Question 1

The markets for long-term debt and equity are called capital markets.

Accepted Answer

A) True 
 B)False

Question 2

A financial intermediary invests in financial assets rather than real assets.

Accepted Answer

A) True 
 B)False

Question 3

Financial markets and intermediaries allow investors and businesses to reduce and reallocate risk.

Accepted Answer

A) True 
 B)False

Question 4

The 2007-2009 financial crisis was mainly caused by the following organizations.

Accepted Answer

A)  Easy money policies 
B)  US government 
C)  Rating Agencies and bankers 
D)  All of the choices are correct. 
A)  Easy money policies 
B)  US government 
C)  Rating Agencies and bankers 
D)  All of the choices are correct.

Question 5

What is meant by the term of liquidity why is it important?

Accepted Answer

The ability to sell or exchange and asse

Question 6

Which one of the following financial intermediaries has shown the greatest preference for investing in long-term financial assets?

Accepted Answer

A)  Commercial banks 
B)  Insurance companies 
C)  Finance companies 
D)  Savings banks 
A)  Commercial banks 
B)  Insurance companies 
C)  Finance companies 
D)  Savings banks

Question 7

One root of the financial crisis of 2007-2009 was the strict money policies promoted by the U.S.Federal Reserve and other central banks after the technology bubble burst (i.e.,money was relatively expensive during this time).

Accepted Answer

A) True 
 B)False

Question 8

Like public companies,private companies can also use their stock price as a measure of performance.

Accepted Answer

A) True 
 B)False

Question 9

Liquidity is important to a mutual fund primarily because:

Accepted Answer

A)  a fund that is less liquid will attract more investors. 
B)  the fund's shareholders may want to redeem their shares at any time. 
C)  new investors may invest in the fund at any time. 
D)  the fund requires cash to pay its taxes. 
A)  a fund that is less liquid will attract more investors. 
B)  the fund's shareholders may want to redeem their shares at any time. 
C)  new investors may invest in the fund at any time. 
D)  the fund requires cash to pay its taxes.

Question 10

The reinvestment of cash back into the firm's operations is an example of a flow of savings to investment.

Accepted Answer

A) True 
 B)False

Question 11

Short-term financing decisions commonly occur in the:

Accepted Answer

A)  primary markets. 
B)  secondary markets. 
C)  capital markets. 
D)  money markets. 
A)  primary markets. 
B)  secondary markets. 
C)  capital markets. 
D)  money markets.

Question 12

From June 2001 to June 2006,housing prices in the United States doubled.

Accepted Answer

A) True 
 B)False

Question 13

Describe what a financial intermediary is and does.

Accepted Answer

An organization that raises mo

Question 14

If Apple Computer Inc.is used as the model,then new firms should expect to raise capital in which one of these orders? Start with the first money raised.

Accepted Answer

A)  owners, venture capitalists, suppliers, public investors 
B)  owners, suppliers, venture capitalists, public investors 
C)  venture capitalists, owners, public investors, suppliers 
D)  owners, public investors, venture capitalists, suppliers 
A)  owners, venture capitalists, suppliers, public investors 
B)  owners, suppliers, venture capitalists, public investors 
C)  venture capitalists, owners, public investors, suppliers 
D)  owners, public investors, venture capitalists, suppliers

Question 15

Hedge fund managers,unlike mutual fund managers,do not receive fund-performance-related fees.

Accepted Answer

A) True 
 B)False

Question 16

Which type of financial institution generally does not accept deposits but does underwrite stock offerings?

Accepted Answer

A)  Insurance company 
B)  Mutual fund 
C)  Commercial bank 
D)  Investment bank 
A)  Insurance company 
B)  Mutual fund 
C)  Commercial bank 
D)  Investment bank

Question 17

The effects of the financial crisis of 2007-2009 were confined to the U.S.and domestic companies.

Accepted Answer

A) True 
 B)False

Question 18

The cost of capital is the interest rate paid on a loan from a bank or some other financial institution.

Accepted Answer

A) True 
 B)False

Question 19

The primary distinction between securities sold in the primary and secondary markets is the:

Accepted Answer

A)  riskiness of the securities. 
B)  price of the securities. 
C)  previous issuance of the securities. 
D)  profitability of the issuing corporation. 
A)  riskiness of the securities. 
B)  price of the securities. 
C)  previous issuance of the securities. 
D)  profitability of the issuing corporation.

Question 20

Which one of these correctly applies to mutual funds?

Accepted Answer

A)  mutual funds are a costly means of achieving portfolio diversification. 
B)  funds are required to limit their annual fees and expenses to less than 1 percent of the portfolio value. 
C)  you can generally buy additional shares in the fund at any time. 
D)  shareholders sell their shares to other shareholders. 
A)  mutual funds are a costly means of achieving portfolio diversification. 
B)  funds are required to limit their annual fees and expenses to less than 1 percent of the portfolio value. 
C)  you can generally buy additional shares in the fund at any time. 
D)  shareholders sell their shares to other shareholders.

Exam 2: Financial Markets and Institutions

The markets for long-term debt and equity are called capital markets.

A financial intermediary invests in financial assets rather than real assets.

Financial markets and intermediaries allow investors and businesses to reduce and reallocate risk.

The 2007-2009 financial crisis was mainly caused by the following organizations.

What is meant by the term of liquidity why is it important?

Which one of the following financial intermediaries has shown the greatest preference for investing in long-term financial assets?

One root of the financial crisis of 2007-2009 was the strict money policies promoted by the U.S.Federal Reserve and other central banks after the technology bubble burst (i.e.,money was relatively expensive during this time).

Like public companies,private companies can also use their stock price as a measure of performance.

Liquidity is important to a mutual fund primarily because:

The reinvestment of cash back into the firm's operations is an example of a flow of savings to investment.

Short-term financing decisions commonly occur in the:

From June 2001 to June 2006,housing prices in the United States doubled.

Describe what a financial intermediary is and does.

If Apple Computer Inc.is used as the model,then new firms should expect to raise capital in which one of these orders? Start with the first money raised.

Hedge fund managers,unlike mutual fund managers,do not receive fund-performance-related fees.

Which type of financial institution generally does not accept deposits but does underwrite stock offerings?

The effects of the financial crisis of 2007-2009 were confined to the U.S.and domestic companies.

The cost of capital is the interest rate paid on a loan from a bank or some other financial institution.

The primary distinction between securities sold in the primary and secondary markets is the:

Which one of these correctly applies to mutual funds?

Goals and Governance of the Firm

Accounting and Finance

Measuring Corporate Performance

The Time Value of Money

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, IPOs, and Seasoned Offerings

Debt and Payout Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters