货币银行学 试卷 华中科技大学 郑长军
A卷
1. Concept Explanation (2%×8﹦16%)
1) financial intermediaries
—The institutions that transfer funds from savers to borrowers, such as banks, insurance corporations, credit companies, funds and others.
2) liquidity
—Liquidity is a measure of how readily one asset can be converted to cash.
3) Hedging
—The practice of using futures to reduce risk.
4) devaluation
—The lowering of the official value of a country’s currency relative to other currencies, thereby resetting the exchange rate.
5) direct finance
—It means the savers and borrowers do transactions directly but not through financial intermediaries, especially capital market.
6) disintermediation
—An exit of savers and borrowers from banks to financial markets.
7) secondary markets
—It is a part of direct finance, it can make a deal of securities.
8) yield to maturity
—It is the interest rate which makes the asset return’s present value equal to its value today.
2. Single Choice (1%×10﹦10%)
1) According to the bond rating provided by Standard & Poor’s, the investment-grade bonds are above ( d ).
a. AAA b. AA c. A d. BBB
2) An increase in government borrowing shifts the bond supply curve to the ( b ).
a. left b. right c. up d. down
3) During recessions interest rates ( a ) because the bond supply curve shifts to the left (due to declining expected profitability of capital ) by more than does the bond demand curve (due to declining wealth).
a. fall b. rise c. are unchanged d. are uncertain
4) The theoretical basis of PPP is ( d ).
a. law of supply and demand b. balance of payment
c. exchange theory d. the law of one price
5) The expected real interest rate equals the nominal interest rate ( b ) the expected rate of inflation.
a. plus b. minus c. multiply d. divided by
6) Savers are ( d ) of funds.
a. demanders b. transferees c. transferors d. suppliers
7) What is NOT belong to the key services provided by the financial system? ( b )
a. risk sharing b. credit c. liquidity d. information
8) Inflation ( c ) the value of money.
a. increases b. affects c. reduces d. has no influence on
9) If the payments system become ( a ) efficient, the costs to the economy would be fewer and more costly transactions, that is, losing gains from specialization.
a. less b. more c. many d. greater
10) The lower is the legal reserve rate, the ( b ) is the money provided by the commercial banks.
a. less b. more c. little d. small
3. Calculation and Answer(5%×4＝20%)
1) Suppose that your wealth elasticity of demand for IBM stock is 2, you own 1000 shares of IBM stock, and your total wealth is $1 million. You earn a $100,000 bonus at work. How much more IBM stock will you buy?
A: Your increase in holdings will be 2(10%) = 20%. You
will buy 0.2(1000) = 200 shares.
2) If the interest rate is 8%, what is the present value of 1000 payable two years from now?
A: The present value is $857.
3) Would it ever make sense to pay $1100 for a coupon bond with a face value of $1000? Briefly explain.
A: In effect, the payments to George were like those of a perpetuity or consol. Therefore, the relevant interest rate would be $135/$1125 = 12%.
4) If $1 buys €1, ￡1 buys €1.5, and ￡1 buys $2, can you trade these currencies to make a profit? If so, how much money can you make if the exchange rates remain fixed at these levels?
A: You can profit by trading dollars for euros, euros for pounds, and pounds for dollars; at these rates, you can repeat the trades forever to make all the money in the world.
4. Q&A (5%×6＝30%)
1) What are the four main functions of money? Describe each function.
A: The main functions of money are to serve as a medium of exchange (generally accepted means of payment), unit of account (all prices expressed in monetary terms), store of value (transferring purchasing power over time), and standard of deferred payment (unit of account for credit arrangements).
2) Who determines the money supply?
A: As we consider the facts of United States, the money supply is determined jointly by actions of the Federal Reserve System (the Fed), banks, and the nonbank public. Decisions about monetary policy are made by the Federal Reserve Board and Federal Open Market Committee.
3) What are the rights and obligations of buyer and seller of an options?
A: An option buyer has the right to buy or sell the underlying asset; an option seller has the obligation to sell or buy underlying asset.
4) What is the total rate of return on an asset? How can it be calculated?
A: The total return includes current interest payment plus capital gain; it equals the current yield plus the percentage change in price.
5) What are the contents of preferred habitat theory?
A: The preferred habitat theory is a eclectic theory of the segmented market theory and the expectation theory. The preferred habitat theory holds that investors care about both expected returns and maturity; they view instruments having different maturities as substitutes—but not perfect substitutes.
6) Why does the bond supply curve
slope up and the bond demand curve slope down in the bond market diagram?
A: The bond demand curve slopes down because at lower bond prices a larger quantity of bonds will be demanded. The bond supply curve slopes up because at higher bond prices a larger quantity of bonds will be supplied.
5. Analytical Problems (12%×2＝24%)
1) How do you think about China’s financial system? Give your opinions.
A: China’s financial system can be divided three kinds: banking, insurance and securities. As for banking, we usually call them indirect finance, and we call securities direct finance. Because now the banking play an important role in China’s economic development, we take some measures to reform the banking system, but I think the next step we should develop the capital market, i.e., direct finance.
2) What is liquidity surplus? Please explain the China’s current modest loosing monetary policies.
A: Liquidity surplus is the state which more money is to be provided.
Now, China has entered a stage of deflation, so we should add money supply, that means we should take the policies which is loosing monetary policies. Thus we can stimulate economic growth.
B卷
6. Concept Explanation (2%×8﹦16%)
1) financial markets
—Financial markets are markets for buying and selling bonds, stocks, foreign exchange, and other instruments.
2) risk loving
—Characteristics of savers who actually prefer to gamble by holding a risky asset with the possibility of maximizing returns.
3) M1
—The narrow aggregate measure of money is M1. It includes currency, traveler’s checks, and checking account deposits.
4) price index
—Price index is to measure the price’s change of goods and services, which includes CPI, PPI and WPI.
5) financial innovation
—The definition of financial innovation develops on the views of Joseph Alois Schumpeter, according to his definition of innovation in his monograph “Theory of Economic Development” to have been written in 1912, “innovation is the setup of production function”. Likewise, financial innovation is that various new organizations of financial institutions, financial instruments and financial system are to be changed.
6) financial regulation
—Countries’ government set up a series of measures to prevent financial system from risks.
7) risk sharing
—Services provided by the financial system wherein savers and borrowers spread and transfer risk..
8) CAPM
—The model is to explain portfolio allocation, which divides risks into two kinds: individual risk and systematic risk. It begins with the idea that the risk contributed by an individual asset to a well-diversified portfolio of stocks reflects the magnitude of its systematic risk. This magnitude is measured by beta(β).
7. Single Choice (1%×10﹦10%)
1) The financial system transfers saver’s funds to ( b )and provides savers with payments for the use of their funds.
a. suppliers b. borrowers c
. buyers d. sellers
2) IOU means ( a ).
a. I owe you b. I am old than you
c. I owe your liabilities d. I owe your money
3) According to the bond rating provided by Standard & Poor’s, the investment-grade bonds are above ( d ).
a. AAA b. AA c. A d. BBB
4) An increase in government borrowing shifts the bond supply curve to the ( b ).
a. left b. right c. up d. down
5) During recessions interest rates ( a ) because the bond supply curve shifts to the left (due to declining expected profitability of capital ) by more than does the bond demand curve (due to declining wealth).
a. fall b. rise c. are unchanged d. are uncertain
6) The Federal Reserve System (often called the Fed) includes ( c )
regional Banks.
a. four b. five c. twelve d. thirteen
7) ATM means ( b ).
a. Auto-technological Machine b. Automatic Teller Machine
c. Asynchronous Transfer Mode d. Automatic Transfer Machine
8) Finance can be divided ( d ).
a. direct finance and indirect finance
b. financial institutions and financial markets
c. microfinance and macrofinance
d. all above are right
9) CDs were created by ( a ).
a. Citibank b. JP Morgan Chase c. HSBC d. Bank of America
10) ( b ) can be exercised at any time until the expiration date.
a. European options b. American options c. corporate bonds d. T-bills
8. Calculation and Answer(5%×4＝20%)
1) Suppose that interest rates for one-year bonds are expected to follow this pattern: 3% today, 5% one year from now, and 7% two years from now. What are the current interest rates on two-year and three-year bonds, according to the expectations theory?
A: The current two-year rate is 4%. The current three-year rate is 5%.
2) Suppose that your wealth elasticity of demand for IBM stock is 2, you own 1000 shares of IBM stock, and your total wealth is $1 million. You earn a $100,000 bonus at work. How much more IBM stock will you buy?
A:Your increase in holdings will be 2(10%) = 20%. You will buy 0.2(1000) = 200 shares.
3) Suppose that you bought 100 shares of stock in Cruella, Inc., on December 31, 1998, for $55 per share. Cruella paid $2 per share in dividends during 1999, and on December 31, 1999, its price was $60 per share. What total return did you receive in 1999?
A:The current yield is 2/55, or 3.6%. The capital gain is 5/55, or 9.1%. The total rate of return is 12.7%.
4) Suppose that a U.S. firm signs a contract to buy factory equipment from a Japanese firm at a cost of ￥250 million. The equipment is to be delivered to the United States and paid for in one year. The current exchange rate is ￥250/$1. The current interest rate is 6% in the United States and 4% in Japan. If the U.S. firm trades dollars for yen today and invests the yen in Japan for one year, how many dollars does it ne
ed today?
A: 250 million yen in one year/1.04 = 240.38462 million yen today; 240.38462 million yen/250 yen per dollar = $961,538.50.
9. Q&A (5%×6＝30%)
1) What are the three main services offered by financial institutions?
A: The financial system provides three key services to savers and borrowers: risk sharing (people can share and transfer risk), liquidity (people can exchange their assets for other assets at low cost), and information (financial markets communicate information, and financial institutions specialize in gathering and using information about borrowers, so they lend more efficiently).
2) What are determinants of portfolio choice?
A: The question means what are the factors affecting a saver’s portfolio allocation of assets. They are a saver’s wealth, expectation of return on assets, degree of risk of assets, liquidity of assets, and the cost of acquiring information about assets.
3) What is the main difference between a coupon bond and a fixed-payment loan?
A: The main difference is whether the principal is repaid through the loan life (fixed-payment loan) or at maturity (coupon bond).
4) Why don’t all risk-averse investors hold a fully diversified portfolio?
A: Transactions costs limit the desirability of diversification.
5) Why does the bond supply curve slope up and the bond demand curve slope down in the bond market diagram?
A: The bond demand curve slopes down because at lower bond prices a larger quantity of bonds will be demanded. The bond supply curve slopes up because at higher bond prices a larger quantity of bonds will be supplied.
6) How does a small open economy differ from a large open economy?
A: Shifts in domestic lending and borrowing in a small open economy have no effect on the world real interest rate, but such shifts in a large open economy can affect the world real interest rate.
10. Analytical Problems (12%×2＝24%)
1) How do you think about the interest rate marketnization of China?
A: (1) China’s interest rate marketnization should take gradual steps.
(2) Generally speaking, China should open the loan interest rate, and then the deposit interest rate; at first the countryside market interest rate, and then city market interest rate; at first a big amount of money market interest rate, and then a small amount of money market interest rate.
2) What is liquidity surplus? Please explain the China’s current modest loosing monetary policies.
A: Liquidity surplus is the state which more money is to be provided.
Now, China has entered a stage of deflation, so we should add money supply, that means we should take the policies which is loosing monetary policies. Thus we can stimulate economic growth.
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