Question 7: Instructions to the bank to shifts funds from your
account to that of the person or firm whose name is
written in the “Pay to the Order of” line.

Checks

Fiat Money

Commodity Money

Question 8: Electronic message to your bank to transfer funds
immediately, like a check

Debit Card

Credit Card

Checking Card

Question 9: Deferred payment
– Issuer makes payment for you
– You have to pay it back

Credit Card

Check Card

Debit Card

Question 10: Which of the following is happening to the future of money?

Unit of account: likely to remain

Means of payment: disappearing

Store of value: disappearing

All of the above

Question 11: The rate at which the general price level is increasing over time

Deflation

Inflation

Deflation Rate

Inflation Rate

Question 12: The measure of the inflation process

Inflation Rate

Deflation

Deflation Rate

Inflation

Question 13: A measure of the ease an asset can be turned into a means of payment (Money).

Liquidity

Inflation

Deflation

Question 14: Narrowest definition
Only most liquid assets

Question 15: Broader definition Includes assets not used as means of payment.

Question 16: When inflation is ____, money growth helps
forecast inflation.

High

Invisible

Low

Question 17: When inflation is ____, the relationship between it and money growth is not as close.

Invisible

Low

High

Question 18: Answers the question: "How much more would it cost for people to purchase today the same basket of goods and services that they actually bought at some fixed time in the past?“

It is the Fixed Weight Index

Inflation

CPI

Question 19: GDP or Personal Consumption Expenditure

Chain-Weight Index

Deflator

CPI

Question 20: Half way between fixed weight and a Deflator.

Chain Weight Index

Deflator

CPI

Question 21: Institution stands between lender and borrower.

Indirect Finance

Portfolio Finance

Direct Finance

Question 22: Borrowers sell securities directly to lenders in the financial markets

Direct Finance

Portfolio Finance

Indirect Finance

Question 23: A written legal obligation of one party to
transfer something of value, usually money, to another party at some future date, under certain conditions

Assets

Financial Instrument

Liabilities

Question 24: Uses of Financial Instruments:

All of the above

Transfer of Risk-Transfer risk from one person to another

Store of Value-Transfer purchasing power into the future

Means of Payment-Purchase goods and services

Question 25: Overcome the costs of complexity, makes them easier to understand

Easy

Standardization

Communicate Information

Question 26: Summarize essential information about issuer. Eliminate expense of collecting information

Easy

Standardization

Communicate Information

Question 27: Used to transfer resources
Examples: stocks and bonds

Underlying Financial Instruments

Derivative Financial Instruments

Overlying Financial Instruments

Question 28: Value derived from underlying instruments
Examples: Futures and options

Derivative Financial Instruments

Overlying Financial Instruments

Underlying Financial Instruments

Question 29: True/false: The size, timing, likelihood payment is made, and conditions under which payment is made all affect the value of financial instruments

True

False

N/A

Question 30: Financial Instrument A requires a large payment, you make the payment sooner, a payment is likely to be made, and you need the instrument badly.

Financial Instrument B requires a small payment, you will make the payment later, a payment is not likely to be made, and you don't need the instrument badly.

Which financial instrument is more valuable?

Both are the same

Neither are valuable

Question 31: Examples of stores of values for Financial Instruments:

Home Mortgages

Bonds

All of the above

Stocks

Bank Loans

Question 32: Financial Instruments used to transfer risk

All of the above

Insurance companies

Futures contracts

Options

Question 33: Places where financial instruments
are bought and sold.

Financial Markets

Financial Institutions

Financial Instruments

Question 34: Roles of Financial Markets include:

Risk Sharing-Provide individuals a place to buy and sell risk.

Information-Pool and communication information about issuers of financial instruments.

All of the above

Liquidity-Ensures owners can buy and sell financial instruments cheaply

Question 35: Buy and Sell Newly Issued Securities

Tertiary Financial Market

Secondary Financial Market

Primary Financial Market

Question 36: Trade Existing Securities

Secondary Financial Market

Primary Financial Market

Tertiary Financial Market

Question 37: Physical location where trading takes place

Centralized Exchange

Over The Counter Market

Electronic Communication Network

Question 38: Networks of dealers connected electronically

Electronic Communication Network

Over The Counter Market

Centralized Exchange

Question 39: Electronic networks where buyers and sellers interact directly.

Electronic Communication Network

Centralized Exchange

Over The Counter Network

Question 40: Financial claims are bought and sold for immediate
cash payment

Debt and Equity Markets

Derivative Markets

Futures Markets

Question 41: Financial claims based on underlying instruments are bought and sold for payment at a future date

Derivatives Markets

Debt and Equity Markets

Futures Markets

Question 42: Well functioning markets have:

Low Transaction Costs

Protect Investors

All of the above

Communicate Accurate Information

Question 43: Financial Institutions:

Reduce transactions cost by specializing in the issuance of standardized securities

All of the above

Issue short term liabilities and purchase long‐term loans.

Reduce information costs of screening and monitoring borrowers

Question 44: Assets for a Financial Institution

Savings, Options, Securities

Deposits, Insurance Policies

Bonds, Stocks, Loans, Real Estate

Question 45: Take deposits and make loans

Insurance Companies

Depository Institutions

Pension Funds

Security Firms

Finance Companies

Question 46: Accept premiums, pay out based on events

Government Sponsored Enterprises

Pension Funds

Insurance Companies

Security Firms

Finance Companies

Question 47: Invest contributions, provide payments
to retirees

Security Firms

Pension Funds

Finance Companies

Insurance Companies

Government sponsored enterprises

Question 48: Proved access to financial markets

Government Sponsored Enterprises

Security Firms

Finance Companies

Insurance Companies

Pension Funds

Question 49: Raise funds in financial markets, make loans

Security Firms

Government Sponsored Enterprises

Pension Funds

Financial Companies

Question 50: Raise funds in financial markets, make loans,
provide guarantees.

Pension Funds

Government Sponsored Enterprises

Security Firms

Finance Companies

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