CFMS CUTIE 1-20 REVIEWER 2024 ANSWERED 100% CORRECT
A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital. A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary. - Answer-A. True
A share of common stock is not a derivative, but an option to buy the stock is a derivative because the value of the option is derived from the value of the stock. - Answer-A. True
Financial institutions are more diversified today than they were in the past, when federal
laws kept investment banks, commercial banks, insurance companies, and similar organizations quite separate. Today the larger financial services corporations offer a variety of services, ranging from checking accounts, to insurance, to underwriting securities, to stock brokerage. - Answer-A. True
Money markets are markets for - Answer-E. Short-term debt securities such as Treasury bills and Commercial paper
Which of the following statement is CORRECT? (1) - Answer-E. As they are generally defined, money market transactions involve debt securities with maturities of less than one year.
You recently sold 200 shares of Disney stock, and the transfer was made through a broker. This is an example of: - Answer-C. A Secondary market transaction
Which of the following statements is CORRECT? (2) - Answer-C. In a "Dutch auction," investors who want to buy shares in an IPO submit bids indicating how many shares they want to buy and the price they are willing to pay. The company determines how many shares it wants to sell. The highest price that enables the company to sell the desired number of shares is the price that all buyers must pay.
Which of the following statements is CORRECT? (3) - Answer-A. The New York Stock Exchange is an auction market, and it has a physical location.
During periods when inflation is increasing, interest rates tend to increase, while interest
rates tend to fall when inflation is declining. - Answer-A. True
If investors expect a zero rate of inflation, then the nominal rate of return on a very short-term U.S Treasury bond should be equal to the real risk-free rate, r*. - Answer-A. True
A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital. A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary. - Answer-A. True
A share of common stock is not a derivative, but an option to buy the stock is a derivative because the value of the option is derived from the value of the stock. - Answer-A. True
Financial institutions are more diversified today than they were in the past, when federal
laws kept investment banks, commercial banks, insurance companies, and similar organizations quite separate. Today the larger financial services corporations offer a variety of services, ranging from checking accounts, to insurance, to underwriting securities, to stock brokerage. - Answer-A. True
Money markets are markets for - Answer-E. Short-term debt securities such as Treasury bills and Commercial paper
Which of the following statement is CORRECT? (1) - Answer-E. As they are generally defined, money market transactions involve debt securities with maturities of less than one year.
You recently sold 200 shares of Disney stock, and the transfer was made through a broker. This is an example of: - Answer-C. A Secondary market transaction
Which of the following statements is CORRECT? (2) - Answer-C. In a "Dutch auction," investors who want to buy shares in an IPO submit bids indicating how many shares they want to buy and the price they are willing to pay. The company determines how many shares it wants to sell. The highest price that enables the company to sell the desired number of shares is the price that all buyers must pay.
Which of the following statements is CORRECT? (3) - Answer-A. The New York Stock Exchange is an auction market, and it has a physical location.
During periods when inflation is increasing, interest rates tend to increase, while interest
rates tend to fall when inflation is declining. - Answer-A. True
If investors expect a zero rate of inflation, then the nominal rate of return on a very short-term U.S Treasury bond should be equal to the real risk-free rate, r*. - Answer-A. True
