Exam 2: The Domestic and International Financial Marketplace

Financial assets include all of the following EXCEPT ____.

Financial intermediaries include _____.

Financial middlemen include _____.

If the spot rate (in U.S. dollars) for Japanese yen is 0.00703 and the 180-day forward rate is 0.00717, then the yen is trading at a(n) ____.

If the spot rate (in U.S. dollars) for Japanese yen is 0.00703 and the 180-day forward rate is 0.00717, then the yen is trading at an annualized forward ____ (round % to 2 decimals).

Securities not listed on exchanges are said to be traded

The New York Stock Exchange is an example of a _____.

An example of a listed security exchange within the secondary market is ____.

Financial intermediaries are compensated for their services by ____.

In any economy as a whole, the actual savings for a given period of time must ____ the actual investments.

Changes in the tax code that slow down depreciation ____ the present value of investment cash flows and therefore make the investment ____ desirable.

The buyer of a foreign currency call option has the ____ a fixed amount of a foreign currency.

List changes that have occurred within financial markets regulation as a result of the passage of the Sarbanes-Oxley Act of 2002.

____ markets deal in short-term securities having maturities of one year or less.

Commercial banks are a major source of term loans. These loans are best used for financing _____.

Although there was a financial crisis in 2007-2010, some firms were able to weather the crisis. These firms had all of the following characteristics that were directly responsible for their ability to survive the crisis EXCEPT ____.

Two years ago you bought 100 shares of Big Bubba convertible preferred stock at $25 per share. The preferred stock had an annual dividend of $2.125 per share, and a total of $3.19 in dividends per share have been paid so far. Today the company announced that the stock is redeemable for $26.70 plus accrued and unpaid dividends, for a total of $27.76. Alternatively, holders may convert their shares of preferred stock at a conversion rate of 1.6393 shares of Big Bubba common stock for each share of preferred stock. If the closing price of Big Bubba common stock is $27.50, what is your holding period return on the conversion option (round % to 2 decimals)?

You bought 100 shares of Risky Venture stock six months ago for $14 per share and sold it yesterday for $12. The company paid a total of $0.24 per share in dividends to you during the time you held the stock. What was your holding period return (round % to 2 decimals)?

____ finance seeks to identify why some investors react irrationally when confronted with unexpected ups and downs in the market.

Which of the following is not a correct statement about foreign currency futures?