QUESTION 11

Question

As compared to a market-oriented system, under a bank-centered system, the banks
a. have more information about their clients.
b. face a market for securities that is very strong.
c. are hesitant to make large loans due to insufficient information.
d. have little power against larger, stronger corporations.
e. must charge lower interest rates.
2 points

QUESTION 12
Commerce Bank offers a service called Commerce Online, in which customers can use their home computers to complete banking transactions and pay bills electronically. Which form of electronic money does this represent?
a. A credit card
b. A wire transfer
c. A stored value card
d. A debit card
e. An Internet payment
2 points

QUESTION 13
Commodity money differs from our current systems of coins and notes because commodity money is
a. valued for its beauty, not its utility.
b. a store of value.
c. a unit of account.
d. valuable for its own sake.
e. a standard of deferred payment.
2 points

QUESTION 14
Emily uses an online system to place a sell order that must be executed when IBM stock reaches $100 per share. This type of transaction is called a(n)
a. cancellation.
b. limit order.
c. primary order.
d. intermediation.
e. market order.
2 points

QUESTION 15
Financial institutions differ from nonfinancial institutions in all of the following ways except
a. bank performance is more sensitive to interest rates.
b. banks have relatively few nonfinancial assets.
c. government regulation of banks is very heavy.
d. banks have more equity than debt.
e. banks have access to inside information about businesses.
2 points

QUESTION 16
In a market-oriented system, banks compete with securities markets as sources of funds for corporations. Therefore,
a. corporations develop close relationships their banks.
b. banks have more power than in a bank-centered system.
c. banks have to make more loans in order to stay competitive.
d. banks have some degree of monopoly power.
e. the competition causes interest rates to be lower.
2 points

QUESTION 17
In a market-oriented system, the role of securities markets dominate the financial system, rather than banking institutions.
True

False

2 points

QUESTION 18
The distinctions between M1, M2, M3, and L depend on the
a. money’s accessibility to consumers.
b. interest rate charged for each.
c. owners of the money, such as banks, the government, or consumers.
d. form of the money, whether paper or electronic.
e. velocity of the money.
2 points

QUESTION 19
The University of Georgia allows students to buy a BulldogBucks card, which can store value and then be used for payment at the dining hall, copy center, vending machines, laundry, and retail shops. This form of electronic money is called a(n)
a. stored value card.
b. Internet payment.
c. credit card.
d. wire transfer.
e. debit card.
2 points

QUESTION 20
The main use for capital market instruments is
a. avoiding corporate income tax.
b. increasing managers’ personal wealth.
c. rewarding faithful shareholders.
d. taking risks in exchange for potentially high returns.
e. temporarily parking money for the short-term.
2 points

QUESTION 21
The Fisher effect claims that
a. high consumer spending leads to inflation.
b. high interest rates lead to inflation.
c. inflation leads to higher wages as well as prices.
d. lenders charge higher rates in times of inflation.
e. inflation is an important component of business risk.
2 points

QUESTION 22
The Federal Reserve establishes operating targets, which will result in the achievement of intermediate targets, which will ultimately lead to the achievement of economic goals. Which of the following lists represent economic goals?
a. Bank reserve levels; federal funds rate
b. Open-market operations; the discount rate; reserve requirements
c. Productivity (GDP); employment; international trade
d. Long-term interest rates; short-term interest rates
e. Money supply; bank credit
2 points

QUESTION 23
Term life insurance
a. increases in value over time.
b. is inexpensive compared to other life insurance policies.
c. offers savings and insurance in one policy.
d. is offered only to groups of individuals.
e. pays benefits in a stream rather than a lump sum.
2 points

QUESTION 24
Su-Hyon says, “I want a retirement program that will pay me a guaranteed amount annually until my death.” Which type of program would you recommend to Su-Hyon?
a. An IRA
b. A defined contribution plan
c. A private pension plan
d. A funded pension plan
e. A defined benefit plan
2 points

QUESTION 25
A cash flow budget shows
a. the interest rate you paid on credit cards.
b. the inflow and outflow of money.
c. your total net worth.
d. the appreciation of your assets.
e. the mix of assets and liabilities.

Answer 1

Here are the answers to each of the questions provided:

QUESTION 11 As compared to a market-oriented system, under a bank-centered system, the banks a. have more information about their clients.

QUESTION 12 Commerce Bank offers a service called Commerce Online, in which customers can use their home computers to complete banking transactions and pay bills electronically. Which form of electronic money does this represent? e. An Internet payment

QUESTION 13 Commodity money differs from our current systems of coins and notes because commodity money is d. valuable for its own sake.

QUESTION 14 Emily uses an online system to place a sell order that must be executed when IBM stock reaches $100 per share. This type of transaction is called a(n) b. limit order.

QUESTION 15 Financial institutions differ from nonfinancial institutions in all of the following ways except d. banks have more equity than debt.

QUESTION 16 In a market-oriented system, banks compete with securities markets as sources of funds for corporations. Therefore, e. the competition causes interest rates to be lower.

QUESTION 17 In a market-oriented system, the role of securities markets dominate the financial system, rather than banking institutions. True

QUESTION 18 The distinctions between M1, M2, M3, and L depend on the a. money’s accessibility to consumers.

QUESTION 19 The University of Georgia allows students to buy a BulldogBucks card, which can store value and then be used for payment at the dining hall, copy center, vending machines, laundry, and retail shops. This form of electronic money is called a(n) a. stored value card.

QUESTION 20 The main use for capital market instruments is d. taking risks in exchange for potentially high returns.

QUESTION 21 The Fisher effect claims that d. lenders charge higher rates in times of inflation.

QUESTION 22 The Federal Reserve establishes operating targets, which will result in the achievement of intermediate targets, which will ultimately lead to the achievement of economic goals. Which of the following lists represent economic goals? c. Productivity (GDP); employment; international trade

QUESTION 23 Term life insurance b. is inexpensive compared to other life insurance policies.

QUESTION 24 Su-Hyon says, “I want a retirement program that will pay me a guaranteed amount annually until my death.” Which type of program would you recommend to Su-Hyon? e. A defined benefit plan

QUESTION 25 A cash flow budget shows b. the inflow and outflow of money.

I hope this helps you with your task! If you have any more questions, feel free to ask.