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1) A bank that has (A-) rated debt will be able to issue bonds with yields that are below the U.S. Treasury Yield Curve. True False 2) Since the Federal Reserve stopped its "asset purchase" program in September of 2014 the fed funds rate has increased to 35 basis points. True False 3)The decrease in the interest rate from i1 to i2 can be explained by a) a decline in the expected price level. b) an increase in income. c) a decrease in money growth. d) an increase in money growth. 4) As Lehman Brothers failed in the autumn of 2008 rates on 30 day P-1 rated commercial paper spiked to 18% per year. True False 5) The spread between Baa rated bonds and Aaa rated bonds according to data at the Board of Governors has been below 50 basis points every month of 2014. This indicates that risk is being underpriced by banking institutions. True False 6) If a bank holding company is designated as a GSIB it will be able to use more leverage than a bank holding company than is not designated as a GSIB. True False 7) If the yield curve shifts up in (interest rates along the curve all change by the same number of basis points) and the bank is funded with liabilities that have shorter maturities than its assets; the value of the bank will decline. True False 8) On August 9th, 2007 the actual Fed Funds rate was 16 basis points above the target rate. True False 9) The Board of Governors of the Federal Reserve has designated 25 U.S. bank holding companies as is global systemically important banking organizations (GSIB). These institutions are now required to split up into smaller institutions. True False 10) If a bank manager believes that interest rates will begin to increase over the next three years as the Federal Reserve begins to drain reserves out of the banking system; bank managers who would like to protect the capital base of the bank should increase the difference between the duration of assets and liabilities. True False 11) The Federal Reserve's asset purchase program has been successful in bringing down mortgage rates. Mortgage rates (according to the data provided by the Board of Governors of the Federal Reserve) have fallen from 6.48% in August of 2008 to 3.35% in November of 2012. True False 12) The demand for money by non bank businesses and households is inversely related to the interest rates on treasury securities. This means that as interest rates on Treasury securities declines the public will be more willing to hold money. I f the public reduces its demand for money this would cause interest rates to: a) remain the same b) fall c) rise d) gyrate 13) Bank X finances long term interest paying real estate assets with long term liabilities. If short term interest rates begin to rise the earnings of the bank will: (Assume that all interest receipts are swept into money market securities.) a) Become highly uncertain b) Decrease c) Increase d) Remain unchanged 14) On July 30th 2009, The Federal Reserve through the Federal Reserve Bank of New York purchased $6.496 billion of Treasury Securities. This open market purchase of securities will: a) Shrink the money supply b) Increase interest rates to small businesses c) Increase the debt of the U.S.government d) Increase bank reserves in the Federal Reserve system 15) Managers of significantly undercapitalized banks are able to raise interest rates on deposits as high as they choose to attract funds that uninsured depositors are not willing to supply. True False 16) The Fed Funds rate was less volatile between 8/9/2007 and 10/1/2007 than between 6/1/2007 and 8/1/2007 because the Fed was buying more securities at the end of August than at the beginning of June. True False 17) According to data of the Board of Governors of the Federal Reserve interest rate on 30 year mortgages have been increasing since June of 2014. This can be explained by investors anticipating the termination of the Feds asset purchase program. True False
Assuming that the two investments are equally risky, which one should Mike recommend? Why?
Alter Bridge Mfg., Inc., is currently operating at only 85 percent of fixed asset capacity. Current sales are $760,000. How fast can sales grow before any new fixed assets are needed?
What is a company's fundamental, or intrinsic, value? What might cause a company's intrinsic value to be different than its actual market value?
classify each item as an asset liability common stock revenue or expense.a issuance of ownership sharesb land
From the first e-Activity, describe a situation where the lease agreement would make sound business sense from the perspective of the lessee. Explain your rationale.
suppose you own 2000 common shares of laurence incorporated. the eps is 10.00 the dps is 3.00 and the stock sells for
The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.6 million and net plant and equipment equals $2.1 million.
consider an investment that pays 1000 certain at the end of each of the nest four years. if the investment costs 3500
rucci inc. is considering a project that would require an initial investment of 462000 and would have a useful life of
Currently, you can exchange $100 for €97.25. The inflation rate in Euroland is expected to be 3.8 percent as compared to 2.1 percent in the U.S. Assuming that relative purchasing power parity exists, what should the exchange rate be four years fro..
Dyl Pickle Inc. had credit sales of $3,600,000 last year and its days sales outstanding was DSO = 35 days. What was its average receivables balance, based on a 365-day year.
1. at a firms quarterly dividend meeting held april 9 the directors declared a 0.50 per share cash dividend for the
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