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 -In a(n)______,if the stock purchase cannot be executed when it is placed,it is left with the exchange's market maker.

CDs with denominations of $1,000,000 or less per depositor are federally insured.

The financial system describes the process by which funds flow from savers to users.

The ______ order is called instructs the broker to obtain the best possible price-the highest price when selling and the lowest price when buying.

Describe how the financial system operates.

Explain the Federal Reserve's three major policy tools.

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 -In the United States,most households are _____ because they conserve more funds than they use.

Raising the reserve requirement tends to increase the supply of money,thereby lowering interest rates.

_____ are short-term debt securities issued by governments,financial institutions,and corporations.

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 backed only by the financial reputation of the issuing corporation.

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

Treasury bills have a minimum denomination of _____.

Corporate bonds are a diverse group and often vary based on the _____ that backs it.

Other things being equal,as interest rate rises,the price of a bond ______.

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 -By selling ____,a firm obtains long-term debt capital.

The Fed rarely uses the reserve requirement tool.

Explain what a credit union is and give an example of one.

The Tucana Bank of Commerce pools customer deposits and uses the funds to make loans to businesses and households.These businesses and households,now known as the borrowers,pay the bank interest,and the bank,in turn,pays depositors interest for the use of their money.Which of the following would best describe the process used by the bank?

Sean made a purchase at his local Walmart.Instead of writing a check,Sean used a card issued by his bank with a Visa logo on the front.He entered his PIN and the purchase was automatically deducted from his checking account.Sean used his __________ card.

What provision allows the issuer to redeem the bond before its maturity at a specified price?