Exam 2: Financial Assets, Money, Financial Transactions, and Financial Institutions

One of the most serious management problems encountered by financial intermediaries today is disintermediation - the loss of funds from a financial intermediary to direct or semidirect finance.

Measured by total assets the most important financial institution is the insurance company.

In 2006 the value of M1 was close to

What factors influence the particular financial assets each financial institution acquires?

Between 1960 and 2006, the cost of living index, which measures the prices of consumer goods, increased

Much of the disintermediation experienced by modern financial intermediaries has occurred due to financial innovation within the global financial system.

Identify which economic units are completely self-financed. Which economic units are deficit-budget units? Surplus-budget units? Balanced-budget units?

In the year 2006, the federal government sold assets of around $14 billion and then borrowed almost

In 2006, the major sector of the economy that was the largest net lender of funds was

The text notes that a liquid asset must possess all of the following characteristics except one. Which item listed below is not necessarily true for a liquid asset?

The largest borrowers of money in descending order in 2006 were first, individuals, second, the federal government and third, the local and state governments.

The act of borrowing simultaneously gives rise to an equal volume of financial liabilities incurred.

Internal financing consists of drawing upon current income and accumulated savings to fund the acquisition of assets.

ITT decides to use receivables as collateral for debt it issues rather than borrow from the bank. This is an example of:

The business sector is typically a net borrower of funds in the financial marketplace.

The M1 definition of the U. S. money supply includes small time and savings deposits.

What exactly is the relationship between the process of creating financial assets and liabilities and the acts of saving and investment? Why is that relationship important to your financial and economic well-being?

What do the following terms mean? Deficit-budget unit (DBU)? Surplus-budget unit (SBU)? Balanced-budget unit (BBU)? Why are these concepts important?

An advantage of indirect finance is that secondary securities are attractive to a limited portion of the population.

Within the United States financial system the largest borrower of money in 2006 were nonfinancial businesses at $88 billion.