Exam 3: Financial Instruments, Financial Markets, and Financial Institutions

Standard & Poor's sells information to investors; this is their primary business.Is this an example of a financial intermediary? Explain.

Why has the pace of structural change in financial markets accelerated in recent years?

Suppose that an internet-based program, Novus, wants to raise $10 million to expand its business operations.Describe how Novus can raise these funds directly through each of the follow options: issuing stock, issuing bonds, or obtaining a bank loan.Compare and contrast these three options.

More detailed financial instruments tend to be:

Financial intermediaries handle a larger flow of funds than do primary markets primarily because financial intermediaries:

How do financial markets pool and communicate the information regarding issuers of financial instruments in a convenient way?

Loans made between borrowers and lenders are:

Small savers would rather use financial institutions than lend directly to borrowers because:

Which of the following is not considered to be a shadow bank?

Briefly explain one function of financial instruments that can make them very different from money.

Many financial instruments are standardized because:

A high school basketball player decides to bypass college and go right into the NBA, (the National Basketball Association).Describe the risk the individual is taking and a contract that might transfer the risk.

The pool of information collected by financial markets is usually:

Which of the following is likely to be a primary financial market transaction?

Tom obtains a car loan from Old Town Bank.

Financial instruments are used to channel funds from:

Equity markets are markets:

What is meant by the "paradox of leverage?"

The primary use of derivative contracts is:

Reasons for the rapid structural change in financial markets in recent years include all of the following except: