Role of Financial Markets and Institutions
Financial Institutions and Markets
Business
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Questions
Financial market participants who provide funds are called
The main provider(s) of funds to the U.S. Treasury is (are)
Those financial markets that facilitate the flow of short-term funds are known as
Funds are provided to the initial issuer of securities in the
Which of the following is a capital market instrument?
Which of the following is a money market security?
Equity securities have a ________ expected return than most long-term debt securities, and they exhibit a _________ degree of risk.
Money market securities generally have ______. Capital market securities are typically expected to have a ______.
If security prices fully reflect all available information, the markets for these securities are
If markets are ______, investors could use available information ignored by the market to earn abnormally high returns.
If financial markets are efficient, this implies that investors can ignore the various investment instruments available.
The Securities Exchange Commission (SEC) was established by the
If financial markets were ______, all information about any securities for sale in primary and secondary markets would be continuously and freely available to investors.
The typical role of a securities firm in a public offering of securities is to
Without the participation of financial intermediaries in financial market transactions,
Which of the following is most likely to be described as a depository institution?
In aggregate, ___________ are the most dominant depository institution.
Which of the following is a nondepository financial institution?
Which of the following distinguishes credit unions from commercial banks and savings institutions?
When a securities firm acts as a(n) ______, it maintains a position in securities.
________ obtain funds by issuing securities, then lend the funds to individuals and small businesses.
_______________ concentrate on mortgage loans.
_____ securities have a maturity of one year or less; _____ securities are generally more liquid.
Which of the following is not a major investor in stocks?
Which of the following financial intermediaries commonly invests in stocks and bonds?
Securities are certificates that represent a claim on the issuer.
Debt securities are certificates that represent debt (borrowed funds) by the issuer.
A five-year security was purchased two years ago by an investor who plans to resell it. The security will be sold by the investor in the so-called
When security prices fully reflect all available information, the markets for these securities are said to be efficient.
If markets are perfect, securities buyers and sellers to not have full access to information and cannot always break down securities to the precise size they desire.
A broker executes securities transactions between two parties and charges a fee reflected in the bid-ask spread.
The euro increased business between European countries and created a more competitive environment in Europe.
In recent years, financial institutions have consolidated to capitalize on economies of scale and on economies of scope.
Securities are certificates that represent a claim on the provider of funds.
Debt securities include commercial paper, Treasury bonds, and corporate bonds.
Common types of capital market securities include Treasury bills and commercial paper.
Common types of money market securities include negotiable certificates of deposit and Treasurybills.
Money market securities are commonly issued in order to finance the purchase of assets such asbuildings, equipment, or machinery.
Commercial banks in aggregate have a lower value of assets than savings institutions.
Financial markets facilitating the flow of short-term funds with maturities of less than one year areknown as
Which of the following transactions would not be considered a secondary market transaction?
If investors speculate in the underlying asset rather than derivative contracts on the underlying asset,they will probably achieve ________ returns, and they are exposed to relatively _________ risk.
_________________ maintain a larger amount of assets in aggregate than the other types ofdepository institutions.
A common use of funds for ________________ is investment in stocks.and businesses, while their main use of funds is providing loans to households and businesses.
Long-term debt securities tend to have a ___________ expected return and _________ risk thanmoney market securities.
Common types of capital market securities include Treasury bills and commercial paper.
Common types of money market securities include negotiable certificates of deposit and Treasurybills.
Capital market securities are commonly issued in order to finance the purchase of assets such asbuildings, equipment, or machinery.
Commercial banks in aggregate have more assets than of savings institutions.
Those participants who receive more money than they spend are referred to as
The term ____________ involves decisions such as how much funding to obtain, and how to investthe proceeds to expand operations.
There is a ___________ relationship between the risk of a security and the expected return frominvesting in the security.
If a security is undervalued, some investors would capitalize from this by purchasing that security.As a result, the security’s price will _______, resulting in a _______ return for those investors.
The credit crisis in the 2008-2009 period was caused by weak economies in Asia.
Currently, _________ hold the largest amount of assets of all financial institutions.
The main reason that depository institutions experienced financial problems during the credit crisiswas their investment in:
Those financial markets that facilitate the flow of short-term funds (with maturities of less than oneyear) are known as capital markets, while those that facilitate the flow of long-term funds are known as money markets.
Since markets are efficient, institutional and individual investors should ignore the various investment instruments available.
Speculating with derivative contracts on an underlying asset typically results in both higher risk and higher returns than speculating in the underlying asset itself.
When security prices fully reflect all available information, the markets for these securities are said to be perfect.
Securities that are not as safe and liquid as other securities are never considered for investment by anyone.
By requiring full disclosure of information, securities laws prevent investors from making poor investment decisions.
When a depository institution offers a loan, it is acting as a creditor.
Savings institutions are the most dominant financial institution.
Most mutual funds obtain funds by issuing securities, then lend the funds to individuals and small businesses.
Institutional investors not only provide financial support to companies but exercise some degree of corporate control over them.
Which of the following is not a reason why depository financial institutions are popular?
According to your text, which of the following is not considered a money market security?
________________ are not considered capital market securities.
____________ are long-term debt obligations issued by corporations and government agencies to support their operations.
Equity securities should normally have a ___________ expected return and _________ risk than money market securities.
If investors speculate in derivative contracts rather than the underlying asset, they will probably achieve ____________ returns, and they are exposed to relatively ___________ risk.
When particular securities are perceived to be ______________ by the market, their prices decrease when they are sold by investors.
Which of the following are not considered depository financial institutions?
The main source of funds for ________________ is proceeds from selling securities to households and businesses, while their main use of funds is providing loans to households and businesses.
