Question 1

How did the mortgage market provide the impetus for the financial crisis of 2007-2010?

Accepted Answer

The answer of How did the mortgage market provide the...

Question 2

If the spot rate for the British pound is $1.5077 and the 180-day forward rate is $1.4934, what is the annualized premium (discount)?

Accepted Answer

A)  premium of 1.90% 
B)  premium of 0.97% 
C)  discount of (-)1.90% 
D)  discount of (-)0.97%

Question 3

Maher purchased 100 shares of Chill Pill Pharmaceuticals at $30 per share last spring and sold them in six months for $36 per share. The stock paid no dividend. What was Maher's holding period return?

Accepted Answer

A)  40% 
B)  20% 
C)  10% 
D)  5%

Question 4

Which of the following is correct regarding the forms of market efficiency?
I. In an efficient capital market stock prices provide an unbiased estimate of the true value of an enterprise.
II. In an efficient capital market, stock prices reflect the present value of the firm's expected cash flows.

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II

Question 5

The fact that no investor can expect to earn excess returns based on an investment strategy using only historical stock price or return information is an example of ____ market efficiency.

Accepted Answer

A)  strong-form 
B)  weak-form 
C)  semiweak-form 
D)  semistrong-form

Question 6

The difference between the bid price and the ask price on a security is the:

Accepted Answer

A)  spread 
B)  value 
C)  asset factor 
D)  commission

Question 7

In the ____ market, the firm receives the proceeds from the sale of its securities.

Accepted Answer

A)  over-the-counter 
B)  secondary 
C)  fully integrated 
D)  primary

Question 8

The interest rate at which banks in the Eurocurrency market lend to each other is known as the ____.

Accepted Answer

A)  Eurocurrency currency rate (ECR) 
B)  London interbank offer rate 
C)  exchange rate 
D)  interest rate parity

Question 9

List changes that have occurred within financial markets regulation as a result of the passage of the Sarbanes-Oxley Act of 2002.

Accepted Answer

The answer of List changes that have occurred within financial...

Question 10

Financial intermediaries include

Accepted Answer

A)  securities brokers 
B)  commercial banks 
C)  securities dealers 
D)  all of the above

Question 11

A multinational firm ____.

Accepted Answer

A)  has direct investments in manufacturing facilities in more than one country 
B)  exports finished goods for sale in another country 
C)  imports raw materials from another country 
D)  has a manufacturing representative in another country

Question 12

If the exchange rate from U.S. dollars to Swiss francs is $0.20/franc, then the exchange rate from francs to dollars is

Accepted Answer

A)  0.20 francs/dollar 
B)  0.80 francs/dollar 
C)  5.0 francs/dollar 
D)  2.0 francs/dollar

Question 13

The following are listed security exchanges in the United Sates:

Accepted Answer

A)  New York Stock Exchange 
B)  Pacific Exchange 
C)  Cincinnati Exchange 
D)  All the above are listed exchanges

Question 14

Which of the following is not a correct statement about foreign currency futures?

Accepted Answer

A)  futures contracts have a standardized maturity date 
B)  futures contracts are an exchange-traded agreement 
C)  futures contracts are not liquid 
D)  futures contracts are "marked to market" daily

Question 15

The main purpose of an economy's financial system is to facilitate the transfer of funds from

Accepted Answer

A)  financial middlemen to financial intermediaries 
B)  surplus spending units to deficit spending units 
C)  primary claimholders to secondary claimholders 
D)  lenders to financial intermediaries

Question 16

____ markets deal in short-term securities having maturities of one year or less.

Accepted Answer

A)  Credit 
B)  Money 
C)  Capital 
D)  Capital and credit

Question 17

Financial intermediaries

Accepted Answer

A)  issue secondary claims to the lender 
B)  are compensated for their services by fixed fees 
C)  include both brokers and dealers 
D)  issue primary claims to the lender

Question 18

____ markets deal in long-term securities having maturities greater than one year.

Accepted Answer

A)  Credit 
B)  Money 
C)  Commodity futures 
D)  Capital

Exam 2: The Domestic and International Financial Marketplace