Question 1

Which of the following are not considered money market securities?

Accepted Answer

A)  Treasury bills 
B)  mortgage-backed securities 
C)  negotiable certificates of deposit 
D)  commercial paper 
A)  Treasury bills 
B)  mortgage-backed securities 
C)  negotiable certificates of deposit 
D)  commercial paper

Question 2

The credit crisis in the 2008-2009 period was caused by weak economies in Asia.

Accepted Answer

A) True 
 B)False

Question 3

In recent years, financial institutions have consolidated to capitalize on economies of scale and on economies of scope.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following requires mortgage lenders to verify the income, job status, and credit history of mortgage applicants before extending a mortgage?

Accepted Answer

A)  Mortgage Lenders Reform Act 
B)  Financial Reform Act of 2010 
C)  Securities Act of 1933 
D)  Sarbanes-Oxley Act 
A)  Mortgage Lenders Reform Act 
B)  Financial Reform Act of 2010 
C)  Securities Act of 1933 
D)  Sarbanes-Oxley Act

Question 5

____ involve(s) decisions such as how much funding to obtain and what types of securities to issue when financing operations.

Accepted Answer

A)  Corporate finance 
B)  Investment management 
C)  Financial markets and institutions 
D)  none of the above 
A)  Corporate finance 
B)  Investment management 
C)  Financial markets and institutions 
D)  none of the above

Question 6

____ maintain a larger amount of assets in aggregate than the other types of nondepository institutions.

Accepted Answer

A)  Finance companies 
B)  Mutual funds 
C)  Life insurance companies 
D)  Securities firms 
A)  Finance companies 
B)  Mutual funds 
C)  Life insurance companies 
D)  Securities firms

Question 7

The Securities and Exchange Commission (SEC) was established by the

Accepted Answer

A)  Federal Reserve Act. 
B)  McFadden Act. 
C)  Securities Exchange Act of 1934. 
D)  Glass-Steagall Act. 
E)  none of the above 
A)  Federal Reserve Act. 
B)  McFadden Act. 
C)  Securities Exchange Act of 1934. 
D)  Glass-Steagall Act. 
E)  none of the above

Question 8

When security prices fully reflect all available information, the markets for these securities are said to be perfect.

Accepted Answer

A) True 
 B)False

Question 9

____ are long-term debt obligations issued by corporations and government agencies to support their operations.

Accepted Answer

A)  Common stock 
B)  Derivative securities 
C)  Bonds 
D)  None of the above 
A)  Common stock 
B)  Derivative securities 
C)  Bonds 
D)  None of the above

Question 10

Securities represent a claim on the issuer.

Accepted Answer

A) True 
 B)False

Question 11

Money market securities generally have ____.

Accepted Answer

A)  relatively low liquidity, low expected return, and a high degree of credit risk. 
B)  relatively high liquidity, high expected return, and a high degree of credit risk. 
C)  relatively low liquidity, high expected return, and a low degree of credit risk. 
D)  relatively high liquidity, low expected return, and a low degree of credit risk. 
A)  relatively low liquidity, low expected return, and a high degree of credit risk. 
B)  relatively high liquidity, high expected return, and a high degree of credit risk. 
C)  relatively low liquidity, high expected return, and a low degree of credit risk. 
D)  relatively high liquidity, low expected return, and a low degree of credit risk.

Question 12

Which of the following are not considered depository financial institutions?

Accepted Answer

A)  finance companies 
B)  commercial banks 
C)  savings institutions 
D)  credit unions 
E)  All of the above are depository financial institutions. 
A)  finance companies 
B)  commercial banks 
C)  savings institutions 
D)  credit unions 
E)  All of the above are depository financial institutions.

Question 13

International integration of securities markets allows:

Accepted Answer

A)  governments and corporations to have easier access to funding from creditors and investors in other countries. 
B)  investors and creditors to benefit from investment opportunities in other countries. 
C)  one's country's financial problems to adversely affect other countries. 
D)  All of the above 
A)  governments and corporations to have easier access to funding from creditors and investors in other countries. 
B)  investors and creditors to benefit from investment opportunities in other countries. 
C)  one's country's financial problems to adversely affect other countries. 
D)  All of the above

Question 14

There is a ____ relationship between the risk of a security and the expected return from investing in the security.

Accepted Answer

A)  positive 
B)  negative 
C)  indeterminable 
D)  none of the above 
A)  positive 
B)  negative 
C)  indeterminable 
D)  none of the above

Question 15

Common types of capital market securities include Treasury bills and commercial paper.

Accepted Answer

A) True 
 B)False

Question 16

Financial market participants who provide funds are called

Accepted Answer

A)  deficit units. 
B)  surplus units. 
C)  primary units. 
D)  secondary units. 
A)  deficit units. 
B)  surplus units. 
C)  primary units. 
D)  secondary units.

Question 17

If markets are perfect, securities buyers and sellers to not have full access to information and cannot always break down securities to the precise size they desire.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

When particular securities are perceived to be ____ by the market, their prices decrease when they are sold by investors.

Accepted Answer

A)  undervalued 
B)  overvalued 
C)  fairly priced 
D)  efficient 
E)  none of the above 
A)  undervalued 
B)  overvalued 
C)  fairly priced 
D)  efficient 
E)  none of the above

Question 20

Those financial markets that facilitate the flow of short-term funds (with maturities of less than one year) are known as capital markets, while those that facilitate the flow of long-term fundsare known as money markets.

Accepted Answer

A) True 
 B)False

Exam 1: Role of Financial Markets and Institutions

Which of the following are not considered money market securities?

The credit crisis in the 2008-2009 period was caused by weak economies in Asia.

In recent years, financial institutions have consolidated to capitalize on economies of scale and on economies of scope.

Which of the following requires mortgage lenders to verify the income, job status, and credit history of mortgage applicants before extending a mortgage?

____ involve(s) decisions such as how much funding to obtain and what types of securities to issue when financing operations.

____ maintain a larger amount of assets in aggregate than the other types of nondepository institutions.

The Securities and Exchange Commission (SEC) was established by the

When security prices fully reflect all available information, the markets for these securities are said to be perfect.

____ are long-term debt obligations issued by corporations and government agencies to support their operations.

Securities represent a claim on the issuer.

Money market securities generally have ____.

Which of the following are not considered depository financial institutions?

International integration of securities markets allows:

There is a ____ relationship between the risk of a security and the expected return from investing in the security.

Common types of capital market securities include Treasury bills and commercial paper.

Financial market participants who provide funds are called

If markets are perfect, securities buyers and sellers to not have full access to information and cannot always break down securities to the precise size they desire.

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

When particular securities are perceived to be ____ by the market, their prices decrease when they are sold by investors.

Those financial markets that facilitate the flow of short-term funds (with maturities of less than one year) are known as capital markets, while those that facilitate the flow of long-term fundsare known as money markets.

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 Operations

Pension Fund Operations

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