TEST BANK
Financial Markets and Institutions, 10th Edition
by Frederic S Mishkin, Stanley Eakins
SC
O
R
EG
U
ID
ES
, Table of Content
PART 1: INTRODUCTION
Why Study Financial Markets and Institutions?
Overview of the Financial System
PART 2: FUNDAMENTALS OF FINANCIAL MARKETS
What Do Interest Rates Mean and What Is Their Role in Valuation?
Why Do Interest Rates Change?
How Do Risk and Term Structure Affect Interest Rates?
Are Financial Markets Efficient?
SC
PART 3: FUNDAMENTALS OF FINANCIAL INSTITUTIONS
Why Do Financial Institutions Exist?
Why Do Financial Crises Occur and Why Are They So Damaging to the Economy?
PART 4: CENTRAL BANKING AND THE CONDUCT OF MONETARY POLICY
Central Banks and the Federal Reserve System
O
Conduct of Monetary Policy
PART 5: FINANCIAL MARKETS
The Money Markets
R
The Bond Market
The Stock Market
The Mortgage Markets
EG
The Foreign Exchange Market
The International Financial System
PART 6: THE FINANCIAL INSTITUTIONS INDUSTRY
Banking and the Management of Financial Institutions
Financial Regulation
U
Banking Industry: Structure and Competition
The Mutual Fund Industry
Insurance Companies and Pension Funds
ID
Investment Banks, Security Brokers and Dealers, and Venture Capital Firms
PART 7: THE MANAGEMENT OF FINANCIAL INSTITUTIONS
Risk Management in Financial Institutions
ES
Hedging with Financial Derivatives
CHAPTERS ON THE WEB
Financial Crises in Emerging Market Economies W-1
Savings Associations and Credit Unions W-22
Finance Companies
,Financial Markets and Institutions, 10e (Mishkin)
Chapter 1 Why Study Financial Markets and Institutions?
1.1 Multiple Choice
1) Financial markets and institutions
A) involve the movement of huge quantities of money.
SC
B) affect the profits of businesses.
C) affect the types of goods and services produced in an economy.
D) do all of the above.
E) do only A and B of the above.
Answer: D
Topic: Chapter 1.1 Why Study Financial Markets
O
Question Status: Previous Edition
2) Financial market activities affect
A) personal wealth.
R
B) spending decisions by individuals and business firms.
C) the economy's location in the business cycle.
D) all of the above.
EG
Answer: D
Topic: Chapter 1.1 Why Study Financial Markets
Question Status: Previous Edition
3) Markets in which funds are transferred from those who have excess funds available to those
who have a shortage of available funds are called
A) commodity markets.
U
B) funds markets.
C) derivative exchange markets.
D) financial markets.
ID
Answer: D
Topic: Chapter 1.1 Why Study Financial Markets
Question Status: Previous Edition
ES
4) The price paid for the rental of borrowed funds (usually expressed as a percentage of the
rental of $100 per year) is commonly referred to as the
A) inflation rate.
B) exchange rate.
C) interest rate.
D) aggregate price level.
Answer: C
Topic: Chapter 1.1 Why Study Financial Markets
Question Status: Previous Edition
, 5) The bond markets are important because
A) they are easily the most widely followed financial markets in the United States.
B) they are the markets where interest rates are determined.
C) they are the markets where foreign exchange rates are determined.
D) all of the above.
Answer: B
Topic: Chapter 1.1 Why Study Financial Markets
SC
Question Status: Previous Edition
6) Interest rates are important to financial institutions since an interest rate increase the
cost of acquiring funds and the income from assets.
A) decreases; decreases
B) increases; increases
C) decreases; increases
O
D) increases; decreases
Answer: B
Topic: Chapter 1.1 Why Study Financial Markets
R
Question Status: Previous Edition
7) Typically, increasing interest rates
EG
A) discourages individuals from saving.
B) discourages corporate investments.
C) encourages corporate expansion.
D) encourages corporate borrowing.
E) none of the above.
Answer: B
Topic: Chapter 1.1 Why Study Financial Markets
U
Question Status: Previous Edition
8) Compared to interest rates on long-term U.S. government bonds, interest rates on
ID
fluctuate more and are lower on average.
A) medium-quality corporate bonds
B) low-quality corporate bonds
C) high-quality corporate bonds
D) three-month Treasury bills
ES
E) none of the above
Answer: D
Topic: Chapter 1.1 Why Study Financial Markets
Question Status: Previous Edition
Financial Markets and Institutions, 10th Edition
by Frederic S Mishkin, Stanley Eakins
SC
O
R
EG
U
ID
ES
, Table of Content
PART 1: INTRODUCTION
Why Study Financial Markets and Institutions?
Overview of the Financial System
PART 2: FUNDAMENTALS OF FINANCIAL MARKETS
What Do Interest Rates Mean and What Is Their Role in Valuation?
Why Do Interest Rates Change?
How Do Risk and Term Structure Affect Interest Rates?
Are Financial Markets Efficient?
SC
PART 3: FUNDAMENTALS OF FINANCIAL INSTITUTIONS
Why Do Financial Institutions Exist?
Why Do Financial Crises Occur and Why Are They So Damaging to the Economy?
PART 4: CENTRAL BANKING AND THE CONDUCT OF MONETARY POLICY
Central Banks and the Federal Reserve System
O
Conduct of Monetary Policy
PART 5: FINANCIAL MARKETS
The Money Markets
R
The Bond Market
The Stock Market
The Mortgage Markets
EG
The Foreign Exchange Market
The International Financial System
PART 6: THE FINANCIAL INSTITUTIONS INDUSTRY
Banking and the Management of Financial Institutions
Financial Regulation
U
Banking Industry: Structure and Competition
The Mutual Fund Industry
Insurance Companies and Pension Funds
ID
Investment Banks, Security Brokers and Dealers, and Venture Capital Firms
PART 7: THE MANAGEMENT OF FINANCIAL INSTITUTIONS
Risk Management in Financial Institutions
ES
Hedging with Financial Derivatives
CHAPTERS ON THE WEB
Financial Crises in Emerging Market Economies W-1
Savings Associations and Credit Unions W-22
Finance Companies
,Financial Markets and Institutions, 10e (Mishkin)
Chapter 1 Why Study Financial Markets and Institutions?
1.1 Multiple Choice
1) Financial markets and institutions
A) involve the movement of huge quantities of money.
SC
B) affect the profits of businesses.
C) affect the types of goods and services produced in an economy.
D) do all of the above.
E) do only A and B of the above.
Answer: D
Topic: Chapter 1.1 Why Study Financial Markets
O
Question Status: Previous Edition
2) Financial market activities affect
A) personal wealth.
R
B) spending decisions by individuals and business firms.
C) the economy's location in the business cycle.
D) all of the above.
EG
Answer: D
Topic: Chapter 1.1 Why Study Financial Markets
Question Status: Previous Edition
3) Markets in which funds are transferred from those who have excess funds available to those
who have a shortage of available funds are called
A) commodity markets.
U
B) funds markets.
C) derivative exchange markets.
D) financial markets.
ID
Answer: D
Topic: Chapter 1.1 Why Study Financial Markets
Question Status: Previous Edition
ES
4) The price paid for the rental of borrowed funds (usually expressed as a percentage of the
rental of $100 per year) is commonly referred to as the
A) inflation rate.
B) exchange rate.
C) interest rate.
D) aggregate price level.
Answer: C
Topic: Chapter 1.1 Why Study Financial Markets
Question Status: Previous Edition
, 5) The bond markets are important because
A) they are easily the most widely followed financial markets in the United States.
B) they are the markets where interest rates are determined.
C) they are the markets where foreign exchange rates are determined.
D) all of the above.
Answer: B
Topic: Chapter 1.1 Why Study Financial Markets
SC
Question Status: Previous Edition
6) Interest rates are important to financial institutions since an interest rate increase the
cost of acquiring funds and the income from assets.
A) decreases; decreases
B) increases; increases
C) decreases; increases
O
D) increases; decreases
Answer: B
Topic: Chapter 1.1 Why Study Financial Markets
R
Question Status: Previous Edition
7) Typically, increasing interest rates
EG
A) discourages individuals from saving.
B) discourages corporate investments.
C) encourages corporate expansion.
D) encourages corporate borrowing.
E) none of the above.
Answer: B
Topic: Chapter 1.1 Why Study Financial Markets
U
Question Status: Previous Edition
8) Compared to interest rates on long-term U.S. government bonds, interest rates on
ID
fluctuate more and are lower on average.
A) medium-quality corporate bonds
B) low-quality corporate bonds
C) high-quality corporate bonds
D) three-month Treasury bills
ES
E) none of the above
Answer: D
Topic: Chapter 1.1 Why Study Financial Markets
Question Status: Previous Edition
