FIN 122 Exam 1 Study Guide

The item on the assets side of a bank’s balance sheet that represents the largest proportion of bank assets is

The ___ is primarily responsible for the amount of money that is created, although most of the money is depos. instit.

A debt security created by pooling together a group of mortgage loans

One of the most significant functions of the financial system is the creation of money, which is a medium of exchange

The principal assets of banks do NOT include

Long-run inflation expectations in the capital markets can be estimated by:

Equilibrium interest rate is the tax rate that equates the demand for and supply of loanable funds

__________ are where debt securities of one year or less are issued or traded

The basic price that equates the demand for and supply of loanable funds in the financial markets is the ___ :

Financial environment is the country or countries being studied

The principal liabilities of all depository institutions are

Investment banking firms sell shares to businesses and invest the pooled proceeds in corporate and government securities

The basic sources of loanable funds are:

___ states that interest rates are a function of the supply and demand for loanable funds

open-end investment company that issues an unlimited number of shares to investors and use pooled proceeds to buy secur.

As interest rates rise, the prices of existing bonds will:

In general, the effective rate of interest on a discount loan

If $5,000 is borrowed on a discount basis and the rate is 10%, the annual percentage interest rate on this loan would be

As the economy begins moving out of a recessionary period, the yield curve is generally:

It is illegal for individuals to own Treasury notes in this country

nominal rate=11%, risk-free rate=2%, DP=4%, LP=.5%, MP=1.5%, what is the IP?

The 07/08 financial crisis and 08/09 Great Recession led to the passage of Dodd-Frank Wall Street Reform and Con. Pro. A

When referring to an “upward sloping” yield curve, interest rates:

Receiving one dollar today has the same value as receiving one dollar in one year

Reasons that banks become insolvent include all of the following except

___ accept the savings of individuals and lend pooled savings to individuals primarily in the form of mortgage loans

Junk bonds and high-yield bonds are the same thing

Personal finance is the study of how growth-driven performance-focused, early-stage firms raise financial capital and...

___ provide the record-keeping mechanism for showing ownership of the financial instruments used in the flow of funds

involves the marketing of securities, the analysis of securities, and the management of investment risk thru portfolio

Finance has its origins in:

An increase in the demand for loanable funds, holding supply constant, will cause interest rates to:

Inflation caused by an increase in the money supply is called:

default risk premiums on Baa corporate bonds are generally better indicators of investor pessimism or optimism

$1,000 invested today at 6% interest would be worth ________ one year from now

__ sell or market new securities issued by businesses to individual and investors, where __ firms assist indiv. securit.

A mortgage is a loan backed by real property in the form of buildings and houses

A government securities issued with maturities up to one year

The interest rate is the basic price that equates the demand for supply of loanable funds in the financial markets

The Federal Reserve Act of 1913 created a system of central banks in the United States

The major factor that determines the volume of savings, corporate as well as individual, is the:

The federal debt is owned primarily by:

The principal assets of savings banks are

The primary types of assets on a bank’s balance sheet include cash, securities, and loans

When referring to a “downward sloping” yield curve:

The demand for loanable funds comes from all sectors of the economy

Economists use a __ framework to explain the prices and quantities of goods and services are determined in a econ system

orga. provides loans directly to consumers and businesses or aid individuals in obtaining financing for durable goods is

reaction to the then developing 07-09 financial crisis, short-term interest rates__ sharply and were __ than __ percent

organization received contributions from employees or employers and invests the proceeds on behalf of the employees is

Financial markets encourage investment by:

Finance is the study of how individuals, institutions, and businesses acquire, spend and manage money and other fin. re.

Which of the following are not thrift institutions?

Historically, one of the biggest borrowers has been the federal government

The six principles of finance include: money=value, high returns=more risk, diverse=reduce risk, F. M.=efficient...

Demand-pull inflation may be defined as an excessive demand for goods and services during periods of economic expansion

Percent annual rate on a discount loan

Commercial banks accept deposits and makes loans to individuals and businesses

long-term govt securities yield 9%, 5 year Treasury securities yield 8.5%, and 1 year Treasury bills yield 8%. yield cu

The financial environment

Financial diversification is where the individual savings are accumulated in depository institutions and lent/invested

Depository institutions include commercial banks, savings and loans, mutual savings banks, and credit unions

The riskier the investment, the lower the return

response to the financial crisis of 07-09, the yield spread between AAA corporate bonds and treasury bonds:

In an inflationary period, interest rates have a tendency to: