Exam 2: An Overview of the Financial System

The process of indirect finance using financial intermediaries is called ________.

Securities are ________ for the person who buys them,but are ________ for the individual or firm that issues them.

How do financial intermediaries play an important role in the economy?

Long-term debt has a maturity that is ________.

Financial markets improve economic welfare because ________.

Which of the following are short-term financial instruments?

The liquidity of assets in contractual savings institutions ________.

________ are short-term loans in which Treasury bills serve as collateral.

Which of the following statements about the characteristics of debt and equities is true?

A debt instrument sold by a bank to its depositors that pays annual interest of a given amount and at maturity pays back the original purchase price is called ________.

The primary assets of money market mutual funds are ________.

How does regulation reduce the problems of adverse selection and moral hazard? What regulations are or have been used to protect the public from panics?

Explain why only the largest and most trustworthy corporations issue the financial instruments known as commercial paper?

________ are financial intermediaries that acquire funds by selling shares to many individuals and using the proceeds to purchase diversified portfolios of stocks and bonds.

Which of the following is not a contractual savings institution?

The higher a security's price in the secondary market the ________ funds a firm can raise by selling securities in the ________ market.

When I purchase ________,I own a portion of a firm and have the right to vote on issues important to the firm and to elect its directors.

Which of the following is a contractual savings institution?

Bonds issued by corporations are called ________ bonds.

Which of the following are investment intermediaries?