Interest Rates

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Question 1

Free

Multiple Choice

Which one of the following is the interest rate that the largest commercial banks charge their most creditworthy corporate customers for short-term loans?

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discount

Federal funds

prime

bid

call money

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Question 2

Free

Multiple Choice

Which one of the following terms applies to a rate that serves as an indicator of future trends?

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bellwether

prime

call

discount

nominal

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Question 3

Free

Multiple Choice

Which one of the following rates is the rate that banks charge each other for overnight loans of $1 million or more?

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institutional

financial overnight

Federal funds

monetary

daily

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Question 4

Free

Multiple Choice

Which one of the following rates is the rate a commercial bank must pay the Federal Reserve to borrow reserves overnight?

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discount

Fed funds

financial overnight

daily

institutional

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Question 5

Free

Multiple Choice

Which one of the following rates is used by brokerage firms as the basis for determining margin loan rates?

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discount

Fed funds

prime

brokerage

call money

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Question 6

Multiple Choice

Which one of the following is unsecured debt issued by corporations on a short-term basis?

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commercial paper

interbank offered loan

equipment bond

collateralized debt

banker's acceptance

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Question 7

Multiple Choice

A $100,000 or more term deposit at a bank is called which one of the following?

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interbank deposit

bankers' acceptance

collateralized deposit

call bond

certificate of deposit

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Question 8

Multiple Choice

Which one of the following describes a banker's acceptance?

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agreement to loan money in exchange for an agreement by the borrower to offer an asset as collateral

written agreement to loan funds in the future once the loan terms have been accepted

postdated check with payment guaranteed by a bank

agreement by a bank to provide short-term funds for the construction phase of a project

the sale of a security by a bank accompanied by an agreement to repurchase the security the following day

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Question 9

Multiple Choice

Which one of the following is defined as U.S.dollar-denominated deposits held in a foreign bank?

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Eurodollars

foreign funds

certificates of deposits

banker's acceptances

T-bills

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Question 10

Multiple Choice

Which one of the following abbreviations is the interest rate that international banks charge one another for overnight Eurodollar loans?

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EIOEL

EUDOR

LEDOR

EDBOR

LIBOR

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Question 11

Multiple Choice

Which one of the following is a short-term debt instrument issued by the U.S.Treasury?

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Freddie Mac

Ginnie Mae

T-note

T-bill

T-bond

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Question 12

Multiple Choice

A pure discount security is an interest-bearing asset that pays:

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interest on a semi-annual basis.

interest on an annual basis.

a single payment at maturity.

no interest.

a variable-rate interest.

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Question 13

Multiple Choice

Which one of the following is a basis point?

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1 percent

0.1 percent

0.01 percent

0.001 percent

0.0001 percent

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Question 14

Multiple Choice

Which one of the following is the method used to quote interest rates on money market instruments?

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short basis

floating-rate basis

call rate method

bank discount basis

prime rate method

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Question 15

Multiple Choice

The Treasury yield curve is a graph which plots Treasury yields against which one of the following?

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corporate bond yields

Fed funds rate

maturities

inflation rates

S&P 500 yield

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Question 16

Multiple Choice

Which one of the following is defined as the relationship between the interest rate on default-free,pure discount bonds and the time to maturity?

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discount rate curve

Treasury yield curve

risk premium structure

term structure of interest rates

market interest rate curve

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Question 17

Multiple Choice

Pure discount bonds which are created by separating the interest and principal payments from U.S.Treasury bonds are called U.S.Treasury:

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notes.

bills.

STRIPS.

SWAPS.

tax-exempts.

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Question 18

Multiple Choice

Which one of the following rates is the normally quoted rate?

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nominal

deflated

inflated

real

indexed

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Question 19

Multiple Choice

Which one of the following best describes a real interest rate?

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current rate on a U.S. Treasury bill

nominal rate minus the risk-premium on an individual security

market return minus the risk-free rate

nominal rate minus inflation

historical rate rather than a projected rate

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Question 20

Multiple Choice

Which one of the following best describes the Fisher hypothesis?

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long-term interest rates are based on current inflation rates

nominal interest rates are inversely related to real rates

interest rates tend to be higher than inflation rates

nominal interest rates tend to be relatively constant over time

future interest rates must be higher than current interest rates

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