Exam 16: The Financial System

Bonds with the highest level of risk are rated AAA.

Banks in other nations often respond to changes in the U.S.financial system by making similar changes in their own systems.

The _____ involves the direct trading of exchange-listed stocks off the floor of the exchange (in the case of NYSE-listed stocks)or outside the network (in the case of NASDAQ-listed stocks).

______ are creditors (an entity to whom a debt is owed)of a corporation or government body.

Complete the following using the terms listed. a.bonds b.Commercial banks c.NASDAQ d.Credit unions e.financial system f.call provision g.insider trading h.Federal Open Market Committee (FOMC) i.Securities j.New York Stock Exchange k.Internet-only banks l.limit order m.debentures n.primary market o.net savers -The ______ is sometimes referred to as the Big Board,the most famous and one of the oldest stock markets in the world,having been founded in 1792.

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

Madelyn Inc. ,an automobile company,decides to expand its operation abroad by setting up three new manufacturing plants.Since enough funds were not available for this expansion process,Madelyn decides to list its company on its national stock exchange and issue securities for raising additional capital.The market for Madelyn's securities can be described as a ______ market.

Securities are sold to the investing public in two ways: in open auctions and through investment bankers.

The process used by an insurance company to determine whom to insure and how much to charge is called __________.

What feature gives the bondholder or preferred stockholder the right to exchange the bond or preferred stock for a fixed number of shares of common stock?

The two largest stock markets in the world are the _____ and the _____.

Complete the following using the terms listed. a.bonds b.Commercial banks c.NASDAQ d.Credit unions e.financial system f.call provision g.insider trading h.Federal Open Market Committee (FOMC) i.Securities j.New York Stock Exchange k.Internet-only banks l.limit order m.debentures n.primary market o.net savers -When bond rates start to decline,issuers usually use the _____ to redeem the bond before its maturity at a specified price.

There are __________ Federal Reserve districts.

Tom just bought a bond from United Pet Group.This bond is only backed by the financial reputation of the company.What type of bond did Tom buy?

Complete the following using the terms listed. a.bonds b.Commercial banks c.NASDAQ d.Credit unions e.financial system f.call provision g.insider trading h.Federal Open Market Committee (FOMC) i.Securities j.New York Stock Exchange k.Internet-only banks l.limit order m.debentures n.primary market o.net savers -______ represent obligations on the part of issuers to provide purchasers with expected or stated returns on the funds invested or loaned.

______ is defined as the use of material nonpublic information about a company to make investment profits.

Two types of municipal bonds exist.What are they?

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.

Explain the concept of financial institutions.

When a company offers stock for sale to the general public for the first time,it is called an initial public offering.