Financial Markets and Institutions – Exam 2, 2026 – Study
Material and Practice Questions
The process of packing and/or selling mortgages which are then used to back publicly traded
securities is called ___________. - ANS✔✔ securitization
With the fixed rate mortgage, the __________ bears the interest rate risk, and with an
adjustable rate mortgage the ____________ bears the interest risk. - ANS✔✔ lender; borrower
The financial Crisis officially began in December 2007 according to the National Bureau. While
there are many factors that contributed to the financial crisis, many..following was a major
contributor? - ANS✔✔ easy money, and government incentives for greater mortgage lending
The term subprime in regard to mortgages means mortgages made to individuals ___________.
- ANS✔✔ who have poor credit ratings
Common Stock typically have which of the following provisions that bonds do no: - ANS✔✔
voting rights
If all preferred dividend payments that have been missed must be paid before any common
stock is paid, the preferred stock is called ____________ preferred stock. - ANS✔✔ cumulative
In a _________ offering, the firm preregisters with the SEC any securities it wishes to sell over
the next two years - ANS✔✔ Shelf
In terms of volume of trading and market value of firms traded, the _________ is the largest US
Stock Market. In terms of number of firms traded, the __________ is the largest in the US. -
ANS✔✔ NYSE; NASDAQ
Material and Practice Questions
The process of packing and/or selling mortgages which are then used to back publicly traded
securities is called ___________. - ANS✔✔ securitization
With the fixed rate mortgage, the __________ bears the interest rate risk, and with an
adjustable rate mortgage the ____________ bears the interest risk. - ANS✔✔ lender; borrower
The financial Crisis officially began in December 2007 according to the National Bureau. While
there are many factors that contributed to the financial crisis, many..following was a major
contributor? - ANS✔✔ easy money, and government incentives for greater mortgage lending
The term subprime in regard to mortgages means mortgages made to individuals ___________.
- ANS✔✔ who have poor credit ratings
Common Stock typically have which of the following provisions that bonds do no: - ANS✔✔
voting rights
If all preferred dividend payments that have been missed must be paid before any common
stock is paid, the preferred stock is called ____________ preferred stock. - ANS✔✔ cumulative
In a _________ offering, the firm preregisters with the SEC any securities it wishes to sell over
the next two years - ANS✔✔ Shelf
In terms of volume of trading and market value of firms traded, the _________ is the largest US
Stock Market. In terms of number of firms traded, the __________ is the largest in the US. -
ANS✔✔ NYSE; NASDAQ
