Question 1

The difference between mutual funds and ETFs is that ETFs are traded on exchanges and mutual funds are not.

Accepted Answer

A) True 
 B)False  True

Question 2

Individuals are often savers because they wish to save for things such as a down payment on a home or graduate school.

Accepted Answer

A) True 
 B)False  True

Question 3

Owners of common stock are the owners of the firm.

Accepted Answer

A) True 
 B)False  True

Question 4

All financial intermediaries are banks.

Accepted Answer

A) True 
 B)False

Question 5

Investors in common stock increase their wealth when the

Accepted Answer

A) the market value of the stock goes up. 
B) when the stock pays a dividend. 
C) when the stock pays interest on the original investment. 
D) both A and B. 
A) the market value of the stock goes up. 
B) when the stock pays a dividend. 
C) when the stock pays interest on the original investment. 
D) both A and B.

Question 6

In financial markets,borrowers pay savers by giving them a return on investment.

Accepted Answer

A) True 
 B)False

Question 7

Colin,a private individual,sold one thousand shares of stock in DEF Corporation to Colleen,also a private individual.This represents a secondary market transaction.

Accepted Answer

A) True 
 B)False

Question 8

The purpose of financial markets is to bring borrowers and savers together.

Accepted Answer

A) True 
 B)False

Question 9

All of the following are classified as non-bank financial intermediaries except

Accepted Answer

A) stock brokerages. 
B) investment banks. 
C) insurance companies. 
D) hedge funds. 
A) stock brokerages. 
B) investment banks. 
C) insurance companies. 
D) hedge funds.

Question 10

A stock's market value is dependent on investors' expectations of future cash flows to the firm.

Accepted Answer

A) True 
 B)False

Question 11

Insurance companies have a great deal of money to invest because

Accepted Answer

A) there profit margins are so high. 
B) because they are reluctant to cover insurable losses. 
C) because they must hold large reserves to pay potential claims. 
D) insurance do not actually have large sums to invest. 
A) there profit margins are so high. 
B) because they are reluctant to cover insurable losses. 
C) because they must hold large reserves to pay potential claims. 
D) insurance do not actually have large sums to invest.

Question 12

Investors in securities markets do not use a financial intermediary.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following financial instruments entails the most risk and potentially the highest returns for investors?

Accepted Answer

A) Debt with a maturity of less than one year 
B) Bonds 
C) Common stock 
D) Preferred stock 
A) Debt with a maturity of less than one year 
B) Bonds 
C) Common stock 
D) Preferred stock

Question 14

ABC Corporation issued and sold 10 shares of stock to Irene Investor,a private individual.This represents a secondary market transaction.

Accepted Answer

A) True 
 B)False

Question 15

Mutual Funds and ETFs provide the investor a chance to diversify without having to buy shares in numerous corporations.

Accepted Answer

A) True 
 B)False

Question 16

There are more companies listed on NASDAQ than are listed on the New York Stock Exchange.

Accepted Answer

A) True 
 B)False

Question 17

A company has the option to pay bond interest or not.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is true regarding Investment Banks?

Accepted Answer

A) As a result of the financial crisis of 2008,all stand alone Investment banks either failed,were merged into commercial banks,or became commercial banks. 
B) Under the Glass-Steagal act,commercial banks were allowed to operate as Investment banks. 
C) When Glass-Steagal was repealed in 1999,commercial banks and Investment banks had to be separate entities. 
D) As of 2010,stand alone Investment banks are numerous. 
A) As a result of the financial crisis of 2008,all stand alone Investment banks either failed,were merged into commercial banks,or became commercial banks. 
B) Under the Glass-Steagal act,commercial banks were allowed to operate as Investment banks. 
C) When Glass-Steagal was repealed in 1999,commercial banks and Investment banks had to be separate entities. 
D) As of 2010,stand alone Investment banks are numerous.

Question 19

The principal savers in the financial markets are

Accepted Answer

A) businesses. 
B) banks. 
C) individuals. 
D) governments. 
A) businesses. 
B) banks. 
C) individuals. 
D) governments.

Question 20

Established firms in need of additional capital can raise it in the secondary market.

Accepted Answer

A) True 
 B)False

The difference between mutual funds and ETFs is that ETFs are traded on exchanges and mutual funds are not.

Individuals are often savers because they wish to save for things such as a down payment on a home or graduate school.

Owners of common stock are the owners of the firm.

All financial intermediaries are banks.

Investors in common stock increase their wealth when the

In financial markets,borrowers pay savers by giving them a return on investment.

Colin,a private individual,sold one thousand shares of stock in DEF Corporation to Colleen,also a private individual.This represents a secondary market transaction.

The purpose of financial markets is to bring borrowers and savers together.

All of the following are classified as non-bank financial intermediaries except

A stock's market value is dependent on investors' expectations of future cash flows to the firm.

Insurance companies have a great deal of money to invest because

Investors in securities markets do not use a financial intermediary.

Which of the following financial instruments entails the most risk and potentially the highest returns for investors?

ABC Corporation issued and sold 10 shares of stock to Irene Investor,a private individual.This represents a secondary market transaction.

Mutual Funds and ETFs provide the investor a chance to diversify without having to buy shares in numerous corporations.

There are more companies listed on NASDAQ than are listed on the New York Stock Exchange.

A company has the option to pay bond interest or not.

Which of the following is true regarding Investment Banks?

The principal savers in the financial markets are

Established firms in need of additional capital can raise it in the secondary market.

Getting Started-Principles of Finance

Understanding Financial Statements,taxes,and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters

Exam 2: Firms and the Financial Market

The difference between mutual funds and ETFs is that ETFs are traded on exchanges and mutual funds are not.

Individuals are often savers because they wish to save for things such as a down payment on a home or graduate school.

Owners of common stock are the owners of the firm.

All financial intermediaries are banks.

Investors in common stock increase their wealth when the

In financial markets,borrowers pay savers by giving them a return on investment.

Colin,a private individual,sold one thousand shares of stock in DEF Corporation to Colleen,also a private individual.This represents a secondary market transaction.

The purpose of financial markets is to bring borrowers and savers together.

All of the following are classified as non-bank financial intermediaries except

A stock's market value is dependent on investors' expectations of future cash flows to the firm.

Insurance companies have a great deal of money to invest because

Investors in securities markets do not use a financial intermediary.

Which of the following financial instruments entails the most risk and potentially the highest returns for investors?

ABC Corporation issued and sold 10 shares of stock to Irene Investor,a private individual.This represents a secondary market transaction.

Mutual Funds and ETFs provide the investor a chance to diversify without having to buy shares in numerous corporations.

There are more companies listed on NASDAQ than are listed on the New York Stock Exchange.

A company has the option to pay bond interest or not.

Which of the following is true regarding Investment Banks?

The principal savers in the financial markets are

Established firms in need of additional capital can raise it in the secondary market.

Getting Started-Principles of Finance

Understanding Financial Statements,taxes,and Cash Flows

Financial Analysis-Sizing up Firm Performance

Time Value of Money-The Basics

The Time Value of Money-Annuities and Other Topics

An Introduction to Risk and Return-History of Financial Market Returns

Risk and Return-Capital Market Theory

Debt Valuation and Interest Rates

Stock Valuation

Investment Decision Criteria

Analyzing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters