Exam 2: The Financial Markets and Interest Rates

Which of the following is an example of both a capital market and a primary market transaction?

An example of a primary market transaction involving a money market security is

A corporation needing cash sells securities to investors in the secondary market.

Private placements are

The prime lending rate is the base rate on

The Sarbanes-Oxley Act of 2002,in order to protect investors,requires a higher level of accountability for which of the following groups?

A wealthy private investor providing a direct transfer of funds is called

Which of the following statements is an example of a futures market transaction?

The nominal interest rate is 7% and the expected inflation rate is 2%.Based on the Fisher effect,the real rate of interest is

The process of shelf-registration is beneficial to the issuing firm because it will reduce the time needed for the firm to take an issue to market.

The money market includes transactions in short-term financial instruments.

The syndicate can be thought of as a wholesaler of securities and the dealer organization as a retailer of securities.

Insurance companies invest in the "long-end" of the securities market by purchasing securities with longer maturities.In which of the following instruments would an insurance company be least likely to invest most of its assets?

An example of a primary market transaction is

The current rate of return on a one-year U.S.Government security is 3%.The rate of return on a two-year U.S.Government security is 5%.According to the expectations theory,what is the return on a one-year U.S.Government security purchased one year from today?

The vast majority of corporate bond business takes place over the counter.

Advantages of private placements do not include which of the following?

Which of the following is not a valid theory that attempts to explain the shape of the term structure of interest rates?

ExxonMobil generates about $50 billion in cash annually from its operations and invests about half of that on new exploration.Therefore,ExxonMobil is an example of a(n):

In response to the banking crisis and economic collapse of 2007 and 2008,the U.S.government moved to increase interest rates in order to attract foreign capital seeking high returns in U.S.banks.