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FIN 341 Exam 2 WITH COMPLETE EXAM QUESTIONS
AND CORRECT VERIFIED ANSWERS/ ALREADY GRADED
A+ (MOST RECENT!!)
Which of the following is NOT a money market security?
a, Treasury bill
b, Negotiable certificate of deposit
c, Common stock
d, Federal funds ......ANSWER......C
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
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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
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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.
FIN 341 Exam 2 WITH COMPLETE EXAM QUESTIONS
AND CORRECT VERIFIED ANSWERS/ ALREADY GRADED
A+ (MOST RECENT!!)
Which of the following is NOT a money market security?
a, Treasury bill
b, Negotiable certificate of deposit
c, Common stock
d, Federal funds ......ANSWER......C
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
,2|Page
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
, 3|Page
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.
