Question 1

The diagram below is a diagram of the

Accepted Answer

A) secondary markets. 
B) primary markets. 
C) money markets. 
D) derivatives markets. 
E) commodities markets. 
A) secondary markets. 
B) primary markets. 
C) money markets. 
D) derivatives markets. 
E) commodities markets.

Question 2

Discuss how secondary markets benefit issuers and investors.

Accepted Answer

The secondary markets provide liquidity

Question 3

Financial intermediaries' ability to reduce the average cost of collecting information because of their efficient operations allows them to take advantage of

Accepted Answer

A) asset transformation. 
B) economies of scale. 
C) economies of scope. 
D) transformational trading. 
E) standardization. 
A) asset transformation. 
B) economies of scale. 
C) economies of scope. 
D) transformational trading. 
E) standardization.

Question 4

The most diversified type of depository institutions is

Accepted Answer

A) credit unions. 
B) savings associations. 
C) commercial banks. 
D) finance companies. 
E) mutual funds. 
A) credit unions. 
B) savings associations. 
C) commercial banks. 
D) finance companies. 
E) mutual funds.

Question 5

As of 2016,which one of the following derivatives instruments had the greatest amount of notional principal outstanding?

Accepted Answer

A) Futures 
B) Swaps 
C) Options 
D) Bonds 
E) Forwards 
A) Futures 
B) Swaps 
C) Options 
D) Bonds 
E) Forwards

Question 6

Which of the following is/are money market instrument(s)?

Accepted Answer

A) Negotiable CDs 
B) Common stock 
C) T-bonds 
D) 4-year maturity corporate bond 
E) Negotiable CDs,common stock,and T-bonds 
A) Negotiable CDs 
B) Common stock 
C) T-bonds 
D) 4-year maturity corporate bond 
E) Negotiable CDs,common stock,and T-bonds

Question 7

What have been the major factors contributing to growth in the foreign financial markets?

Accepted Answer

1. The amount of savings available for i

Question 8

Enterprise Risk Management (ERM)system is responsible for managing the totality of a firm's risk exposures.

Accepted Answer

A) True 
 B)False

Question 9

One of the factors responsible for globalization of financial markets and institutions is deregulation.

Accepted Answer

A) True 
 B)False

Question 10

Depository institutions include

Accepted Answer

A) banks. 
B) thrifts. 
C) finance companies. 
D) all of these choices are correct. 
E) banks and thrifts. 
A) banks. 
B) thrifts. 
C) finance companies. 
D) all of these choices are correct. 
E) banks and thrifts.

Question 11

Money markets trade securities that
I. mature in one year or less.
II. have little chance of loss of principal.
III. must be guaranteed by the federal government.

Accepted Answer

A) I only 
B) II only 
C) I and II only 
D) I and III only 
E) I,II,and III 
A) I only 
B) II only 
C) I and II only 
D) I and III only 
E) I,II,and III

Question 12

The largest capital market security outstanding in 2016 measured by market value was

Accepted Answer

A) securitized mortgages. 
B) corporate bonds. 
C) municipal bonds. 
D) Treasury bonds. 
E) corporate stocks. 
A) securitized mortgages. 
B) corporate bonds. 
C) municipal bonds. 
D) Treasury bonds. 
E) corporate stocks.

Question 13

You are a corporate treasurer seeking to raise funds for your firm. What are some advantages of raising funds via a financial intermediary (FI)rather than by selling securities to the public?

Accepted Answer

Advantages include 
-Speed: Funds can no

Question 14

Discuss the benefits to funds suppliers of using a financial intermediary asset transformer in place of directly purchasing claims such as stocks or bonds. What is the major disadvantage?
What is the downside of putting your money in an intermediary?

Accepted Answer

Potential benefits to funds suppliers (S

Question 15

Asset transformation by financial intermediaries involves increasing the risk attributes of securities such as mortgages,bonds,and stocks.

Accepted Answer

A) True 
 B)False

Question 16

In the United States the SEC provides deposit insurance for $250,000 per person per bank.

Accepted Answer

A) True 
 B)False

Question 17

What does an asset transformer do? Why is asset transformation a risky activity?

Accepted Answer

An asset transformer buys one security f

Question 18

Which of the following are capital market instruments?

Accepted Answer

A) 10-year corporate bonds 
B) 30-year mortgages 
C) 20-year Treasury bonds 
D) 15-year U.S. government agency bonds 
E) All of these choices are correct 
A) 10-year corporate bonds 
B) 30-year mortgages 
C) 20-year Treasury bonds 
D) 15-year U.S. government agency bonds 
E) All of these choices are correct

Question 19

Explain how the credit crunch originating in the mortgage markets hurt financial intermediaries' attempts to use diversification and monitoring to limit the riskiness of their loans and investments while offering more liquid claims to savers.

Accepted Answer

Financial intermediaries' (FIs)attempts

Question 20

Commercial paper is

Accepted Answer

A) a time draft payable to a seller of goods,with payment guaranteed by a bank. 
B) a loan to an individual or business to purchase a home,land,or other real property. 
C) short-term funds transferred between financial institutions usually for no more than one day. 
D) a marketable bank-issued time deposit that specifies the interest rate earned and a fixed maturity date. 
E) a short-term unsecured promissory note issued by a company to raise funds for a short time period. 
A) a time draft payable to a seller of goods,with payment guaranteed by a bank. 
B) a loan to an individual or business to purchase a home,land,or other real property. 
C) short-term funds transferred between financial institutions usually for no more than one day. 
D) a marketable bank-issued time deposit that specifies the interest rate earned and a fixed maturity date. 
E) a short-term unsecured promissory note issued by a company to raise funds for a short time period.

Exam 1: Introduction

The diagram below is a diagram of the

Discuss how secondary markets benefit issuers and investors.

Financial intermediaries' ability to reduce the average cost of collecting information because of their efficient operations allows them to take advantage of

The most diversified type of depository institutions is

As of 2016,which one of the following derivatives instruments had the greatest amount of notional principal outstanding?

Which of the following is/are money market instrument(s)?

What have been the major factors contributing to growth in the foreign financial markets?

Enterprise Risk Management (ERM)system is responsible for managing the totality of a firm's risk exposures.

One of the factors responsible for globalization of financial markets and institutions is deregulation.

Depository institutions include

Money markets trade securities that I. mature in one year or less. II. have little chance of loss of principal. III. must be guaranteed by the federal government.

The largest capital market security outstanding in 2016 measured by market value was

You are a corporate treasurer seeking to raise funds for your firm. What are some advantages of raising funds via a financial intermediary (FI)rather than by selling securities to the public?

Discuss the benefits to funds suppliers of using a financial intermediary asset transformer in place of directly purchasing claims such as stocks or bonds. What is the major disadvantage? What is the downside of putting your money in an intermediary?

Asset transformation by financial intermediaries involves increasing the risk attributes of securities such as mortgages,bonds,and stocks.

In the United States the SEC provides deposit insurance for $250,000 per person per bank.

What does an asset transformer do? Why is asset transformation a risky activity?

Which of the following are capital market instruments?

Explain how the credit crunch originating in the mortgage markets hurt financial intermediaries' attempts to use diversification and monitoring to limit the riskiness of their loans and investments while offering more liquid claims to savers.

Commercial paper is

Determinants of Interest Rates

Interest Rates and Security Valuation

The Federal Reserve System, monetary Policy, and Interest Rates

Money Markets

Bond Markets

Mortgage Markets

Stock Markets

Foreign Exchange Markets

Derivative Securities Markets

Commercial Banks: Industry Overview

Commercial Banks Financial Statements and Analysis

Regulation of Commercial Banks

Other Lending Institutions: Savings Institutions, credit Unions, and Finance Companies

Insurance Companies

Securities Firms and Investment Banks

Investment Companies

Pension Funds

Types of Risks Incurred by Financial Institutions

Managing Credit Risk on the Balance Sheet

Managing Liquidity Risk on the Balance Sheet

Managing Interest Rate Risk and Insolvency Risk on the Balance Sheet

Managing Risk Off the Balance Sheet With Derivative Securities

Managing Risk Off the Balance Sheet With Loan Sales and Securitization

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