FMI Final Quiz Spring 2023

1)      If you heard in the news that the stock market is expected to flourish within the next few months, what will happen to the bond demand curve?

• a)      It will shift to the left

• a)      It will shift to the right

• a)      There will be a movement along the same curve

1)      When the economy is experiencing a recession, the demand for bonds will…... and the supply will……. and the interest rate

• a)      Decrease; decrease; decrease

• a)      Increase; decrease; rise

• a)      Decrease; increase; decrease

1)      If the government is experiencing a budget surplus, the need for issuing treasury bonds will…….

• a)      Increase

• a)      Decrease

• a)      Remain constant

1)      If the price of the bond is below the equilibrium price, eventually the price of the bond will …. ….to reach the equilibrium point.

• a)      Increase

• a)      Decrease

• a)      Remain constant

1)      Governments can issue stocks to obtain funds needed for national projects

• True

• False

1)      Commercial papers are short-term debt instruments issued by the government

• True

• False

1)      If there are expectations of a high level of volatility in the stock prices during the coming period, as a risk averse investor, you should invest your money in ….

• a)      Treasury bonds

• a)      Common stocks

• a)      Certificates of deposits

• a)      Any form of fixed income security

1)      An investor will little knowledge concerning the stock market can invest surplus funds in equity funds

• True

• False

1)      Investors in an open-end mutual fund can redeem their shares whenever they need to.

• True

• False

1)       Mutual funds pool the resources of many small investors and invests in a portfolio of securities that is not diversified.

• True

• False