Banking and Finance Test EXAM Questions AND Correct Answers
A bond is sold at a face value of $200 with an annual yield of 3%. How much will the
bondholder have received in payment from the bond issuer after the bond has reached its
maturity date of one year? - ✔✔ $206
By the end of the nineteenth century, the United States banking system transitioned from
- ✔✔ a decentralized system of state banks to a centralized system of state and national
banks.
Determine whether each of the following is direct financing or indirect financing. - ✔✔
taking out a loan at a commercial bank) Indirect
selling stock on the stock market) Direct
investing in a mutual fund) Indirect
selling bonds on the capital market) Direct
Exchange-traded funds are popular investments that are easy to sell and have the
potential to earn significant income for investors. However, they fluctuate wildly in price,
increasing the likelihood that an investment fails. This investment features: - ✔✔ high
risk, high return, and good liquidity.
How does fractional-reserve banking influence the money supply in the United States? -
✔✔ Fractional-reserve banks issue depositor funds to borrowers, increasing the number
of claims made on the same dollars.
In a less-developed economy, cattle is widely accepted as payment for goods and services.
Nearly all goods and services are priced in terms of cattle; however, cows vary in quality,
become less valuable with age, and are difficult to move over long distances. Which of the
following functions of money do cattle provide? - ✔✔ 1) medium of exchange
2) unit of account
Investing contributes to economic growth in which of the following ways? - ✔✔ Investor
funds are loaned to firms, who use borrowed funds to purchase capital.
A bond is sold at a face value of $200 with an annual yield of 3%. How much will the
bondholder have received in payment from the bond issuer after the bond has reached its
maturity date of one year? - ✔✔ $206
By the end of the nineteenth century, the United States banking system transitioned from
- ✔✔ a decentralized system of state banks to a centralized system of state and national
banks.
Determine whether each of the following is direct financing or indirect financing. - ✔✔
taking out a loan at a commercial bank) Indirect
selling stock on the stock market) Direct
investing in a mutual fund) Indirect
selling bonds on the capital market) Direct
Exchange-traded funds are popular investments that are easy to sell and have the
potential to earn significant income for investors. However, they fluctuate wildly in price,
increasing the likelihood that an investment fails. This investment features: - ✔✔ high
risk, high return, and good liquidity.
How does fractional-reserve banking influence the money supply in the United States? -
✔✔ Fractional-reserve banks issue depositor funds to borrowers, increasing the number
of claims made on the same dollars.
In a less-developed economy, cattle is widely accepted as payment for goods and services.
Nearly all goods and services are priced in terms of cattle; however, cows vary in quality,
become less valuable with age, and are difficult to move over long distances. Which of the
following functions of money do cattle provide? - ✔✔ 1) medium of exchange
2) unit of account
Investing contributes to economic growth in which of the following ways? - ✔✔ Investor
funds are loaned to firms, who use borrowed funds to purchase capital.
