Exam 2: An Overview of the Financial System

U)S. dollar deposits in foreign banks outside the U.S. or in foreign branches of U.S. banks are called

A breakdown of financial markets can result in

Because there is an imbalance of information in a lending situation,we must deal with the problems of adverse selection and moral hazard. Define these terms and explain how financial intermediaries can reduce these problems.

The agency that restricts insider trading is the

Which of the following is a contractual savings institution?

Which of the following is an example of an intermediate-term debt?

Which of the following benefits directly from any increase in the corporation's profitability?

A short-term debt instrument issued by well-known corporations is called

The process where financial intermediaries create and sell low-risk assets and use the proceeds to purchase riskier assets is known as

Well functioning financial markets benefit ________ by allowing them to time their purchases more efficiently.

Which of the following is a depository institution?

Which of the following do NOT provide charters?

Hedge funds require large minimum investments ranging from ________ to ________ or more.

Which of the following is NOT a secondary market?

An investment bank purchases securities from a corporation at a predetermined price and then resells them in the market. This process is called

A restriction on bank activities that was repealed in 1999 was

Every financial market has the following characteristic.

Describe the two methods of organizing a secondary market.

Long-term debt has a maturity that is

Distinguish between direct finance and indirect finance. Which of these is the most important source of funds for corporations in the United States?