FIN 341 EXAM 2 COMPREHENSIVE STUDY
GUIDE 2026
◉ T-bills and commercial paper are sold:
a, with a stated coupon rate
b, at a discount from par value
c, at a premium about par value
d, with a stated coupon rate AND at a premium about par
e, None of these are correct.
Answer: B
◉ Assume investors require a 5 percent annualized return on a 180-
day T-bill with a par value of $10,000. The price investors would be
willing to pay is $____.
a.10,000
b.9,524
c.9,750
d. None of these are correct..
Answer: C
◉ Commercial paper has a maximum maturity of ____ days.
,a.45
b.270
c.360
d. None of these are correct..
Answer: B
◉ An investor buys commercial paper with a 60-day maturity for
$985,000. Par value is $1,000,000, and the investor holds it to
maturity. What is the annualized yield?
a.8.62 percent
b.8.78 percent
c.8.90 percent
d.9.14 percent.
Answer: D
◉ The federal funds market allows depository institutions to borrow
a. short-term funds from each other.
b. short-term funds from the Treasury.
c. long-term funds from each other.
d. long-term funds from the Federal Reserve.
e. short-term funds from the Treasury AND long-term funds from
the Federal Reserve..
,Answer: A
◉ When a bank guarantees a future payment to an exporting firm in
a foreign country, the financial instrument used is called
a. a repurchase agreement.
b. a negotiable CD.
c. a banker's acceptance.
d. commercial paper..
Answer: C
◉ The rate at which depository institutions effectively lend or
borrow funds from each other is the ____.
a. federal funds rate
b. discount rate
c. prime rate
d. repo rate.
Answer: A
◉ ____ are the most active participants in the federal funds market.
a. Savings and loan associations
b. Securities firms
c. Credit unions
, d. Commercial banks.
Answer: D
◉ Eurodollar deposits
a. are U.S. dollars deposited in the United States by European
investors.
b. are subject to interest rate ceilings.
c. have a relatively large spread between deposit and loan rates
(compared to the spread between deposits and loans in the United
States).
d. are not subject to reserve requirements..
Answer: D
◉ Treasury bills
a. have a maturity of up to five years.
b. have an active secondary market.
c. are commonly sold at par value.
d. commonly offer coupon payments..
Answer: B
◉ When an investor purchases a six-month (182-day) T-bill with a
$10,000 par value for $9,700, the Treasury bill discount is ____
percent.
GUIDE 2026
◉ T-bills and commercial paper are sold:
a, with a stated coupon rate
b, at a discount from par value
c, at a premium about par value
d, with a stated coupon rate AND at a premium about par
e, None of these are correct.
Answer: B
◉ Assume investors require a 5 percent annualized return on a 180-
day T-bill with a par value of $10,000. The price investors would be
willing to pay is $____.
a.10,000
b.9,524
c.9,750
d. None of these are correct..
Answer: C
◉ Commercial paper has a maximum maturity of ____ days.
,a.45
b.270
c.360
d. None of these are correct..
Answer: B
◉ An investor buys commercial paper with a 60-day maturity for
$985,000. Par value is $1,000,000, and the investor holds it to
maturity. What is the annualized yield?
a.8.62 percent
b.8.78 percent
c.8.90 percent
d.9.14 percent.
Answer: D
◉ The federal funds market allows depository institutions to borrow
a. short-term funds from each other.
b. short-term funds from the Treasury.
c. long-term funds from each other.
d. long-term funds from the Federal Reserve.
e. short-term funds from the Treasury AND long-term funds from
the Federal Reserve..
,Answer: A
◉ When a bank guarantees a future payment to an exporting firm in
a foreign country, the financial instrument used is called
a. a repurchase agreement.
b. a negotiable CD.
c. a banker's acceptance.
d. commercial paper..
Answer: C
◉ The rate at which depository institutions effectively lend or
borrow funds from each other is the ____.
a. federal funds rate
b. discount rate
c. prime rate
d. repo rate.
Answer: A
◉ ____ are the most active participants in the federal funds market.
a. Savings and loan associations
b. Securities firms
c. Credit unions
, d. Commercial banks.
Answer: D
◉ Eurodollar deposits
a. are U.S. dollars deposited in the United States by European
investors.
b. are subject to interest rate ceilings.
c. have a relatively large spread between deposit and loan rates
(compared to the spread between deposits and loans in the United
States).
d. are not subject to reserve requirements..
Answer: D
◉ Treasury bills
a. have a maturity of up to five years.
b. have an active secondary market.
c. are commonly sold at par value.
d. commonly offer coupon payments..
Answer: B
◉ When an investor purchases a six-month (182-day) T-bill with a
$10,000 par value for $9,700, the Treasury bill discount is ____
percent.
