Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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.F) B) and D)
G) A) and E)

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 5

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 IIIF) All of the above
G) C) and D)

Question 6

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.F) A) and D)
G) D) and E)

Question 7

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)  ForwardsF) A) and B)
G) A) and C)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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.F) B) and E)
G) All of the above

Question 10

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 11

Depository institutions include

Accepted Answer

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

Question 12

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 13

Discuss how secondary markets benefit issuers and investors.

Accepted Answer

The secondary markets provide liquidity ...

Question 14

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 correctF) B) and E)
G) A) and D)

Question 15

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.F) A) and D)
G) B) and E)

Question 16

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 17

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 18

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.F) A) and B)
G) A) and C)

Question 19

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-bondsF) B) and D)
G) A) and C)

Question 20

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

Accepted Answer

An asset transformer buys one security f...

Exam 1: Introduction

Depository institutions include

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedAn asset transformer buys one security f...View AnswerShow Answer

Discuss how secondary markets benefit issuers and investors.

Correct AnswerverifiedThe secondary markets provide liquidity ...View AnswerShow Answer

The most diversified type of depository institutions is

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedAdvantages include -Speed: Funds can no...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The diagram below is a diagram of the

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedFinancial intermediaries' (FIs)attempts ...View AnswerShow Answer

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.

Correct AnswerverifiedShow Answer

Which of the following are capital market instruments?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedPotential benefits to funds suppliers (S...View AnswerShow Answer

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

Correct Answerverified1. The amount of savings available for i...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Commercial paper is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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An asset transformer buys one security f...
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The secondary markets provide liquidity ...
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Advantages include
-Speed: Funds can no...
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Financial intermediaries' (FIs)attempts ...
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Potential benefits to funds suppliers (S...
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1. The amount of savings available for i...
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