Question 1

Decentralized control is made possible through a distributed ledger technology, such as a _____, that serves as a public financial transaction database.

Accepted Answer

A) block chain 
B) blocked chain 
C) daisy chain 
D) linked chain 
A) block chain 
B) blocked chain 
C) daisy chain 
D) linked chain

Question 2

Who was responsible for the financial crisis of 2007-2009?

Accepted Answer

A) The U.S.Federal Reserve, for its policy of easy money 
B) The U.S.government, for pushing banks to expand credit for low-income housing 
C) bankers, who aggressively promoted and resold subprime mortgages 
D) The U.S.Federal Reserve, the U.S.government, rating agencies, and bankers 
A) The U.S.Federal Reserve, for its policy of easy money 
B) The U.S.government, for pushing banks to expand credit for low-income housing 
C) bankers, who aggressively promoted and resold subprime mortgages 
D) The U.S.Federal Reserve, the U.S.government, rating agencies, and bankers

Question 3

The primary distinction between securities sold in the primary and secondary markets is the:

Accepted Answer

A) riskiness of the securities. 
B) price of the securities. 
C) previous issuance of the securities. 
D) profitability of the issuing corporation. 
A) riskiness of the securities. 
B) price of the securities. 
C) previous issuance of the securities. 
D) profitability of the issuing corporation.

Question 4

Which one of the following financial intermediaries has shown the greatest preference for investing in long-term financial assets?

Accepted Answer

A) Commercial banks 
B) Insurance companies 
C) Finance companies 
D) Savings banks 
A) Commercial banks 
B) Insurance companies 
C) Finance companies 
D) Savings banks

Question 5

Almost all foreign exchange trading occurs on the floors of the FOREX exchanges in New York and London.

Accepted Answer

A) True 
 B)False

Question 6

The cost of capital is the interest rate paid on a loan from a bank or some other financial institution.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following functions does not require financial markets?

Accepted Answer

A) transporting of cash across time 
B) provision of liquidity 
C) risk reduction by investment in diversified portfolios 
D) provision of pricing information 
A) transporting of cash across time 
B) provision of liquidity 
C) risk reduction by investment in diversified portfolios 
D) provision of pricing information

Question 8

Identify a minimum of four major market factors that contributed to the financial crisis of 2007-2009.

Accepted Answer

1.The Federal Reserve for its easy money

Question 9

Insurance companies primarily reduce an individual's risk by:

Accepted Answer

A) transporting that risk forward in time. 
B) providing payment services. 
C) spreading that risk across many individuals. 
D) providing low-interest-rate loans. 
A) transporting that risk forward in time. 
B) providing payment services. 
C) spreading that risk across many individuals. 
D) providing low-interest-rate loans.

Question 10

The reinvestment of cash back into the firm's operations is an example of a flow of savings to investment.

Accepted Answer

A) True 
 B)False

Question 11

Commodity and derivative markets:

Accepted Answer

A) are additional sources of financing for corporate projects. 
B) enable the financial manager to adjust a firm's exposure to various business risks. 
C) are always over-the-counter markets. 
D) deal only in foreign currencies. 
A) are additional sources of financing for corporate projects. 
B) enable the financial manager to adjust a firm's exposure to various business risks. 
C) are always over-the-counter markets. 
D) deal only in foreign currencies.

Question 12

One reason suggesting that banks may be better than individuals at matching lenders to borrowers is that banks:

Accepted Answer

A) can shift loan risk to their deposit customers. 
B) are motivated by the potential for profit. 
C) do not have any income tax liability. 
D) have information to evaluate creditworthiness. 
A) can shift loan risk to their deposit customers. 
B) are motivated by the potential for profit. 
C) do not have any income tax liability. 
D) have information to evaluate creditworthiness.

Question 13

Liquidity is important to a mutual fund primarily because:

Accepted Answer

A) a fund that is less liquid will attract more investors. 
B) the fund's shareholders may want to redeem their shares at any time. 
C) new investors may invest in the fund at any time. 
D) the fund requires cash to pay its taxes. 
A) a fund that is less liquid will attract more investors. 
B) the fund's shareholders may want to redeem their shares at any time. 
C) new investors may invest in the fund at any time. 
D) the fund requires cash to pay its taxes.

Question 14

Financing for public corporations flows through:

Accepted Answer

A) the financial markets only. 
B) financial intermediaries only. 
C) derivatives markets. 
D) the financial markets, financial intermediaries, or both. 
A) the financial markets only. 
B) financial intermediaries only. 
C) derivatives markets. 
D) the financial markets, financial intermediaries, or both.

Question 15

Financing for private corporations must flow through financial intermediaries.

Accepted Answer

A) True 
 B)False

Question 16

Which one of the following is least liquid?

Accepted Answer

A) foreign currency 
B) Government of Canada Treasury bonds 
C) real estate 
D) savings deposit 
A) foreign currency 
B) Government of Canada Treasury bonds 
C) real estate 
D) savings deposit

Question 17

What is meant by the term of liquidity why is it important?

Accepted Answer

The ability to sell or exchange and asse

Question 18

Which one of these is a money market security?

Accepted Answer

A) commercial paper 
B) common stock 
C) 2-year bond 
D) 20-year bond 
A) commercial paper 
B) common stock 
C) 2-year bond 
D) 20-year bond

Question 19

Which one of these correctly applies to mutual funds?

Accepted Answer

A) mutual funds are a costly means of achieving portfolio diversification. 
B) funds are required to limit their annual fees and expenses to less than 1 percent of the portfolio value. 
C) you can generally buy additional shares in the fund at any time. 
D) shareholders sell their shares to other shareholders. 
A) mutual funds are a costly means of achieving portfolio diversification. 
B) funds are required to limit their annual fees and expenses to less than 1 percent of the portfolio value. 
C) you can generally buy additional shares in the fund at any time. 
D) shareholders sell their shares to other shareholders.

Exam 2: Financial Markets and Institutions

Decentralized control is made possible through a distributed ledger technology, such as a _____, that serves as a public financial transaction database.

Who was responsible for the financial crisis of 2007-2009?

The primary distinction between securities sold in the primary and secondary markets is the:

Which one of the following financial intermediaries has shown the greatest preference for investing in long-term financial assets?

Almost all foreign exchange trading occurs on the floors of the FOREX exchanges in New York and London.

The cost of capital is the interest rate paid on a loan from a bank or some other financial institution.

Which of the following functions does not require financial markets?

Identify a minimum of four major market factors that contributed to the financial crisis of 2007-2009.

Insurance companies primarily reduce an individual's risk by:

The reinvestment of cash back into the firm's operations is an example of a flow of savings to investment.

Commodity and derivative markets:

One reason suggesting that banks may be better than individuals at matching lenders to borrowers is that banks:

Liquidity is important to a mutual fund primarily because:

Financing for public corporations flows through:

Financing for private corporations must flow through financial intermediaries.

Which one of the following is least liquid?

What is meant by the term of liquidity why is it important?

Which one of these is a money market security?

Which one of these correctly applies to mutual funds?

Goals and Governance of the Firm

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters