FIN 305 WEEK 4 CERTIFICATION SCRIPT
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
◍ IBM creates and sells additional stock to the investment banker Morgan
Stanley. Morgan Stanley then resells the issue to the
U. S. public through its mutual funds.This transaction is an example of
a(n):a - money market transaction b - forward transactionc - asset
transformation by morgan stanley d - primary market transactione - foreign
exchange transaction.
Answer: d - primary market transaction
◍ In the United States the SEC provides deposit insurance for $250,000 per
person per bank:true or false.
Answer: false
◍ A corporation seeking to sell new equity securities to the public for the first
time in order to raise cash for capital investment would most likely:a -
conduct a private placement to a large number of potential buyersb - place
an ad in the wall street journal soliciting retail suppliers of fundsc - issue
bonds with the assistance of a dealerd - conduct an IPO with the assistance
of an investment bankere - engage in a secondary market sale of equity.
Answer: d - conduct an IPO with the assistance of an investment banker
◍ Suppose you win $100 million in lottery. The money is paid in equal annual
installments of $4 million over 25 years. If the appropriate discount rate is
10%, how much is the lottery actually worth today? (Assume the payments
occur at the end of each period)..
Answer: $36,308,160
◍ The real risk-free rate is the increment to purchasing power that the lender
, earns in order to induce him or her to forego current consumption:true or
false.
Answer: true
◍ money market.
Answer: securities with maturities 1 year or less- include treasury bills,
commercial paper & repurchase agreements
◍ Who are the suppliers of loanable funds?.
Answer: The suppliers of loanable funds are the household sector (i.e.,
consumers), the business sector, governmental agencies, and foreign
investors
◍ financial institutions consist of.
Answer: commercial banks, thrifts, insurance companies, securities firms &
investment banks, financial companies, investment funds, & pension funds
◍ difference between t notes and t bonds.
Answer: t notes:maturity between 1 & 10 yearst bonds:maturity of more
than 10 years
◍ securities firms & investment banks.
Answer: financial institutions that underwrite securities and engage in
related activities such as securities brokerage, securities trading, & making a
market in which securities can trade
◍ Which of the following is the major monetary policy-making body of the
U. S. Federal Reserve System?a - US Congress b - FOMCc - FBR bank
presidentsd - OCCe - group of eight.
Answer: b - FOMC
◍ pension fund.
Answer: financial institutions that offer savings plans through which fund
participants accumulate savings during their working years before
withdrawing them during their retirement years
◍ Which of the following are capital market instruments:a - 20 year treasury
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
◍ IBM creates and sells additional stock to the investment banker Morgan
Stanley. Morgan Stanley then resells the issue to the
U. S. public through its mutual funds.This transaction is an example of
a(n):a - money market transaction b - forward transactionc - asset
transformation by morgan stanley d - primary market transactione - foreign
exchange transaction.
Answer: d - primary market transaction
◍ In the United States the SEC provides deposit insurance for $250,000 per
person per bank:true or false.
Answer: false
◍ A corporation seeking to sell new equity securities to the public for the first
time in order to raise cash for capital investment would most likely:a -
conduct a private placement to a large number of potential buyersb - place
an ad in the wall street journal soliciting retail suppliers of fundsc - issue
bonds with the assistance of a dealerd - conduct an IPO with the assistance
of an investment bankere - engage in a secondary market sale of equity.
Answer: d - conduct an IPO with the assistance of an investment banker
◍ Suppose you win $100 million in lottery. The money is paid in equal annual
installments of $4 million over 25 years. If the appropriate discount rate is
10%, how much is the lottery actually worth today? (Assume the payments
occur at the end of each period)..
Answer: $36,308,160
◍ The real risk-free rate is the increment to purchasing power that the lender
, earns in order to induce him or her to forego current consumption:true or
false.
Answer: true
◍ money market.
Answer: securities with maturities 1 year or less- include treasury bills,
commercial paper & repurchase agreements
◍ Who are the suppliers of loanable funds?.
Answer: The suppliers of loanable funds are the household sector (i.e.,
consumers), the business sector, governmental agencies, and foreign
investors
◍ financial institutions consist of.
Answer: commercial banks, thrifts, insurance companies, securities firms &
investment banks, financial companies, investment funds, & pension funds
◍ difference between t notes and t bonds.
Answer: t notes:maturity between 1 & 10 yearst bonds:maturity of more
than 10 years
◍ securities firms & investment banks.
Answer: financial institutions that underwrite securities and engage in
related activities such as securities brokerage, securities trading, & making a
market in which securities can trade
◍ Which of the following is the major monetary policy-making body of the
U. S. Federal Reserve System?a - US Congress b - FOMCc - FBR bank
presidentsd - OCCe - group of eight.
Answer: b - FOMC
◍ pension fund.
Answer: financial institutions that offer savings plans through which fund
participants accumulate savings during their working years before
withdrawing them during their retirement years
◍ Which of the following are capital market instruments:a - 20 year treasury
