A:

I. Moral suasion
II. Changing the discount rate
III. Changing the reserve requirement
IV. Changing the prime interest rate

A. I, II, III, IV

B. II, III, IV

C. I, III

D. I, II, III






The tools of the Federal Reserve include all the above except changing the prime interest rate. The prime interest rate is set by banks. To be sure, the practices and policies of the Fed affect the prime, but the Fed does not set that rate. The Fed also employs the operations of the FOMC, and Regulation "T" in its efforts. For more help see moral suasion, and our Series 7 Exam Prep.

Correct answer: d. I, II, III




RELATED FAQS
  1. If a sales representative moves from one broker-dealer to another ...

    The correct answer is b. I, II and III are correct since all parties are required to notify the Administrator. Read Answer >>
  2. Under the Telephone Consumer Act of 1991, a telemarketer must provide which of the ...

    The correct answer is d. All the choices except II are specific requirements of the Act. In addition, the law places time-of-day ... Read Answer >>
  3. Which of the following signatures are required on a client’s new account form ... ...

    The correct answer is B. While local practices of a broker-dealer might require the client to sign the form, even when opening ... Read Answer >>
  4. Which of the following are not types of open-end management investment companies ...

    The correct answer is d) Hedge funds are extremely aggressive entities that engage in margin and short-selling.  They are ... Read Answer >>
  5. Which statements about common shareholder rights are FALSE? I. A shareholder may ...

    The correct answer is a. I should be the the other way around: convertible bond holders can exchange their bonds for shares. ... Read Answer >>
  6. Which of the following statements is (are) true with respect to setting the proper ...

    The correct answer is: d) Choice II is incorrect because the longer the investment horizon, the less emphasis must be placed ... Read Answer >>
Related Articles
  1. Professionals

    Practice Questions 10 - 13

    Practice Questions 10 - 13
  2. Professionals

    Summary And Review

    Summary And Review
  3. Professionals

    Sample Questions 5 - 8

    Sample Questions 5 - 8
  4. Professionals

    Sample Questions 1 - 3

    Sample Questions 1 - 3
  5. Professionals

    Sample Questions 27 - 31

    Sample Questions 27 - 31
  6. Professionals

    Summary And Review

    Summary And Review
  7. Professionals

    Sample Questions 9 - 14

    Sample Questions 9 - 14
  8. Professionals

    Coverdell Education Savings Accounts

    FINRA/NASAA Series 66: Section 4 Coverdell Education Savings Accounts. In this section Coverdell Education Savings Accounts (ERA) and related sample questions.
  9. Professionals

    Interest Rates

    NASAA Series 65: Section 15 Interest Rates. This section explains the impact of money supply on interest rates and Fed's actions that impact stocks.
  10. Professionals

    Sample Questions 1 - 4

    Sample Questions 1 - 4
RELATED TERMS
  1. Wall Street Journal Prime Rate

    An interest rate that large banks in the United States charge ...
  2. Basel III

    A comprehensive set of reform measures designed to improve the ...
  3. Prime Rate

    The interest rate that commercial banks charge their most credit-worthy ...
  4. Schedule II Bank

    A bank which is a subsidiary of a foreign bank and authorized ...
  5. Prime Bank

    Term used to describe the top 50 banks (or thereabouts) in the ...
  6. Level 3

    A trading service consisting of everything in Level 2, plus the ...

You May Also Like

Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center