Question 1

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 2

An individual can save and invest in a corporation only by lending money to it or by purchasing additional shares.

Accepted Answer

A) True 
 B)False

Question 3

Previously issued securities are traded among investors in the secondary markets.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 7

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.

Question 8

Financing for public corporations must flow through financial markets.

Accepted Answer

A) True 
 B)False

Question 9

What are subprime mortgages and how were they a part of the Financial Crisis of 2007-2009?

Accepted Answer

In the early twenty-first century, centr

Question 10

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 11

Which of the following information is not provided by the financial markets?

Accepted Answer

A)  The price of six ounces of gold 
B)  The cost of borrowing $500,000 for 5 years 
C)  Microsoft's earnings in 2013 
D) The cost of one million yen in U.S. dollars 
A)  The price of six ounces of gold 
B)  The cost of borrowing $500,000 for 5 years 
C)  Microsoft's earnings in 2013 
D) The cost of one million yen in U.S. dollars

Question 12

What are the largest institutional investors in bonds? In stocks?

Accepted Answer

The largest institutional investors in b

Question 13

Approximately what percentage of U.S. corporate equities are held by households?

Accepted Answer

A)  25% 
B)  40% 
C)  50% 
D) 60% 
A)  25% 
B)  40% 
C)  50% 
D) 60%

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

In the United States, banks are the most important source of long-term financing for businesses.

Accepted Answer

A) True 
 B)False

Question 16

Insurance companies primarily reduce an individual's risk by:

Accepted Answer

A)  transporting that risk forward in time. 
B)  providing payment services. 
C)  spreading that risk across many individuals. 
D) providing low-interest-rate loans. 
A)  transporting that risk forward in time. 
B)  providing payment services. 
C)  spreading that risk across many individuals. 
D) providing low-interest-rate loans.

Question 17

Only small companies can go through financial markets to obtain financing.

Accepted Answer

A) True 
 B)False

Question 18

For corporate bonds, the higher the credit quality of an issuer, the higher the interest rate.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 2: Financial Markets and Institutions

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

An individual can save and invest in a corporation only by lending money to it or by purchasing additional shares.

Previously issued securities are traded among investors in the secondary markets.

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

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

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

Which one of these correctly applies to mutual funds?

Financing for public corporations must flow through financial markets.

What are subprime mortgages and how were they a part of the Financial Crisis of 2007-2009?

Short-term financing decisions commonly occur in the:

Which of the following information is not provided by the financial markets?

What are the largest institutional investors in bonds? In stocks?

Approximately what percentage of U.S. corporate equities are held by households?

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

In the United States, banks are the most important source of long-term financing for businesses.

Insurance companies primarily reduce an individual's risk by:

Only small companies can go through financial markets to obtain financing.

For corporate bonds, the higher the credit quality of an issuer, the higher the interest rate.

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:

Goals and Governance of the Corporation

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

How Corporations Raise Venture Capital and Issue Securities

Debt Policy

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Working Capital Management

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters