the economics of money, banking, and financial markets

305 $

© 2014 Pearson Canada Inc.$

8. 
   

   The agreement to provide a standardized commodity to a buyer on a specific date at a specific
   future price is ____.
   A) a put option
   B) a call option
   C) a futures contract
   D) a mortgage-backed security
   Answer: C
   Diff: 1 Type: MC Page Ref: 244
   Skill: Recall
   Objective List: 11.2 Examine financial innovation and the growth of the "shadow banking
   system"

   
   


9. 
   

   An instrument developed to help investors and institutions hedge interest-rate risk is
   ____.
   A) a bond
   B) a sweep account
   C) a financial derivative
   D) a mortgage-backed security
   Answer: C
   Diff: 1 Type: MC Page Ref: 244
   Skill: Recall
   Objective List: 11.2 Examine financial innovation and the growth of the "shadow banking
   system"

   
   


10. 
    

    Financial instruments whose payoffs are linked to previously issued securities are called
    ____.
    A) grandfathered bonds
    B) financial derivatives
    C) hedge securities
    D) reversible bonds
    Answer: B
    Diff: 1 Type: MC Page Ref: 244
    Skill: Recall
    Objective List: 11.2 Examine financial innovation and the growth of the "shadow banking
    system"

    
    


11. 
    

    Both ____ and ____ were financial innovations that occurred because of interest
    rate risk volatility.
    A) adjustable-rate mortgages; commercial paper
    B) adjustable-rate mortgages; financial derivatives
    C) sweep accounts; financial derivatives
    D) sweep accounts; commercial paper
    Answer: B
    Diff: 1 Type: MC Page Ref: 243 - 244
    Skill: Recall
    Objective List: 11.2 Examine financial innovation and the growth of the "shadow banking
    system"