Exam 16: The Financial System

If an individual owns 10% of the assets in a particular company,he or she becomes a(n)

Veronica just bought a bond from United Pet Group.This bond is only backed by the financial reputation of the company.What type of bond did Veronica buy?

The process used by an insurance company to determine whom to insure and how much to charge is called

Banks in other nations often respond to changes in the U.S.financial system by making similar changes in their own systems.

All federally insured commercial banks must belong to the Federal Reserve System.

When the Fed sells government securities,banks have __________ money to lend and economic growth

Which of the following U.S.institutions is among the world's 20 largest banks?

The discount rate is the rate banks charge one another for short-term loans.

Savings banks were originally established to make __________ loans.

Inflationary pressures will begin to build if the money supply grows too rapidly.

The Roxy Bank of Englewood pools customer deposits and uses the funds to make loans to businesses and households.These businesses and households,now known as the borrowers,pay the bank interest,and the bank,in turn,pays depositors interest for the use of their money.Which of the following would best describe the process used by the bank?

Which are the two largest stock markets in the world?

Life insurance companies tend to invest excess funds in short-term securities,while pension funds tend to invest excess funds in long-term securities.

Money market instruments are short-term debt securities issued by individuals who are savers.

Most investors are members of the NYSE,or other stock markets,and therefore they do not need to use the services of a brokerage firm to buy or sell stocks.

In the secondary market,firms and governments issue securities and sell them initially to the public.

Remote Inc.,an automobile company,decides to expand its operation abroad by setting up three new manufacturing plants.Since enough funds were not available for this expansion process,Remote decides to list its company on its national stock exchange and issue securities for raising additional capital.The market for Remote's securities can be described as a(n)______ market.

Partly because of subprime mortgages,the credit crisis came about.

Two types of municipal bonds exist.What are they?

A general obligation bond is a bond issue whose proceeds will be used to pay for a project that will produce revenue,such as a toll road or bridge.