Question 1

The key to the banks' ability to make illiquid loans is their ability to pool liquid deposits from thousands of depositors.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  20% 
B)  40% 
C)  60% 
D)  80% 
A)  20% 
B)  40% 
C)  60% 
D)  80%

Question 5

Which one of these is generally a key difference between U.S.and foreign commercial banks?

Accepted Answer

A)  Pooling and investing savings 
B)  Accepting investor deposits 
C)  Providing debt financing to corporations 
D)  Making equity investments in corporations 
A)  Pooling and investing savings 
B)  Accepting investor deposits 
C)  Providing debt financing to corporations 
D)  Making equity investments in corporations

Question 6

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 11% 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 11% 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%.

Question 7

The opportunity cost of capital is the expected rate of return that shareholders can obtain in the financial markets on investments with the same risk as the firm's capital investments.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The cost of capital:

Accepted Answer

A)  is the expected rate of return on a capital investment. 
B)  is an opportunity cost determined by the risk-free rate of return. 
C)  is the interest rate that the firm pays on a loan from a bank or insurance company. 
D)  for risky investments is normally higher than the firm's borrowing rate. 
A)  is the expected rate of return on a capital investment. 
B)  is an opportunity cost determined by the risk-free rate of return. 
C)  is the interest rate that the firm pays on a loan from a bank or insurance company. 
D)  for risky investments is normally higher than the firm's borrowing rate.

Question 10

From June 2001 to June 2006,house prices in the United States rose sharply.

Accepted Answer

A) True 
 B)False

Question 11

Which one of these was a contributing factor to the need for many foreign banks to seek aid from their governments as a result of the financial crisis of 2007-2009?

Accepted Answer

A)  Decrease in their exchange rates 
B)  Investments in U.S. subprime mortgages 
C)  Interest rate spikes 
D)  Currency controls 
A)  Decrease in their exchange rates 
B)  Investments in U.S. subprime mortgages 
C)  Interest rate spikes 
D)  Currency controls

Question 12

Which one of the following statements is not characteristic of mutual funds?

Accepted Answer

A)  They are always considered to be financial institutions. 
B)  They raise money by selling shares to investors. 
C)  They pool the savings of many investors. 
D)  They offer professional management and portfolio diversification. 
A)  They are always considered to be financial institutions. 
B)  They raise money by selling shares to investors. 
C)  They pool the savings of many investors. 
D)  They offer professional management and portfolio diversification.

The key to the banks' ability to make illiquid loans is their ability to pool liquid deposits from thousands of depositors.

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

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

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

Which one of these is generally a key difference between U.S.and foreign commercial banks?

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

The opportunity cost of capital is the expected rate of return that shareholders can obtain in the financial markets on investments with the same risk as the firm's capital investments.

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

The cost of capital:

From June 2001 to June 2006,house prices in the United States rose sharply.

Which one of these was a contributing factor to the need for many foreign banks to seek aid from their governments as a result of the financial crisis of 2007-2009?

Which one of the following statements is not characteristic of 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 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

Exam 2: Financial Markets and Institutions

The key to the banks' ability to make illiquid loans is their ability to pool liquid deposits from thousands of depositors.

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

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

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

Which one of these is generally a key difference between U.S.and foreign commercial banks?

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

The opportunity cost of capital is the expected rate of return that shareholders can obtain in the financial markets on investments with the same risk as the firm's capital investments.

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

The cost of capital:

From June 2001 to June 2006,house prices in the United States rose sharply.

Which one of these was a contributing factor to the need for many foreign banks to seek aid from their governments as a result of the financial crisis of 2007-2009?

Which one of the following statements is not characteristic of 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 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