Finance Quiz

1. What is the federal funds rate?
The interest rate paid by banks on deposits held by the Federal Reserve.
The interest rate charged by the Federal Reserve to member banks.
The interest rate at which banks lend and borrow overnight funds from each other.
2. What is the prime rate?
The interest rate at which the Federal Reserve lends to member banks.
The interest rate charged by banks to their most creditworthy customers.
The interest rate paid by banks on deposits from their customers.
3. What is an interest rate?
The percentage at which an amount of money is borrowed or invested.
The cost of goods and services.
The amount of taxes paid to the government.
4. What is a treasury bill?
A long-term debt security issued by the US government.
A short-term debt security issued by the US government.
A stock issued by the US government.
5. What is a certificate of deposit (CD)?
A bond issued by the US government.
A share of ownership in a company.
A time deposit offered by banks and other financial institutions.
6. What is a money market account?
An interest-bearing account offered by banks and other financial institutions.
A short-term debt security issued by the US government.
A share of ownership in a company.
7. What is the discount rate?
The interest rate charged by banks to their most creditworthy customers.
The interest rate at which the Federal Reserve lends to member banks.
The interest rate paid by banks on deposits from their customers.
8. What is a fixed interest rate?
An interest rate that fluctuates based on market conditions.
An interest rate that remains constant for the life of a loan or investment.
An interest rate that is set by the borrower or investor.
9. What is a variable interest rate?
An interest rate that fluctuates based on market conditions.
An interest rate that remains constant for the life of a loan or investment.
An interest rate that is set by the borrower or investor.
10. What is inflation?
A general decrease in prices and increase in the value of money.
A measure of the creditworthiness of a borrower or issuer.
A general increase in prices and decrease in the value of money.
11. What is deflation?
A general increase in prices and decrease in the value of money.
A general decrease in prices and increase in the value of money.
A measure of the risk associated with a particular investment.
12. What is a credit score?
A measure of the creditworthiness of a borrower.
A measure of the risk associated with a particular investment.
A measure of the performance of a particular company or investment.
13. Which type of interest is calculated only on the principal amount?
Simple interest
Compound interest
Annual interest
14. What is a bond?
A share of ownership in a company.
A certificate of deposit issued by a bank.
A loan made to a company or government.
15. What is a yield curve?
A graph that shows the relationship between interest rates and the time to maturity for a set of bonds.
A measure of the creditworthiness of a borrower or issuer.
A measure of the risk associated with a particular investment.