FIN 364 DeVry Week 5 Homework

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FIN 364 DeVry Week 5 Homework

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FIN 364 DeVry Week 5 Homework

FIN364

FIN 364 DeVry Week 5 Homework

FIN 364 DeVry Week 5 Homework

  1. Question : (TCO 6)Which of the following is not a characteristic of money market instruments?
  • Short term to maturity
  • Small denominations
  • Low default risk
  • High marketability

Question 2. Question : (TCO 6) Small investors are likely to invest in the money market _____.

  • directly
  • locally
  • through banks
  • indirectly

Question 3. Question : (TCO 6) Which of the following may be a liability of a non-financial business corporation?

  • Commercial paper
  • Federal Funds
  • Treasury securities
  • Agency securities

Question 4. Question : (TCO 6) Which of the following money market rates is studied closely for indicators of changes in Federal Reserve monetary policy?

  • Federal Funds
  • Treasury bills
  • Commercial paper
  • Banker’s acceptances

Question 5. Question : (TCO 6) Issuers of commercial paper tend to be

  • large financial and nonfinancial firms.
  • firms with high credit risk.
  • small banks.
  • wealthy individuals.

Question 6. Question : (TCO 6) Banks invest in government securities for a variety of reasons except

  • income.
  • safety.
  • acceptable for collateral.
  • high relative yield.

Question 7. Question : (TCO 6) Which of the following money market instruments would typically be used in international transactions?

  • A Treasury bill
  • A banker’s acceptance
  • Commercial paper
  • A negotiable CD

Question 8. Question : (TCO 6) An important economic function of the U.S. government security dealer is to

  • underwrite Treasury securities.
  • “make a market” for Treasury securities.
  • support open market operations of the Federal Reserve.
  • All of the above

Question 9. Question : (TCO 6) Which of the following money market instruments is not sold on a discount basis?

  • Commercial paper
  • Negotiable certificates of deposit
  • Treasury bills
  • Banker’s acceptances

Question 10. Question : (TCO 6) Yields on three-month T-bills are more similar to

  • Two-year Treasury notes rates.
  • 90-day commercial paper rates.
  • federal funds rates.
  • Aaa-rated corporate bond rates.

Question 11. Question : (TCO 6) A non-competitive bid in the Treasury securities auction market is characterized by

  • the bidder specifying the quantity of bills desired.
  • the bid not exceeding a specific dollar amount.
  • the bidders paying a price equal to the weighted average price of all competitive bids accepted.
  • All of the above

Question 12. Question : (TCO 6) A repurchase agreement calls for

  • a firm to sell securities with the agreement to buy them back later at a higher price.
  • a firm to buy securities with the agreement to sell them back later at a higher price.
  • a firm to sell securities with the agreement to buy them back later at a lower price.
  • a firm to buy securities with the agreement to sell them back later at a lower price.

Question 13. Question : (TCO 6) The Wall Street Journal publishes T-bill price (bid/ask) based on the _____ rate; with the _____ rate provided as the quoted (ask) yield on the T-bill.

  • bond equivalent; bank discount
  • effective annual; bank discount
  • bank discount; bond equivalent
  • bank equivalent; bank discount

Question 14. Question : (TCO 6) A firm buys $1,000,000 of a 30-day commercial paper issue for $995,450. The bond equivalent yield on this commercial paper is _____.

  • 5.56%
  • 5.46%
  • 5.49%
  • 5.54%

Question 15. Question : (TCO 6) Calculate the bond equivalent yield on a 52-day $1,000,000 T-bill issue selling for 98.555% of its face value.

  • 10.85%
  • 10.75%
  • 10.54%
  • 10.29%