Question 1

U.S.bonds and other debt securities are mostly held by:

Accepted Answer

A)  institutional investors. 
B)  households. 
C)  foreign investors. 
D)  state and local governments. 
A)  institutional investors. 
B)  households. 
C)  foreign investors. 
D)  state and local governments.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Which of the following financial markets is not located in one centralized location?

Accepted Answer

A)  NYSE 
B)  LSE 
C)  NASDAQ 
D)  CBOT 
A)  NYSE 
B)  LSE 
C)  NASDAQ 
D)  CBOT

Question 5

A financial institution:

Accepted Answer

A)  is a kind of financial intermediary. 
B)  simply pools and invests savings. 
C)  raises financing by selling shares or policies. 
D)  invests primarily in commodities. 
A)  is a kind of financial intermediary. 
B)  simply pools and invests savings. 
C)  raises financing by selling shares or policies. 
D)  invests primarily in commodities.

Question 6

Which of the following financial assets might be least likely to have an active secondary market?

Accepted Answer

A)  Common stock of a large firm 
B)  Bank loans made to smaller firms 
C)  Bonds of a major, multinational corporation 
D)  Debt issued by the U.S. Treasury 
A)  Common stock of a large firm 
B)  Bank loans made to smaller firms 
C)  Bonds of a major, multinational corporation 
D)  Debt issued by the U.S. Treasury

Question 7

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 8

How can the financial manager identify the cost of the capital raised by a corporation?

Accepted Answer

The cost of capital is the minimum accep

Question 9

When Patricia sells her General Motors common stock at the same time that Brian purchases the same amount of GM stock,GM receives:

Accepted Answer

A)  the dollar value of the transaction. 
B)  the dollar amount of the transaction, less brokerage fees. 
C)  only the par value of the common stock. 
D)  nothing. 
A)  the dollar value of the transaction. 
B)  the dollar amount of the transaction, less brokerage fees. 
C)  only the par value of the common stock. 
D)  nothing.

Question 10

Property insurance companies protect themselves against the extensive damage caused by hurricanes and earthquakes by:

Accepted Answer

A)  selling thousands of policies to different homeowners. 
B)  factoring the cost into the price of the policies. 
C)  buying reinsurance against such catastrophes. 
D)  declaring bankruptcy when the need arises. 
A)  selling thousands of policies to different homeowners. 
B)  factoring the cost into the price of the policies. 
C)  buying reinsurance against such catastrophes. 
D)  declaring bankruptcy when the need arises.

Question 11

What is an exchange traded fund? What are some popular choices of exchange traded funds?

Accepted Answer

Exchange traded funds (ETFs)are portfoli

Question 12

Long-term financing decisions commonly occur in the:

Accepted Answer

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

Question 13

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 14

U.S.corporate equities are mostly held by:

Accepted Answer

A)  insurance companies. 
B)  households. 
C)  foreign investors. 
D)  state and local governments. 
A)  insurance companies. 
B)  households. 
C)  foreign investors. 
D)  state and local governments.

Question 15

When corporations need to raise funds through stock issues,they rely on the:

Accepted Answer

A)  primary market. 
B)  secondary market. 
C)  tertiary market. 
D)  centralized NASDAQ exchange. 
A)  primary market. 
B)  secondary market. 
C)  tertiary market. 
D)  centralized NASDAQ exchange.

Question 16

Which of the following functions does not require financial markets?

Accepted Answer

A)  Transporting of cash across time 
B)  Provision of liquidity 
C)  Risk reduction by investment in diversified portfolios 
D)  Provision of trade information 
A)  Transporting of cash across time 
B)  Provision of liquidity 
C)  Risk reduction by investment in diversified portfolios 
D)  Provision of trade information

Question 17

Why are secondary market transactions of importance to corporations?

Accepted Answer

Although corporations do not generate ca

Question 18

In 2010,U.S.corporate and foreign bonds totaled:

Accepted Answer

A)  less than $500 billion. 
B)  about $3 trillion. 
C)  about $7 trillion. 
D)  more than $11 trillion. 
A)  less than $500 billion. 
B)  about $3 trillion. 
C)  about $7 trillion. 
D)  more than $11 trillion.

Question 19

Which of the following mutual funds have a tax advantage?

Accepted Answer

A)  Balanced funds 
B)  Pension funds 
C)  Bond funds 
D)  Funds that invest in foreign countries 
A)  Balanced funds 
B)  Pension funds 
C)  Bond funds 
D)  Funds that invest in foreign countries

Question 20

A capital investment that generates a 10% rate of return is worthwhile if:

Accepted Answer

A)  corporate bonds of similar risk offer 8% rates of return. 
B)  corporate bonds of similar risk offer 10% rates of return. 
C)  top-quality corporate bonds offer 10% rates of return. 
D)  the expected rate of return on the stock market is 12%. 
A)  corporate bonds of similar risk offer 8% rates of return. 
B)  corporate bonds of similar risk offer 10% rates of return. 
C)  top-quality corporate bonds offer 10% rates of return. 
D)  the expected rate of return on the stock market is 12%.

Exam 2: Financial Markets and Institutions

U.S.bonds and other debt securities are mostly held by:

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

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

Which of the following financial markets is not located in one centralized location?

A financial institution:

Which of the following financial assets might be least likely to have an active secondary market?

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

How can the financial manager identify the cost of the capital raised by a corporation?

When Patricia sells her General Motors common stock at the same time that Brian purchases the same amount of GM stock,GM receives:

Property insurance companies protect themselves against the extensive damage caused by hurricanes and earthquakes by:

What is an exchange traded fund? What are some popular choices of exchange traded funds?

Long-term financing decisions commonly occur in the:

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

U.S.corporate equities are mostly held by:

When corporations need to raise funds through stock issues,they rely on the:

Which of the following functions does not require financial markets?

Why are secondary market transactions of importance to corporations?

In 2010,U.S.corporate and foreign bonds totaled:

Which of the following mutual funds have a tax advantage?

A capital investment that generates a 10% rate of return is worthwhile if:

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

Risk, Return, and Capital Budgeting

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Filters