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Question
Which of the following is correct about futures contracts?a. Buyers of futures contracts make a profit when prices rise.
b. Buyers of futures contracts make a profit when interest rates rise.
c. Sellers of futures contracts make a profit when prices rise.
d. Sellers of futures contracts make a profit when prices interest rates fall.
e. b. and d.
Answer
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Related questions
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Which of the following is not true regarding collateralized mortgage obligations (CMOs)?
a. Interest earned on CMOs is exempt from state income taxes.
b. CMO yields are generally higher than comparable Treasury yields.
c. CMOs exhibit little default risk.
d. All of the above are true.
e. Only a. and c. are true.
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Regulators generally prohibit banks from purchasing ____________ for income purposes.
a. Treasury bills
b. commercial paper
c. common stock
d. repurchase agreements
e. bankers' acceptances
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In general, banks are less willing to sell securities when the market value is greater than the book value.
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a. A Hays County general obligation bond to modernize the county fire department.
b. A Lubbock County general obligation bond to build a new sewer plant.
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e. A State of Texas bond to finance road repairs.
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Banks can effectively improve their portfolios by:
a. shortening maturities when yields are expected to fall.
b. obtaining less call protection when rates are expected to fall.
c. reducing diversification when the economy is slowing down.
d. increasing bond quality when quality yield spreads are low.
e. all of the above
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An investor can invest in either a tax-exempt security that pays 5% or a taxable corporate security of comparable risk and maturity that pays 8%. At what marginal tax rate will the investor be indifferent between these two securities?
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The static spread is:
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b. the difference between a fixed-rate yield and a floating-rate yield.
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d. the difference between expected inflation and the current Treasury bill rate.
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Which of the following is not true regarding prepayments?
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Eurobonds are subject to fewer regulations than U.S. issued bonds.
Q:
A forward market exchange in foreign currencies is an agreement to exchange:
a. currencies in the future at an unspecified time at an exchange rate determined at the time the contract is agreed to.
b. currencies in the future at a specified time at an unknown exchange rate.
c. currencies in the future at an unspecified time at an unknown exchange rate.
d. a product for a foreign currency in the future at a specified time.
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Q:
Non-performing international loans do not completely reflect potential losses because:
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b. banks often loan borrowers funds to make payments on existing loans.
c. U.S. banks can easily recover the funds in foreign courts.
d. the U.S. government has strongly discouraged U.S. banks from making international loans.
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The risk that a foreign government will suspend debt service payments is known as:
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Q:
The first type of international office that a bank forms outside its home country that is exploratory in nature is known as:
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b. a head office.
c. a representative office.
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Historically, what has prevented universal banks from operating in the United States?
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b. The Glass-Stegall Act
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e. a. and c. only
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a. France
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Q:
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a. 1.6%.
b. 2.0%.
c. 4.0%.
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Q:
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c. undivided profits.
d. perpetual preferred stock.
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c. FDIC insurance premiums.
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Q:
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b. it reduces required reserves.
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b. mezzanine financing.
c. automobile financing.
d. seed money.
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Q:
Loan covenants:
a. protect the borrower from lender interference in management.
b. are limited to "negative" provisions.
c. may limit discretionary cash outlays by borrowers.
d. are seldom enforced.
e. often result in the lender's bankruptcy.
Q:
In the credit process, which of the following activities falls under Credit Execution and Administration?
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b. Evaluate collateral
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a. International risk
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c. Continent risk
d. Country risk
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a. a good faith deposit.
b. a loan against the repurchase agreement.
c. a risk-free guarantee.
d. the difference between the market value of the collateral and the amount of the loan.
e. all of the above.