C214 - Financial Management UPDATED Exam Questions And Correct Answers

C214 - Financial Management UPDATED Exam Questions And Correct Answers Finance is a subfield with in ✔✔✔✔ Economics Which of the following is not an exa mple of firm capital? ✔✔✔✔ Financial Markets Capital is defined as a ✔✔✔✔ financial asset Corporate finance is devoted to understanding various types of ✔✔✔✔ financial instruments Which of the following is an example of firm capital? ✔✔✔✔ Cash Corporat e finance focuses on the decision making by the ✔✔✔✔ Management What are the three important areas of finance ✔✔✔✔ Corporate finance, investments, and banking/financial institutions Banks make money when interest rates they charge money to borrowers are less than interest rates they pay to depositors ✔✔✔✔ False Stocks and Bonds are two types of ✔✔✔✔ financial instruments Stocks represent ownership in ✔✔✔✔ a particular company Companies can raise capital by issuing ✔✔✔✔ bonds or stocks A stock is a ins trument issued by ✔✔✔✔ corporations A treasury bond is a debt instrument issued by ✔✔✔✔ corporations or governments A stock is a share of ________________ in a particular company ✔✔✔✔ ownership A bond is similar to ✔✔✔✔ A loan Primary financial markets where issuers ✔✔✔✔ place new securities with investors What are the two ways a syndicate can place a bond? ✔✔✔✔ Competitive sales or negotiated sale An IPO is a ✔✔✔✔ New equity offering An IPO on the ✔✔✔✔ Primary market Syndic ates are generally made up of ✔✔✔✔ investment banks and other institutional investors Negotiated sales ✔✔✔✔ allow underwriters to submit bids to purchase bonds Who is the worlds largest secondary financial market ✔✔✔✔ New York Stock Exchange (NYSE) Auct ion markets ✔✔✔✔ Have a physical location Dealer markets ✔✔✔✔ Do not have a physical location Nasdaq is an example of a ✔✔✔✔ Dealer market Stocks that are listed on dealer markets generally have ✔✔✔✔ multiple dealers for each stock When dealers have to compete with one another, transaction costs will generally ✔✔✔✔ Decrease Markets are where ✔✔✔✔ prices are determined The ___________ specialist has an objective to provide liquidity to the market. ✔✔✔✔ NYSE The NYSE specialist will charge _________________ to sellers of the stock ✔✔✔✔ higher prices The NYSE specialist will charge ______________ to buyers of the stock ✔✔✔✔ a lower price The bid ask spread is compensation to the specialist for ✔✔✔✔ providing liquidity to the market What are the two types of orders that are used by investors? ✔✔✔✔ Market orders & Limit orders Market orders are ✔✔✔✔ time sensitive Limit orders are ✔✔✔✔ price sensitive A market order to buy a stock would execute at ✔✔✔✔ the c urrent ask price A market order to sell as stock would execute at ✔✔✔✔ the current bid price