Money, Banking, and the Financial System, 5th Edition
Glenn Hubbard | Anthony Patrick O'Brien
TEST BANK
Includes All Chapters (1 to 18 )
WHAT'S INCLUDED
• Multiple Choice Questions (MCQs)
• Short Answer Questions
• Essay / Discussion Questions
• Conceptual Questions
• Application-Based Questions
• Analytical Exercises
• Learning Objective-Based Assessment Questions
• Complete Answer Keys Included
• Chapter-by-Chapter Coverage
• Covers All 18 Chapters
,Money, Banking, and the Financial System, 5e (Hubbard/O'Brien)
Chapter 1 Introducing Money and the Financial System
1.1 Key Components of the Financial System
1) The financial system is primarily a means by which
A) funds are transferred from savers to borrowers.
B) money is put into circulation.
C) the government puts into operation its plans for the economy.
D) business firms distribute their goods.
Answer: A
Diff: 1
Topic: financial system
Objective: Identify the key components of the financial system
2) Which of the following is NOT a financial asset?
A) a bond issued by Google
B) Wells Fargo Bank
C) a home mortgage loan
D) a certificate of deposit
Answer: B
Diff: 1
Topic: financial assets
Objective: Identify the key components of the financial system
3) If you buy a bond issued by Intel, the bond is a(n)
A) liability to Intel and an asset to you.
B) liability to you and an asset to Intel.
C) liability to both you and Intel.
D) asset to both you and Intel.
Answer: A
Diff: 2
Topic: financial assets
Objective: Identify the key components of the financial system
4) Which of the following forms the largest share of household holdings of financial assets?
A) corporate stocks
B) bonds
C) pension entitlements
D) equity in unincorporated businesses
Answer: C
Diff: 1
Topic: financial assets
Special Feature: Apply the Concept: What Do People Do with Their Savings?
Objective: Identify the key components of the financial system
1
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,5) From 1978 to 2024, the percentage of wealth held by households decreased for all of the following
categories of assets EXCEPT
A) corporate stocks.
B) bonds.
C) deposits.
D) equity in unincorporated businesses.
Answer: A
Diff: 1
Topic: financial assets
Special Feature: Apply the Concept: What Do People Do with Their Savings?
Objective: Identify the key components of the financial system
6) Which of the following is NOT a key financial service provided by the financial system?
A) risk sharing
B) profitability
C) liquidity
D) information
Answer: B
Diff: 1
Topic: financial system
Objective: Identify the key components of the financial system
7) Economists define risk as
A) the difference between the interest rate borrowers pay and the interest rate lenders receive.
B) the chance that the value of financial assets will change from what you expect.
C) the ease with which an asset can be exchanged for other assets or for goods and services.
D) the difference between the return on common stock and the return on corporate bonds.
Answer: B
Diff: 1
Topic: financial system
Objective: Identify the key components of the financial system
8) Economists define liquidity as
A) the difference between the return on the asset and the return on a long-term U.S. Treasury bond.
B) the fraction the asset makes up of an investor's portfolio.
C) the ease with which an asset can be exchanged for money.
D) the difference between the total demand for an asset and the total supply of the asset.
Answer: C
Diff: 1
Topic: financial system
Objective: Identify the key components of the financial system
2
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, 9) Which of the following assets is the most liquid?
A) money market mutual fund
B) computer
C) washing machine
D) U.S. Treasury bond
Answer: A
Diff: 2
Topic: financial system
Objective: Identify the key components of the financial system
10) By providing and communicating information, the financial system
A) reduces the difference between the return on three-month U.S. Treasury bills and the return on thirty-
year U.S. Treasury bonds.
B) relieves individual savers from the necessity of searching out individual borrowers.
C) eliminates the risk in investing in the stock market.
D) guarantees investors a reasonable return on their money.
Answer: B
Diff: 2
Topic: financial system
Objective: Identify the key components of the financial system
11) Financial securities that represent partial ownership of a corporation are known as
A) bonds.
B) stocks.
C) coupons.
D) dividends.
Answer: B
Diff: 1
Topic: financial assets
Objective: Identify the key components of the financial system
12) Securitization is the process of
A) issuing stocks to finance capital spending.
B) issuing bonds to finance purchases of equipment and structures.
C) reducing risk by decreasing corporate debt loads.
D) converting loans into securities.
Answer: D
Diff: 1
Topic: financial assets
Objective: Identify the key components of the financial system
3
Copyright © 2027
Glenn Hubbard | Anthony Patrick O'Brien
TEST BANK
Includes All Chapters (1 to 18 )
WHAT'S INCLUDED
• Multiple Choice Questions (MCQs)
• Short Answer Questions
• Essay / Discussion Questions
• Conceptual Questions
• Application-Based Questions
• Analytical Exercises
• Learning Objective-Based Assessment Questions
• Complete Answer Keys Included
• Chapter-by-Chapter Coverage
• Covers All 18 Chapters
,Money, Banking, and the Financial System, 5e (Hubbard/O'Brien)
Chapter 1 Introducing Money and the Financial System
1.1 Key Components of the Financial System
1) The financial system is primarily a means by which
A) funds are transferred from savers to borrowers.
B) money is put into circulation.
C) the government puts into operation its plans for the economy.
D) business firms distribute their goods.
Answer: A
Diff: 1
Topic: financial system
Objective: Identify the key components of the financial system
2) Which of the following is NOT a financial asset?
A) a bond issued by Google
B) Wells Fargo Bank
C) a home mortgage loan
D) a certificate of deposit
Answer: B
Diff: 1
Topic: financial assets
Objective: Identify the key components of the financial system
3) If you buy a bond issued by Intel, the bond is a(n)
A) liability to Intel and an asset to you.
B) liability to you and an asset to Intel.
C) liability to both you and Intel.
D) asset to both you and Intel.
Answer: A
Diff: 2
Topic: financial assets
Objective: Identify the key components of the financial system
4) Which of the following forms the largest share of household holdings of financial assets?
A) corporate stocks
B) bonds
C) pension entitlements
D) equity in unincorporated businesses
Answer: C
Diff: 1
Topic: financial assets
Special Feature: Apply the Concept: What Do People Do with Their Savings?
Objective: Identify the key components of the financial system
1
Copyright © 2027
,5) From 1978 to 2024, the percentage of wealth held by households decreased for all of the following
categories of assets EXCEPT
A) corporate stocks.
B) bonds.
C) deposits.
D) equity in unincorporated businesses.
Answer: A
Diff: 1
Topic: financial assets
Special Feature: Apply the Concept: What Do People Do with Their Savings?
Objective: Identify the key components of the financial system
6) Which of the following is NOT a key financial service provided by the financial system?
A) risk sharing
B) profitability
C) liquidity
D) information
Answer: B
Diff: 1
Topic: financial system
Objective: Identify the key components of the financial system
7) Economists define risk as
A) the difference between the interest rate borrowers pay and the interest rate lenders receive.
B) the chance that the value of financial assets will change from what you expect.
C) the ease with which an asset can be exchanged for other assets or for goods and services.
D) the difference between the return on common stock and the return on corporate bonds.
Answer: B
Diff: 1
Topic: financial system
Objective: Identify the key components of the financial system
8) Economists define liquidity as
A) the difference between the return on the asset and the return on a long-term U.S. Treasury bond.
B) the fraction the asset makes up of an investor's portfolio.
C) the ease with which an asset can be exchanged for money.
D) the difference between the total demand for an asset and the total supply of the asset.
Answer: C
Diff: 1
Topic: financial system
Objective: Identify the key components of the financial system
2
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, 9) Which of the following assets is the most liquid?
A) money market mutual fund
B) computer
C) washing machine
D) U.S. Treasury bond
Answer: A
Diff: 2
Topic: financial system
Objective: Identify the key components of the financial system
10) By providing and communicating information, the financial system
A) reduces the difference between the return on three-month U.S. Treasury bills and the return on thirty-
year U.S. Treasury bonds.
B) relieves individual savers from the necessity of searching out individual borrowers.
C) eliminates the risk in investing in the stock market.
D) guarantees investors a reasonable return on their money.
Answer: B
Diff: 2
Topic: financial system
Objective: Identify the key components of the financial system
11) Financial securities that represent partial ownership of a corporation are known as
A) bonds.
B) stocks.
C) coupons.
D) dividends.
Answer: B
Diff: 1
Topic: financial assets
Objective: Identify the key components of the financial system
12) Securitization is the process of
A) issuing stocks to finance capital spending.
B) issuing bonds to finance purchases of equipment and structures.
C) reducing risk by decreasing corporate debt loads.
D) converting loans into securities.
Answer: D
Diff: 1
Topic: financial assets
Objective: Identify the key components of the financial system
3
Copyright © 2027
