Question 1

A goal of the Securities and Exchange Commission is to reduce problems arising from

Accepted Answer

A) competition. 
B) banking panics. 
C) risk. 
D) asymmetric information. 
A) competition. 
B) banking panics. 
C) risk. 
D) asymmetric information.

Question 2

Which of the following can be described as direct finance?

Accepted Answer

A) You take out a mortgage from your local bank. 
B) You borrow $2,500 from a friend. 
C) You buy shares of common stock in the secondary market. 
D) You buy shares in a mutual fund. 
A) You take out a mortgage from your local bank. 
B) You borrow $2,500 from a friend. 
C) You buy shares of common stock in the secondary market. 
D) You buy shares in a mutual fund.

Question 3

Which of the following instruments are traded in a capital market?

Accepted Answer

A) corporate bonds 
B) U)S. Treasury bills 
C) negotiable bank CDs 
D) repurchase agreements 
A) corporate bonds 
B) U)S. Treasury bills 
C) negotiable bank CDs 
D) repurchase agreements

Question 4

U)S. Treasury bills pay no interest but are sold at a ________. That is,you will pay a lower purchase price than the amount you receive at maturity.

Accepted Answer

A) premium 
B) collateral 
C) default 
D) discount 
A) premium 
B) collateral 
C) default 
D) discount

Question 5

________ work in the secondary markets matching buyers with sellers of securities.

Accepted Answer

A) Dealers 
B) Underwriters 
C) Brokers 
D) Claimants 
A) Dealers 
B) Underwriters 
C) Brokers 
D) Claimants

Question 6

An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.

Accepted Answer

A) adverse selection 
B) moral hazard 
C) risk sharing 
D) credit risk 
A) adverse selection 
B) moral hazard 
C) risk sharing 
D) credit risk

Question 7

Which of the following are NOT traded in a capital market?

Accepted Answer

A) U)S. government agency securities 
B) state and local government bonds 
C) repurchase agreements 
D) corporate bonds 
A) U)S. government agency securities 
B) state and local government bonds 
C) repurchase agreements 
D) corporate bonds

Question 8

A mutual fund that is organized as a limited partnership with high minimum investments is called a

Accepted Answer

A) hedge fund. 
B) investment bank. 
C) mutual savings bank. 
D) money market mutual fund. 
A) hedge fund. 
B) investment bank. 
C) mutual savings bank. 
D) money market mutual fund.

Question 9

Which of the following is NOT a goal of financial regulation?

Accepted Answer

A) ensuring the soundness of the financial system 
B) reducing moral hazard 
C) reducing adverse selection 
D) ensuring that investors never suffer losses 
A) ensuring the soundness of the financial system 
B) reducing moral hazard 
C) reducing adverse selection 
D) ensuring that investors never suffer losses

Question 10

When secondary market buyers and sellers of securities meet in one central location to conduct trades the market is called a(n)

Accepted Answer

A) exchange. 
B) over-the-counter market. 
C) common market. 
D) barter market. 
A) exchange. 
B) over-the-counter market. 
C) common market. 
D) barter market.

Question 11

Although the dominance of ________ over ________ is clear in all countries,the relative importance of bond versus stock markets differs widely.

Accepted Answer

A) financial intermediaries;securities markets 
B) financial intermediaries;government agencies 
C) government agencies;financial intermediaries 
D) government agencies;securities markets 
A) financial intermediaries;securities markets 
B) financial intermediaries;government agencies 
C) government agencies;financial intermediaries 
D) government agencies;securities markets

Question 12

With ________ finance,borrowers obtain funds from lenders by selling them securities in the financial markets.

Accepted Answer

A) active 
B) determined 
C) indirect 
D) direct 
A) active 
B) determined 
C) indirect 
D) direct

Question 13

A financial market in which only short-term debt instruments are traded is called the ________ market.

Accepted Answer

A) bond 
B) money 
C) capital 
D) stock 
A) bond 
B) money 
C) capital 
D) stock

Question 14

Which of the following can be described as involving direct finance?

Accepted Answer

A) A corporation issues new shares of stock. 
B) People buy shares in a mutual fund. 
C) A pension fund manager buys a short-term corporate security in the secondary market. 
D) An insurance company buys shares of common stock in the over-the-counter markets. 
A) A corporation issues new shares of stock. 
B) People buy shares in a mutual fund. 
C) A pension fund manager buys a short-term corporate security in the secondary market. 
D) An insurance company buys shares of common stock in the over-the-counter markets.

Question 15

Distinguish between a foreign bond and a Eurobond.

Accepted Answer

A foreign bond is sold in a fo

Question 16

When an investment bank ________ securities,it guarantees a price for a corporation's securities and then sells them to the public.

Accepted Answer

A) underwrites 
B) undertakes 
C) overwrites 
D) overtakes 
A) underwrites 
B) undertakes 
C) overwrites 
D) overtakes

Question 17

Studies of the major developed countries show that when businesses go looking for funds to finance their activities they usually obtain these funds from

Accepted Answer

A) government agencies. 
B) equities markets. 
C) financial intermediaries. 
D) bond markets. 
A) government agencies. 
B) equities markets. 
C) financial intermediaries. 
D) bond markets.

Question 18

Government regulations to reduce the possibility of financial panic include all of the following EXCEPT

Accepted Answer

A) transactions costs. 
B) restrictions on assets and activities. 
C) disclosure. 
D) deposit insurance. 
A) transactions costs. 
B) restrictions on assets and activities. 
C) disclosure. 
D) deposit insurance.

Question 19

A corporation acquires new funds only when its securities are sold in the

Accepted Answer

A) secondary market by an investment bank. 
B) primary market by an investment bank. 
C) secondary market by a stock exchange broker. 
D) secondary market by a commercial bank. 
A) secondary market by an investment bank. 
B) primary market by an investment bank. 
C) secondary market by a stock exchange broker. 
D) secondary market by a commercial bank.

Question 20

Which of the following can be described as involving direct finance?

Accepted Answer

A) A corporation takes out loans from a bank. 
B) People buy shares in a mutual fund. 
C) A corporation buys a short-term corporate security in a secondary market. 
D) People buy shares of common stock in the primary markets. 
A) A corporation takes out loans from a bank. 
B) People buy shares in a mutual fund. 
C) A corporation buys a short-term corporate security in a secondary market. 
D) People buy shares of common stock in the primary markets.

Exam 2: An Overview of the Financial System

A goal of the Securities and Exchange Commission is to reduce problems arising from

Which of the following can be described as direct finance?

Which of the following instruments are traded in a capital market?

U)S. Treasury bills pay no interest but are sold at a ________. That is,you will pay a lower purchase price than the amount you receive at maturity.

________ work in the secondary markets matching buyers with sellers of securities.

An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.

Which of the following are NOT traded in a capital market?

A mutual fund that is organized as a limited partnership with high minimum investments is called a

Which of the following is NOT a goal of financial regulation?

When secondary market buyers and sellers of securities meet in one central location to conduct trades the market is called a(n)

Although the dominance of ________ over ________ is clear in all countries,the relative importance of bond versus stock markets differs widely.

With ________ finance,borrowers obtain funds from lenders by selling them securities in the financial markets.

A financial market in which only short-term debt instruments are traded is called the ________ market.

Which of the following can be described as involving direct finance?

Distinguish between a foreign bond and a Eurobond.

When an investment bank ________ securities,it guarantees a price for a corporation's securities and then sells them to the public.

Studies of the major developed countries show that when businesses go looking for funds to finance their activities they usually obtain these funds from

Government regulations to reduce the possibility of financial panic include all of the following EXCEPT

A corporation acquires new funds only when its securities are sold in the

Which of the following can be described as involving direct finance?

Why Study Money, banking, and Financial Markets

What Is Money

The Meaning of Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

Financial Crises in Emerging Market Economies

The ISLM Model

Filters

Although the dominance of over is clear in all countries,the relative importance of bond versus stock markets differs widely.