Investing and Finance Quiz

2. The interest rate the Federal Reserve charges banks for short-term loans is the:

• Discount rate
  The discount rate is what the Federal Reserve charges to banks for short-term loans. The prime rate is what banks charge preferred borrowers, while a periodic rate refers a changing rate used by some credit card companies.
• Prime rate
  The discount rate is what the Federal Reserve charges to banks for short-term loans. The prime rate is what banks charge preferred borrowers, while a periodic rate refers a changing rate used by some credit card companies.
• Periodic rate
  The discount rate is what the Federal Reserve charges to banks for short-term loans. The prime rate is what banks charge preferred borrowers, while a periodic rate refers a changing rate used by some credit card companies.

3. In addition to setting interest rates, the Federal Reserve affects monetary policy through open market operations, which are the:

• Buying or selling of U.S. government securities
  Open market operations are the buying or selling of U.S. government securities to increase or decrease the amount of money in circulation. The money received from the sale of securities is taken out of circulation, reducing the money supply. When the Federal Reserve buys securities, it returns money to circulation.
• Cash reserves each bank must keep on hand to satisfy consumer demand
  Open market operations are the buying or selling of U.S. government securities to increase or decrease the amount of money in circulation. The money received from the sale of securities is taken out of circulation, reducing the money supply. When the Federal Reserve buys securities, it returns money to circulation.
• Annual review of all stock market regulations, required by Congress
  Open market operations are the buying or selling of U.S. government securities to increase or decrease the amount of money in circulation. The money received from the sale of securities is taken out of circulation, reducing the money supply. When the Federal Reserve buys securities, it returns money to circulation.

4. Beta measures the:

• Volatility of a particular stock
  Beta measures how the price of a particular stock fluctuates in relation to the whole stock market. Stocks with a beta of more than 1 are volatile, fluctuating more than the general market. Stocks with a beta of less than 1 are expected to fluctuate less than the overall market.
• Stability of a nation's monetary system
  Beta measures how the price of a particular stock fluctuates in relation to the whole stock market. Stocks with a beta of more than 1 are volatile, fluctuating more than the general market. Stocks with a beta of less than 1 are expected to fluctuate less than the overall market.
• Financial worthiness of a company
  Beta measures how the price of a particular stock fluctuates in relation to the whole stock market. Stocks with a beta of more than 1 are volatile, fluctuating more than the general market. Stocks with a beta of less than 1 are expected to fluctuate less than the overall market.

5. Many financial advisers recommend DRIPs, which are:

• Depreciating real income portfolios
  Dividend reinvestment plans take the dividend paid by a particular stock and use it to purchase more shares of that stock, rather than paying it to the shareholder. It is an easy way to buy more shares of stock, if you do not need the dividend income.
• Debt reduction incentive programs
  Dividend reinvestment plans take the dividend paid by a particular stock and use it to purchase more shares of that stock, rather than paying it to the shareholder. It is an easy way to buy more shares of stock, if you do not need the dividend income.
• Dividend reinvestment plans
  Dividend reinvestment plans take the dividend paid by a particular stock and use it to purchase more shares of that stock, rather than paying it to the shareholder. It is an easy way to buy more shares of stock, if you do not need the dividend income.

6. When purchasing corporate bonds, investors:

• Receive stock paying a fixed dividend
  A bond is simply an IOU, promising to repay the loan with interest, issued by a government entity or a corporation. Corporate bonds are generally taxed as ordinary income, while government bonds are usually tax free. Preferred stock pays a fixed dividend, but lacks voting rights.
• Earn tax-free interest income
  A bond is simply an IOU, promising to repay the loan with interest, issued by a government entity or a corporation. Corporate bonds are generally taxed as ordinary income, while government bonds are usually tax free. Preferred stock pays a fixed dividend, but lacks voting rights.
• Are making a loan to the company
  A bond is simply an IOU, promising to repay the loan with interest, issued by a government entity or a corporation. Corporate bonds are generally taxed as ordinary income, while government bonds are usually tax free. Preferred stock pays a fixed dividend, but lacks voting rights.

7. A zero coupon bond would:

• Not require a sales charge
  A zero coupon bond would pay no interest until it reached maturity.
• Pay no interest until it matured
  A zero coupon bond would pay no interest until it reached maturity.
• Be sold by the U.S. Treasury Department
  A zero coupon bond would pay no interest until it reached maturity.

8. The primary purpose of the International Monetary Fund is to:

• Promote international monetary cooperation
  Established in 1944, the International Monetary Fund is designed to promote international monetary cooperation.
• Serve as a bank for the United Nations
  Established in 1944, the International Monetary Fund is designed to promote international monetary cooperation.
• Ensure that interest rates are the same in member nations
  Established in 1944, the International Monetary Fund is designed to promote international monetary cooperation.

9. Offshore banks are:

• Located in Caribbean nations
  Offshore banks are licensed by nations with low taxes and limited financial regulations. There are some 4,000 offshore banks with some $5 trillion in assets located all over the world.
• Exempt from International Monetary Fund regulation
  Offshore banks are licensed by nations with low taxes and limited financial regulations. There are some 4,000 offshore banks with some $5 trillion in assets located all over the world.
• Licensed by countries with minimal taxation and financial regulations
  Offshore banks are licensed by nations with low taxes and limited financial regulations. There are some 4,000 offshore banks with some $5 trillion in assets located all over the world.

10. A brass plate bank is:

• An established, blue chip institution
  The so-called brass plate, or shell, banks have no physical presence. They conduct business over the phone, through the mail, by fax, or over the Internet. These banks are almost always licensed by offshore banking centers and are popular with those seeking considerable privacy.
• A bank authorized to sell insurance
  The so-called brass plate, or shell, banks have no physical presence. They conduct business over the phone, through the mail, by fax, or over the Internet. These banks are almost always licensed by offshore banking centers and are popular with those seeking considerable privacy.
• A bank with no offices
  The so-called brass plate, or shell, banks have no physical presence. They conduct business over the phone, through the mail, by fax, or over the Internet. These banks are almost always licensed by offshore banking centers and are popular with those seeking considerable privacy.