Exam 2: Financial Markets and Institutions

During the Financial Crisis of 2007-2009, the U.S.government bailed out all of the following firms except:

Previously issued securities are traded among investors in the secondary markets.

Only the IPOs for large corporations are sold in primary markets.

Insurance companies can usually cover the claims of policyholders because:

Which one of the following funds not provides a tax advantage to individual investors?

For corporate bonds, the higher the credit quality of an issuer, the higher the interest rate.

A financial institution:

The cost of capital is the minimum acceptable rate of return for capital investment.

The rates of return on investments outside the corporation set the minimum return for investment projects inside the corporation.

You can buy silver in the:

Describe what a mutual fund is.

The key to the banks' ability to make illiquid loans is their ability to pool liquid deposits from thousands of depositors.

"Reinvestment" means:

Which of the following financial assets is least likely to have an active secondary market?

When corporations need to raise funds through stock issues, they rely on the:

The stocks of major corporations trade in many markets throughout the world on a continuous or near-continuous basis.

Like public companies, private companies can also use their stock price as a measure of performance.

What are three major types of financial markets? Describe what the main characteristics of each market are.

Which one of these is generally a key difference between U.S.and foreign commercial banks?

Describe what a financial intermediary is and does.