Exam 16: The Financial System

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 financial market where corporations and governments issue securities and sell them initially to the general public is called the ______.

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?

If an individual owns 10% of the assets in a particular company,he or she becomes a(n)_____.

Explain the process of underwriting.

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

Savings banks have greatly expanded their business lending activities in recent years while cutting back on their home mortgage lending activity.

Any firm can be listed on the New York Stock Exchange.

The credit crisis came about partly because of subprime mortgages.

Issuers tend to call bonds when market interest rates are declining.

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 -_____ are the largest and probably most important financial institutions in the United States and in most other countries as well.

In the long run,stock prices tend to follow a company's profits.

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

When the Fed buys government securities,it adds to the supply of money and credit,which causes a reduction in interest rates.

_____ connect major brokerages and individual traders virtually using the Internet,so that trades can be made directly without going through an intermediary.

The SEC requires reports any time an investor accumulates more than 5% of a company's outstanding stock.

______ securities are backed by a pool of mortgage loans purchased from lenders,such as savings banks.

The market value of a stock is the price at which the stock is currently selling.

The National Association of Securities Dealers (NASD)purpose is to ensure that brokers perform their basic functions honestly and fairly,under constant supervision.

One of the Federal Reserve's most important tasks is to help facilitate the clearing of checks.

What is the Federal Reserve's most important function? How does this function affect the nation's rate of inflation and employment?