Question

16. Money market instruments issued by the U.S. Treasury are called (a) Treasury bills. (b) Treasury notes. (c) Treasury bonds. (d) Treasury strips. 17. The most influential participant(s) in the U.S. money market (a) is the Federal Reserve. (b) is the U.S. Treasury Department, (c) are the large money center banks. (d) are the investment banks that underwrite securities 18. Federal funds are (a) usually overnight investments. (b) borrowed by banks that have a deficit of reserves. (c) lent by banks that have an excess of reserves. (d) all of the above. (e) only (a) and (b) of the above 19. When inflation rose in the late 1970s, (a) consumers moved money out of money market mutual funds because their returns did not keep pace with inflation (b) banks solidified their advantage over money markets by offering higher deposit rates. (c) brokerage houses introduced highly popular money market mutual funds, which drew significant amounts of money out of bank deposits. (d) consumers were unable to take advantage of higher rates in money markets because of the requirement of large transaction sizes 20. (D) Securities that have an original maturity greater than one year are traded in capital markets. (II) The best known capital market securities are stocks and bonds. (a) (D) is true, (II) false. (b) (1) is false, (II) true. (c) Both are true. (d) Both are false 21. (1) Firms and individuals use the capital markets for long-term investments. (II) The capital markets provide an alternative to investment in assets such as real estate and gold (a) (1) is true, (II) false. (b) (I) is false, (II) true. (c) Both are true. (d) Both are false

Answer 1

16) a. Treasury Bills

17) b. Is the U.S. Treasury department

18)d. All of the above

19)c. Brokerage houses introduced highly popular money market mutual funds, which drew significant amounts of money out of bank deposit

20) c. Both are True

21) C. Both are true