Exam 16: The Financial System

The basic form of corporate ownership is embodied in ____.

A local government in Iowa issued bonds to the general public to build a community park in the locality. The primary objective of the proposed community park is to enhance the green cover in the locality. Which of the following best describes the bonds issued in this scenario?

Which of the following financial institutions would invest the greatest percentage of its assets in common stocks and other long-term investments?

Municipal bonds are exempt from interest payments of federal income tax.

___ are short-term securities issued by the U.S. Treasury and backed by the full faith and credit of the U.S. government.

Describe the two ways that funds can be transferred between savers and users.

The NASDAQ is a computerized communications network that links member investment firms and is the world's largest intranet.

Savings banks were originally established to make ________ loans.

The vast majority of funds flow through direct transfers.

All market participants must keep detailed records of every aspect of every trade. What is this called?

Sales of most corporate and municipal securities are made via auctions.

M1 consists of currency in circulation and balances in bank checking accounts.

Most investors are members of the NYSE, or other stock markets, and therefore they do not need to use the services of a brokerage firm to buy or sell stocks.

The market interest rate does not have any effect on bond prices.

Most nations do not have a central bank similar to the U.S. Federal Reserve.

Bonds with ratings of BB and below are classified as speculative or junk bonds.

Convertible bonds pay lower interest rates than those lacking conversion features.

Jeff wants to purchase a low-risk bond. Therefore, he should buy a government bond.

What are financial institutions?

Daily trading on the AMEX market is ____ shares.