
B) funds markets.
C) derivative exchange markets.
D) financial markets.
Answer: D
Question Status: Previous Edition
4) 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
Question Status: Previous Edition
6) Interest rates are important to financial institutions since an interest rate increase ________ the cost of
acquiring funds and ________ the income from assets.
A) decreases; decreases
B) increases; increases
C) decreases; increases
D) increases; decreases
Answer: B
Question Status: Previous Edition
8) Compared to interest rates on long-term U.S. government bonds, interest rates on ________ fluctuate
more and are lower on average.
A) medium-quality corporate bonds
B) low-quality corporate bonds
C) high-quality corporate bonds
D) three-month Treasury bills
E) none of the above
Answer: D
Question Status: Previous Edition
9) Compared to interest rates on long-term U.S. government bonds, interest rates on three-month
Treasury bills fluctuate ________ and are ________ on average.
A) more; lower
B) less; lower
C) more; higher
D) less; higher
Answer: A
Question Status: Previous Edition
2
11) Stock prices since the 1980s have been
A) relatively stable, trending upward at a steady pace.
B) relatively stable, trending downward at a moderate rate.
C) extremely volatile.
D) unstable, trending downward at a moderate rate.
Answer: C
Question Status: Previous Edition
12) The largest one-day drop in the history of the American stock markets occurred in
A) 1929.
B) 1987.
C) 2000.
D) 2001.
Answer: B
Question Status: Previous Edition
15) (I) Debt markets are often referred to generically as the bond market.
(II) A bond is a security that is a claim on the earnings and assets of a corporation.
A) (I) is true, (II) false.
B) (I) is false, (II) true.
C) Both are true.
D) Both are false.
Answer: A
Question Status: Previous Edition
3
16) (I) A bond is a debt security that promises to make payments periodically for a specified period of
time.
(II) A stock is a security that is a claim on the earnings and assets of a corporation.
A) (I) is true, (II) false.
B) (I) is false, (II) true.
C) Both are true.
D) Both are false.
Answer: C
Question Status: Previous Edition
20) From 1980 to early 1985 the dollar ________ in value, thereby benefiting American ________
A) appreciated; businesses.
B) appreciated; consumers.
C) depreciated; businesses.
D) depreciated; consumers.
Answer: B
Question Status: Previous Edition
4
21) Money is defined as
A) anything that is generally accepted in payment for goods and services or in the repayment of debt.
B) bills of exchange.
C) a riskless repository of spending power.
D) all of the above.
E) only A and B of the above.
Answer: A
Question Status: Previous Edition
22) The organization responsible for the conduct of monetary policy in the United States is the
A) Comptroller of the Currency.
B) U.S. Treasury.
C) Federal Reserve System.
D) Bureau of Monetary Affairs.
Answer: C
Question Status: Previous Edition
25) Economists group commercial banks, savings and loan associations, credit unions, mutual funds,
mutual savings banks, insurance companies, pension funds, and finance companies together under the
heading financial intermediaries. Financial intermediaries
A) act as middlemen, borrowing funds from those who have saved and lending these funds to others.
B) produce nothing of value and are therefore a drain on society's resources.
C) help promote a more efficient and dynamic economy.
D) do all of the above.
E) do only A and C of the above.
Answer: E
Question Status: Previous Edition
5
26) Economists group commercial banks, savings and loan associations, credit unions, mutual funds,
mutual savings banks, insurance companies, pension funds, and finance companies together under the
heading financial intermediaries. Financial intermediaries
A) act as middlemen, borrowing funds from those who have saved and lending these funds to others.
B) play an important role in determining the quantity of money in the economy.
C) help promote a more efficient and dynamic economy.
D) do all of the above.
E) do only A and C of the above.
Answer: D
Question Status: Previous Edition
27) Banks are important to the study of money and the economy because they
A) provide a channel for linking those who want to save with those who want to invest.
B) have been a source of financial innovation that is expanding the alternatives available to those
wanting to invest their money.
C) are the only financial institution to play a role in determining the quantity of money in the economy.
D) do all of the above.
E) do only A and B of the above.
Answer: E
Question Status: Previous Edition
28) Banks, savings and loan associations, mutual savings banks, and credit unions
A) are no longer important players in financial intermediation.
B) have been providing services only to small depositors since deregulation.
C) have been adept at innovating in response to changes in the regulatory environment.
D) all of the above.
E) only A and C of the above.
Answer: C
Question Status: Previous Edition
29) (I) Banks are financial intermediaries that accept deposits and make loans.
(II) The term "banks" includes firms such as commercial banks, savings and loan associations, mutual
savings banks, credit unions, insurance companies, and pension funds.
A) (I) is true, (II) false.
B) (I) is false, (II) true.
C) Both are true.
D) Both are false.
Answer: A
Question Status: Previous Edition
30) ________ was the stock market's worst one-day drop in history in the 1980s.
A) Black Friday
B) Black Monday
C) Blackout Day
D) none of the above
Answer: B
Question Status: Previous Edition
33) A security
A) is a claim or price of property that is subject to ownership.
B) promises that payments will be made periodically for a specified period of time.
C) is the price paid for the usage of funds.
D) is a claim on the issuer's future income.
Answer: D
Question Status: Previous Edition
37) From the peak of the high-tech bubble in 2000, the stock market ________ by over ________ by
late 2002.
A) collapsed; 75%
B) rose; 35%
7
C) collapsed; 30%
D) rose; 50%
Answer: C
Question Status: New Question
1.2 True/False
3) A stock is a debt security that promises to make periodic payments for a specific period of time.
Answer: FALSE
Question Status: Previous Edition
4) Monetary policy affects interest rates but has little effect on inflation or business cycles.
Answer: FALSE
Question Status: Previous Edition
5) The government organization responsible for the conduct of monetary policy in the United States is
the U.S. Treasury.
Answer: FALSE
Question Status: Previous Edition
7) Holding everything else constant, as the dollar weakens vacations abroad become less attractive.
Answer: TRUE
Question Status: Previous Edition
8) In recent years, financial markets have become more stable and less risky.
Answer: FALSE
Question Status: Previous Edition
9) Financial innovation has provided more options to both investors and borrowers.
Answer: TRUE
Question Status: Previous Edition
10) A financial intermediary borrows funds from people who have saved.
Answer: TRUE
Question Status: Previous Edition
11) Holding everything else constant, as the dollar strengthens foreigners will buy more U.S. exports.
Answer: FALSE
8
Question Status: Previous Edition
13) Financial institutions are among the largest employers in the country and frequently pay very high
salaries.
Answer: TRUE
Question Status: Previous Edition
16) In recent years, financial markets have become more risky. However, only a limited number of tools
(such as derivatives) are available to assist in managing this risk.
Answer: FALSE
Question Status: New Question
1.3 Essay
1) Have interest rates been more or less volatile in recent years? Why?
Question Status: Previous Edition
3) How does the value of the dollar affect the competitiveness of American businesses?
Question Status: Previous Edition
9
6) What is money?
Question Status: Previous Edition
8) Why is the stock market so important to individuals, firms, and the economy?
Question Status: Previous Edition
10) If you are planning a vacation to Europe, do you prefer a strong dollar or weak dollar relative to the
euro? Why?
Question Status: New Question
10
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