Question 1

Bond rating agencies are important in the channeling of funds to __________ firms in __________-oriented systems.

Accepted Answer

A)  small; banking 
B)  small; markets 
C)  large; banking 
D)  large; markets 
A)  small; banking 
B)  small; markets 
C)  large; banking 
D)  large; markets

Question 2

The __________ "Hausbank" handles all the external financing for a firm.

Accepted Answer

A)  Japanese 
B)  German 
C)  Swedish 
D)  British 
A)  Japanese 
B)  German 
C)  Swedish 
D)  British

Question 3

The two major types of financial systems are the __________-oriented systems.

Accepted Answer

A)  federal- and local 
B)  banking- and markets 
C)  securities- and equities 
D)  contributor- and stockholder 
A)  federal- and local 
B)  banking- and markets 
C)  securities- and equities 
D)  contributor- and stockholder

Question 4

Stocks and bonds issued in markets-oriented financial systems are rather __________ because they are traded __________.

Accepted Answer

A)  liquid; frequently 
B)  liquid; infrequently if at all 
C)  illiquid; frequently 
D)  illiquid; infrequently if at all 
A)  liquid; frequently 
B)  liquid; infrequently if at all 
C)  illiquid; frequently 
D)  illiquid; infrequently if at all

Question 5

Conflict resolution of the stockholder-lender conflict in larger banking-oriented firms is most effectively accomplished by

Accepted Answer

A)  financial intermediation (monitoring). 
B)  financial intermediation (ownership consolidation). 
C)  corporate governance. 
D)  None of the above. 
A)  financial intermediation (monitoring). 
B)  financial intermediation (ownership consolidation). 
C)  corporate governance. 
D)  None of the above.

Question 6

Small firms borrow from "monitoring-intensive" financial intermediaries in __________ financial systems.

Accepted Answer

A)  banking-oriented 
B)  markets-oriented 
C)  banking- and markets-oriented 
D)  socialist 
A)  banking-oriented 
B)  markets-oriented 
C)  banking- and markets-oriented 
D)  socialist

Question 7

In markets-oriented systems an under-performing "entrenched" management is often replaced by

Accepted Answer

A)  SEC regulators. 
B)  a hostile takeover. 
C)  stockholders electing a new board of directors to fire the managers. 
D)  the bank that owns the firm firing them. 
A)  SEC regulators. 
B)  a hostile takeover. 
C)  stockholders electing a new board of directors to fire the managers. 
D)  the bank that owns the firm firing them.

Question 8

Conflict resolution of the manager-stockholder conflict in larger market-oriented firms is most effectively accomplished by

Accepted Answer

A)  financial intermediation (monitoring). 
B)  financial intermediation (ownership consolidation). 
C)  rating agencies. 
D)  managerial compensation. 
A)  financial intermediation (monitoring). 
B)  financial intermediation (ownership consolidation). 
C)  rating agencies. 
D)  managerial compensation.

Question 9

__________ firms are treated similarly in financial systems around the world in the handling of their __________ conflict.

Accepted Answer

A)  Small; stockholder-lender 
B)  Small; manager-stockholder 
C)  Large; stockholder-lender 
D)  Large; manager-stockholder 
A)  Small; stockholder-lender 
B)  Small; manager-stockholder 
C)  Large; stockholder-lender 
D)  Large; manager-stockholder

Question 10

The price the United States and the United Kingdom pay for having rather liquid securities markets is

Accepted Answer

A)  fluctuations in securities prices. 
B)  unresolved stockholder-lender and manager-stockholder conflicts. 
C)  allowing banks to hold substantial ownership shares in large firms. 
D)  shutting large firms out of those securities markets. 
A)  fluctuations in securities prices. 
B)  unresolved stockholder-lender and manager-stockholder conflicts. 
C)  allowing banks to hold substantial ownership shares in large firms. 
D)  shutting large firms out of those securities markets.

Question 11

Germany and __________ are two major banking-oriented systems.

Accepted Answer

A)  the United Kingdom 
B)  Japan 
C)  France 
D)  the United States 
A)  the United Kingdom 
B)  Japan 
C)  France 
D)  the United States

Question 12

In markets-oriented systems, handling of the manager-stockholder conflict in large firms is through

Accepted Answer

A)  rating agencies. 
B)  the potential for takeovers. 
C)  management ownership of the firm. 
D)  bank ownership of the firm. 
A)  rating agencies. 
B)  the potential for takeovers. 
C)  management ownership of the firm. 
D)  bank ownership of the firm.

Question 13

The fewer the stockholders in a corporation the __________ likely they are to be motivated to monitor the corporation's management, thus the __________ the severity of the manager-stockholder conflict.

Accepted Answer

A)  more; greater 
B)  more; fewer 
C)  less; greater 
D)  less; fewer 
A)  more; greater 
B)  more; fewer 
C)  less; greater 
D)  less; fewer

Question 14

Bank ownership of corporate stock is "discouraged" by regulators in

Accepted Answer

A)  the United States. 
B)  the United Kingdom. 
C)  Germany. 
D)  Japan. 
A)  the United States. 
B)  the United Kingdom. 
C)  Germany. 
D)  Japan.

Question 15

The two types of financial systems tend to treat

Accepted Answer

A)  small firms alike. 
B)  large firms alike. 
C)  both small and large firms alike. 
D)  neither small nor large firms alike. 
A)  small firms alike. 
B)  large firms alike. 
C)  both small and large firms alike. 
D)  neither small nor large firms alike.

Question 16

The "corporate takeover market" plays a part in handling the conflict between management and __________ in __________-oriented financial systems.

Accepted Answer

A)  bankers; markets 
B)  bankers; banking 
C)  stockholders; markets 
D)  stockholders; banking 
A)  bankers; markets 
B)  bankers; banking 
C)  stockholders; markets 
D)  stockholders; banking

Question 17

The United States and the United Kingdom are two major __________-oriented systems.

Accepted Answer

A)  securities 
B)  equities 
C)  banking 
D)  markets 
A)  securities 
B)  equities 
C)  banking 
D)  markets

Question 18

As of the end of 1994, which of the countries in our survey had the closest match in size between its stock and banking markets?

Accepted Answer

A)  The United Kingdom 
B)  The United States 
C)  Japan 
D)  Germany 
A)  The United Kingdom 
B)  The United States 
C)  Japan 
D)  Germany

Question 19

The stockholder-lender conflict generally becomes greater

Accepted Answer

A)  the smaller the firm. 
B)  the larger the firm. 
C)  the more the firm borrows from banks. 
D)  the less the firm borrows from banks. 
A)  the smaller the firm. 
B)  the larger the firm. 
C)  the more the firm borrows from banks. 
D)  the less the firm borrows from banks.

Question 20

It is not surprising to see a rather __________ volume of mergers and acquisitions in the United States given its __________-oriented financial system.

Accepted Answer

A)  high; banking 
B)  high; markets 
C)  low; banking 
D)  low; markets 
A)  high; banking 
B)  high; markets 
C)  low; banking 
D)  low; markets

Exam 16: Financial System Design

Bond rating agencies are important in the channeling of funds to __________ firms in __________-oriented systems.

The __________ "Hausbank" handles all the external financing for a firm.

The two major types of financial systems are the __________-oriented systems.

Stocks and bonds issued in markets-oriented financial systems are rather __________ because they are traded __________.

Conflict resolution of the stockholder-lender conflict in larger banking-oriented firms is most effectively accomplished by

Small firms borrow from "monitoring-intensive" financial intermediaries in __________ financial systems.

In markets-oriented systems an under-performing "entrenched" management is often replaced by

Conflict resolution of the manager-stockholder conflict in larger market-oriented firms is most effectively accomplished by

__________ firms are treated similarly in financial systems around the world in the handling of their __________ conflict.

The price the United States and the United Kingdom pay for having rather liquid securities markets is

Germany and __________ are two major banking-oriented systems.

In markets-oriented systems, handling of the manager-stockholder conflict in large firms is through

The fewer the stockholders in a corporation the __________ likely they are to be motivated to monitor the corporation's management, thus the __________ the severity of the manager-stockholder conflict.

Bank ownership of corporate stock is "discouraged" by regulators in

The two types of financial systems tend to treat

The "corporate takeover market" plays a part in handling the conflict between management and __________ in __________-oriented financial systems.

The United States and the United Kingdom are two major __________-oriented systems.

As of the end of 1994, which of the countries in our survey had the closest match in size between its stock and banking markets?

The stockholder-lender conflict generally becomes greater

It is not surprising to see a rather __________ volume of mergers and acquisitions in the United States given its __________-oriented financial system.

Introducing Money, Banking, and Financial Markets

The Role of Money in the Macroeconomy

Financial Instruments, Markets, and Institutions

Interest Rate Measurement and Behavior

The Term and Risk Structure of Interest Rates

The Structure and Performance of Securities Markets

The Pricing of Risky Financial Assets

Money and Capital Markets

Demystifying Derivatives

Understanding Foreign Exchange

The Nature of Financial Intermediation

Depository Financial Institutions

Nondepository Financial Institutions

Understanding Financial Contracts

The Regulation of Markets and Institutions

Who's in Charge Here?

Bank Reserves and the Money Supply

The Instruments of Central Bankin

Understanding Movements in Bank Reserves

Monetary Policy Strategy

The Classical Foundations

The Keynesian Framework

The ISLM World

Money and Economic Stability in the ISLM World

An Aggregate Supply and Demand Perspective on Money and Economic Stability

Rational Expectations: Theory and Policy Implications

Empirical Evidence on the Effectiveness of Monetary Policy

Tying It All Together

Filters

Bond rating agencies are important in the channeling of funds to firms in -oriented systems.

Stocks and bonds issued in markets-oriented financial systems are rather because they are traded .

firms are treated similarly in financial systems around the world in the handling of their conflict.

The fewer the stockholders in a corporation the likely they are to be motivated to monitor the corporation's management, thus the the severity of the manager-stockholder conflict.

The "corporate takeover market" plays a part in handling the conflict between management and in -oriented financial systems.

It is not surprising to see a rather volume of mergers and acquisitions in the United States given its -oriented financial system.