Exam 1: Role of Financial Markets and Institutions

Those financial markets that facilitate the flow of short-term funds (with maturities of less than one year)are known as capital markets, while those that facilitate the flow of long-term funds are known as money markets.

Investors in equity securities may earn a return from

There is a ____ relationship between the risk of a security and the expected return from investing in the security.

The main reason that depository institutions experienced financial problems during the credit crisis was their investment in

If a security is undervalued, some investors will capitalize on this by purchasing that security. As a result, the security's price will ____, resulting in a ____ return for those investors.

Money market securities generally have ____.

Which of the following financial intermediaries commonly invest in stocks and bonds?

Money market securities are commonly issued to finance the purchase of assets such as buildings, equipment, or machinery.

Funds are provided to the initial issuer of securities in the

Which of the following are NOT considered money market securities?

Which of the following is NOT a typical function of securities firms?

International integration of securities markets allows

____ are classified as depository institutions.

A five-year security was purchased two years ago by an investor who plans to resell it. The investor will sell the security in the

Speculating with derivative contracts on an underlying asset typically results in both higher risk and higher returns than speculating in the underlying asset itself.

Savings institutions are a type of nondepository institution.

Bonds issued by corporations have a ____ expected return and ____ risk than Treasury bonds.

Securities represent a claim on the provider of funds.

The credit crisis in the 2008-2009 period was caused by weak economies in Asia.

The financial markets that facilitate the flow of short-term funds are known as