Question 1

Although the dominance of ________ over ________ is clear in all countries, the relative importance of bond versus stock markets differs widely.

Accepted Answer

A)   financial intermediaries; securities markets
B)   financial intermediaries; government agencies
C)   government agencies; financial intermediaries
D)   government agencies; securities marketsE) B) and C)
F) C) and D)

Question 2

An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.

Accepted Answer

A)   adverse selection
B)   moral hazard
C)   risk sharing
D)   credit riskE) A) and B)
F) All of the above

Question 3

Which of the following instruments are traded in a money market?

Accepted Answer

A)   State and local government bonds.
B)   U.S. Treasury bills.
C)   Corporate bonds.
D)   U.S. government agency securities.E) B) and D)
F) A) and D)

Question 4

The primary liabilities of depository institutions are

Accepted Answer

A)   premiums from policies.
B)   shares.
C)   deposits.
D)   bonds.E) All of the above
F) A) and B)

Question 5

Which of the following is a contractual savings institution?

Accepted Answer

A)   A life insurance company
B)   A credit union
C)   A savings and loan association
D)   A mutual fundE) B) and C)
F) A) and B)

Question 6

If Microsoft sells a bond in London and it is denominated in dollars, the bond is a

Accepted Answer

A)   Eurobond.
B)   foreign bond.
C)   British bond.
D)   currency bond.E) B) and C)
F) A) and B)

Question 7

Which of the following are not contractual savings institutions?

Accepted Answer

A)   Life insurance companies
B)   Credit unions
C)   Pension funds
D)   State and local government retirement fundsE) All of the above
F) A) and D)

Question 8

Securities are ________ for the person who buys them, but are ________ for the individual or firm that issues them.

Accepted Answer

A)   assets; liabilities
B)   liabilities; assets
C)   negotiable; nonnegotiable
D)   nonnegotiable; negotiableE) None of the above
F) B) and C)

Question 9

Financial institutions that accept deposits and make loans are called ________ institutions.

Accepted Answer

A)   investment
B)   contractual savings
C)   depository
D)   underwritingE) None of the above
F) B) and C)

Question 10

Which of the following can be described as involving indirect finance?

Accepted Answer

A)   You make a loan to your neighbor.
B)   A corporation buys a share of common stock issued by another corporation in the primary market.
C)   You buy a U.S. Treasury bill from the U.S. Treasury.
D)   You make a deposit at a bank.E) A) and B)
F) A) and C)

Question 11

The primary purpose of deposit insurance is to

Accepted Answer

A)   improve the flow of information to investors.
B)   prevent banking panics.
C)   protect bank shareholders against losses.
D)   protect bank employees from unemployment.E) A) and B)
F) A) and C)

Question 12

Which of the following are short-term financial instruments?

Accepted Answer

A)   A repurchase agreement.
B)   A share of Walt Disney Corporation stock.
C)   A Treasury note with a maturity of four years.
D)   A residential mortgage.E) B) and C)
F) All of the above

Exam 2: An Overview of the Financial System

Securities are for the person who buys them, but are for the individual or firm that issues them.

Correct Answer
verified

Which of the following instruments are traded in a money market?

Correct Answer
verified

Financial institutions that accept deposits and make loans are called ________ institutions.

Correct Answer
verified

Although the dominance of over is clear in all countries, the relative importance of bond versus stock markets differs widely.

Correct Answer
verified

Which of the following can be described as involving indirect finance?

Correct Answer
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The primary purpose of deposit insurance is to

Correct Answer
verified

Which of the following are short-term financial instruments?

Correct Answer
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If Microsoft sells a bond in London and it is denominated in dollars, the bond is a

Correct Answer
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Which of the following are not contractual savings institutions?

Correct Answer
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An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.

Correct Answer
verified

Which of the following is a contractual savings institution?

Correct Answer
verified

The primary liabilities of depository institutions are

Correct Answer
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Exam 2: An Overview of the Financial System

Securities are ________ for the person who buys them, but are ________ for the individual or firm that issues them.

Correct AnswerverifiedShow Answer

Which of the following instruments are traded in a money market?

Correct AnswerverifiedShow Answer

Financial institutions that accept deposits and make loans are called ________ institutions.

Correct AnswerverifiedShow Answer

Although the dominance of ________ over ________ is clear in all countries, the relative importance of bond versus stock markets differs widely.

Correct AnswerverifiedShow Answer

Which of the following can be described as involving indirect finance?

Correct AnswerverifiedShow Answer

The primary purpose of deposit insurance is to

Correct AnswerverifiedShow Answer

Which of the following are short-term financial instruments?

Correct AnswerverifiedShow Answer

If Microsoft sells a bond in London and it is denominated in dollars, the bond is a

Correct AnswerverifiedShow Answer

Which of the following are not contractual savings institutions?

Correct AnswerverifiedShow Answer

An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.

Correct AnswerverifiedShow Answer

Which of the following is a contractual savings institution?

Correct AnswerverifiedShow Answer

The primary liabilities of depository institutions are

Correct AnswerverifiedShow Answer

Securities are for the person who buys them, but are for the individual or firm that issues them.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Although the dominance of over is clear in all countries, the relative importance of bond versus stock markets differs widely.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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