Fi363 Final Study Guide

FI363 Final Examination Student Study Guide
Final Examination 1.05

This is a two-hour, closed book and closed notes test. Therefore, it cannot be a take-home test.

Students are not allowed to use a computer during the test. Students are not allowed to bring extra “scratch” paper to the exam. They can use the back side of the test for scratch paper if needed.

The examination contains twenty multiple choice questions valued at 5 points each (100 points total) and five essay questions valued at 40 points each (200 points total). The total value of the examination is 300 points.

Multiple Choice Questions ask the students to relate key financial System concepts that they have learned:

1. The student should review these course concepts a. Interest rates and interest rate calculations b. Various types of financial markets c. Various types of financial institutions d. Direct and indirect finance e. Present value f. Supply and demand as applied to financial instruments; i.e. supply curve for bonds g. Term structure; i.e. relationship among interest rates on bonds with different maturities h. The Federal Reserve System; identify components i. Monetary Policy; concept behind raising or lower the money supply j. Monetary Policy Targeting k. Money markets; characteristics l. Capital markets ; compared to money market securities m. Mortgage Markets and how they differ from stock and bond markets n. Foreign exchange markets o. Securities and Exchange Commission; characteristics p. Currency exchange rates and the law of one price q. International finance r. Adverse selection s. Moral hazard and characteristics of loan management principles t. Too-Big-to-Fail Policy u. Conflict of interest and the concept behind consumer/business lending v. Bank Liabilities/Assets w. Dual Banking System. x. World Bank y. Financial system structure

Essay questions ask the student to relate core learning concepts to financial system situations and to discuss or define financial system terms. Be certain that you completely understand the following terms. The student should review concepts that relate to the following and be prepared to write analyses that include:

1. Assess the structural characteristics of the American financial system, including both institutions and markets that lead to its efficiency and effectiveness. 2. Describe and evaluate the functions of financial markets. Provide an example of the functions of the Bond Market, the Stock Market, or the Mortgage market. 3. Discuss the role of central banks, such as the Federal Reserve in the United States, to provide economic growth and stability. 4. Differentiate between the roles of various financial institutions within the financial system. Provide a detailed example of one financial institution. 5. Describe and the regulatory system in the United States and evaluate its impact of regulations on financial institutions and markets.