1. A competitive bid in the Treasury securities auction market has all of the following characteristics except:
a. the bidder specifying the quantity of bills desired
b. the price the investor wishes to pay
c. large, institutional investors
d. bids for a maximum of $5,000,000

2. All of the following represents a characteristic of money market instruments except:
a. low default risk
b. guaranteed marketability
c. debt obligation

d. short term

3. The money market security with the lowest yield to the investor is likely to be:
a. a Treasury bill.
b. commercial paper.

c. agency issues.
d. negotiable CDs

4. All of the following money market participants are major investors in money market securities except:
a. Federal Reserve banks.
b. the U.S. Treasury.
c. commercial banks.

d. corporate business.

1. The money market is a dealer only market whereas the capital market trading is dominated by exchanges.
True
False

2. The money market provides liquidity; the capital market finances economic growth.
True
False


3. U.S. regulators have attempted to separate domestic banking risks and international banking risks.
True
False



4. The FDIC is the principal U.S. regulator of international banking activity.
True
False

1. International banking facilities (IBFs) operate as subsidiaries of bank holding companies.
True
False

2. Expropriation and nationalization are two methods of guaranteeing payment of U.S. bank loans to developing countries.
True
False

3. Pooling risk entails lending by several banks to a foreign borrower.
True
False


4. The FDIC is the principal U.S. regulator of international banking activity.
True
False

1. In commercial banks  __________ deposits are the most important source of funds; _________ loans represent the major investment category.


2. __________ deposits represent about two thirds of M1.


3. Though interest payments have been prohibited on demand deposits in the past, banks have paid __________ interest by offering "free" checking accounts, convenience, and other “perks”.


4. The largest amount outstanding of any one capital market security is _______________ followed by ______________ .


 

1. Several money market securities are listed below. Indicate whether each security represents a bank asset, a bank liability, or neither.
a. Banker's Acceptance ­­­­­­­­­­­­­­­___________
b. Negotiable Certificate of Deposit…._________
c. Treasury Bill …._______
d. Federal Funds Purchased ….___________


2. The bank investment portfolio provides both ___________and ___________ to the bank.


3. _____________deposits represent about two thirds of M1.


4. In commercial banks __________deposits are the most important source of funds; ___________________ loans represent the major investment category.

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