Question 1

____ obtain funds by issuing securities and then lend the funds to individuals and small businesses.

Accepted Answer

A) Finance companies 
B) Securities firms 
C) Mutual funds 
D) Insurance companies 
A) Finance companies 
B) Securities firms 
C) Mutual funds 
D) Insurance companies

Question 2

Which of the following distinguishes credit unions from commercial banks and savings institutions?

Accepted Answer

A) Credit unions are nonprofit. 
B) Credit unions accept deposits but do not make loans. 
C) Credit unions make loans but do not accept deposits. 
D) Savings institutions restrict their business to members who share a common bond. 
A) Credit unions are nonprofit. 
B) Credit unions accept deposits but do not make loans. 
C) Credit unions make loans but do not accept deposits. 
D) Savings institutions restrict their business to members who share a common bond.

Question 3

Most of the funds that insurance companies receive from premiums are invested in short-run money market securities.

Accepted Answer

A) True 
 B)False

Question 4

Systemic risk is the risk that a large decline in one stock's price could cause investors to sell their stock in other companies.

Accepted Answer

A) True 
 B)False

Question 5

Debt securities include commercial paper, Treasury bonds, and corporate bonds.

Accepted Answer

A) True 
 B)False

Question 6

If financial markets are efficient, this implies that all securities should earn the same return.

Accepted Answer

A) True 
 B)False

Question 7

Bonds commonly have maturities of one to three years.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following facilitates the exchange of currencies?

Accepted Answer

A) money market 
B) foreign exchange market 
C) New York Stock Exchange 
D) federal funds market 
A) money market 
B) foreign exchange market 
C) New York Stock Exchange 
D) federal funds market

Question 9

Stock issued by a corporation is an example of a(n)

Accepted Answer

A) debt security. 
B) money market security. 
C) equity security. 
D) debt security AND money market security. 
A) debt security. 
B) money market security. 
C) equity security. 
D) debt security AND money market security.

Question 10

The Sarbanes-Oxley Act requires firms to provide complete and accurate financial information and imposes penalties on key executives of the firm if financial fraud is detected.

Accepted Answer

A) True 
 B)False

Question 11

When a securities firm acts as a(n)____, it makes a market in specific securities by maintaining an inventory of those securities.

Accepted Answer

A) adviser 
B) dealer 
C) broker 
D) None of these are correct. 
A) adviser 
B) dealer 
C) broker 
D) None of these are correct.

Question 12

Which of the following is a money market security?

Accepted Answer

A) Treasury note 
B) municipal bond 
C) mortgage 
D) commercial paper 
A) Treasury note 
B) municipal bond 
C) mortgage 
D) commercial paper

Question 13

Equity securities

Accepted Answer

A) have a maturity. 
B) pay interest on a periodic basis. 
C) represent ownership in the issuer. 
D) repay the principal amount at maturity. 
A) have a maturity. 
B) pay interest on a periodic basis. 
C) represent ownership in the issuer. 
D) repay the principal amount at maturity.

Question 14

Which of the following is a capital market instrument?

Accepted Answer

A) a six-month certificate of deposit 
B) a three-month Treasury bill 
C) a ten-year bond 
D) an agreement for a bank to loan funds directly to a company for nine months 
A) a six-month certificate of deposit 
B) a three-month Treasury bill 
C) a ten-year bond 
D) an agreement for a bank to loan funds directly to a company for nine months

____ obtain funds by issuing securities and then lend the funds to individuals and small businesses.

Which of the following distinguishes credit unions from commercial banks and savings institutions?

Most of the funds that insurance companies receive from premiums are invested in short-run money market securities.

Systemic risk is the risk that a large decline in one stock's price could cause investors to sell their stock in other companies.

Debt securities include commercial paper, Treasury bonds, and corporate bonds.

If financial markets are efficient, this implies that all securities should earn the same return.

Bonds commonly have maturities of one to three years.

Which of the following facilitates the exchange of currencies?

Stock issued by a corporation is an example of a(n)

The Sarbanes-Oxley Act requires firms to provide complete and accurate financial information and imposes penalties on key executives of the firm if financial fraud is detected.

When a securities firm acts as a(n)____, it makes a market in specific securities by maintaining an inventory of those securities.

Which of the following is a money market security?

Equity securities

Which of the following is a capital market instrument?

Determination of Interest Rates

Structure of Interest Rates

Functions of the Fed

Monetary Policy

Money Markets

Bond Markets

Bond Valuation and Risk

Mortgage Markets

Stock Offerings and Investor Monitoring

Stock Valuation and Risk

Market Microstructure and Strategies

Financial Futures Markets

Options Markets

Swap Markets

Foreign Exchange Derivative Markets

Commercial Bank Operations

Bank Regulation

Bank Management

Bank Performance

Thrift Operations

Finance Company Operations

Mutual Fund Operations

Securities Operations

Insurance and Pension Fund Operations

Pension Fund Operations

Filters

Exam 1: Role of Financial Markets and Institutions

____ obtain funds by issuing securities and then lend the funds to individuals and small businesses.

Which of the following distinguishes credit unions from commercial banks and savings institutions?

Most of the funds that insurance companies receive from premiums are invested in short-run money market securities.

Systemic risk is the risk that a large decline in one stock's price could cause investors to sell their stock in other companies.

Debt securities include commercial paper, Treasury bonds, and corporate bonds.

If financial markets are efficient, this implies that all securities should earn the same return.

Bonds commonly have maturities of one to three years.

Which of the following facilitates the exchange of currencies?

Stock issued by a corporation is an example of a(n)

The Sarbanes-Oxley Act requires firms to provide complete and accurate financial information and imposes penalties on key executives of the firm if financial fraud is detected.

When a securities firm acts as a(n)____, it makes a market in specific securities by maintaining an inventory of those securities.

Which of the following is a money market security?

Equity securities

Which of the following is a capital market instrument?

Determination of Interest Rates

Structure of Interest Rates

Functions of the Fed

Monetary Policy

Money Markets

Bond Markets

Bond Valuation and Risk

Mortgage Markets

Stock Offerings and Investor Monitoring

Stock Valuation and Risk

Market Microstructure and Strategies

Financial Futures Markets

Options Markets

Swap Markets

Foreign Exchange Derivative Markets

Commercial Bank Operations

Bank Regulation

Bank Management

Bank Performance

Thrift Operations

Finance Company Operations

Mutual Fund Operations

Securities Operations

Insurance and Pension Fund Operations

Pension Fund Operations

Filters