LSUS MBA 727 Choi Exam 1 Questions
With 100% Correct Answers
Financial market participants who provide funds are called -
| | | | | | | |
Correct Answer-Surplus units
| | |
Those financial markets that facilitate the flow of short-term
| | | | | | | |
funds are known as - Correct Answer-Money markets
| | | | | | | |
Which of the following is a capital market instrument? -
| | | | | | | | |
Correct Answer-A ten-year bond
| | | |
Which of the following is a money market security? - Correct
| | | | | | | | | |
Answer-commercial paper
| |
Money market securities generally have - Correct Answer-
| | | | | | |
relatively high liquidity, low expected return, and a low degree
| | | | | | | | |
of credit risk
| | |
The Securities and Exchange Commission(SEC) was established
| | | | | |
by the - Correct Answer-Securities Exchange Act of 1934
| | | | | | | | |
| pg. |1 professoraxel
,Which of the following is a nondepository financial institution?
| | | | | | | |
- Correct Answer-Mutual fund
| | | |
_____________securities have a maturity of one year or less; | | | | | | | |
_____________securities generally have relatively high
| | | | |
liquidity. - Correct Answer-Money market; money market
| | | | | | |
Which of the following transactions would not be considered a
| | | | | | | | |
secondary market transaction? - Correct Answer-A firm that
| | | | | | | |
was privately held engages in an offering of stock to the public
| | | | | | | | | | | |
Which of the following are not considered money market
| | | | | | | |
securities? - Correct Answer-Mortgage backed securities
| | | | | |
The Securities Exchange Commission(SEC) does NOT - Correct
| | | | | | |
Answer-decide whether a public issue is fairly priced.
| | | | | | | |
Discuss how secondary markets benefit funds issuers - Correct
| | | | | | | |
Answer-The secondary markets provide liquidity to investors
| | | | | | |
after their initial purchase of the security. This liquidity
| | | | | | | | |
encourages them to purchase the security at the initial offer.
| | | | | | | | | |
The current market price also reflects current prospects for the
| | | | | | | | | |
firm and the competitiveness of the issue relative to similar
| | | | | | | | | |
securities. Corporate treasurers follow their stocks' price
| | | | | | |
| pg. |2 professoraxel
, | closely because the stock price reflects how well their firm and
| | | | | | | | | |
| the market are performing. The current security price also
| | | | | | | |
| provides information about the cost of obtaining any
| | | | | | |
| additional funds. |
What determines the price of financial instruments? Which are
| | | | | | | |
riskier, capital market instruments or money market
| | | | | | |
instruments? Why? - Correct Answer-The price of any financial
| | | | | | | | |
instrument is the present value of future cash flows
| | | | | | | | |
discounted at an appropriate rate. A small change in interest
| | | | | | | | | |
rates causes a large change in present value of distant cash
| | | | | | | | | | |
flows. Hence, the prices of long-term instruments. In addition,
| | | | | | | | |
distant cash flows for stocks are not known with certainty.
| | | | | | | | | |
Changing economic prospects can cause very large changes in
| | | | | | | | |
current stock values. Money market instruments have
| | | | | | |
predictable cash flows and mature in one year or less, so they
| | | | | | | | | | | |
are much less risky.
| | | |
Distinguish between primary and secondary markets.
| | | | |
Distinguish between money and capital markets. - Correct
| | | | | | | |
Answer-primary markets are used for the issuance of new
| | | | | | | | |
securities while secondary markets are used for trading of
| | | | | | | | |
existing securities. Money markets facilitate the trading of
| | | | | | | |
short-term(money market) instruments while capital markets
| | | | | |
facilitate the trading of long-term (capital market)
| | | | | | |
instruments.
|
| pg. |3 professoraxel
With 100% Correct Answers
Financial market participants who provide funds are called -
| | | | | | | |
Correct Answer-Surplus units
| | |
Those financial markets that facilitate the flow of short-term
| | | | | | | |
funds are known as - Correct Answer-Money markets
| | | | | | | |
Which of the following is a capital market instrument? -
| | | | | | | | |
Correct Answer-A ten-year bond
| | | |
Which of the following is a money market security? - Correct
| | | | | | | | | |
Answer-commercial paper
| |
Money market securities generally have - Correct Answer-
| | | | | | |
relatively high liquidity, low expected return, and a low degree
| | | | | | | | |
of credit risk
| | |
The Securities and Exchange Commission(SEC) was established
| | | | | |
by the - Correct Answer-Securities Exchange Act of 1934
| | | | | | | | |
| pg. |1 professoraxel
,Which of the following is a nondepository financial institution?
| | | | | | | |
- Correct Answer-Mutual fund
| | | |
_____________securities have a maturity of one year or less; | | | | | | | |
_____________securities generally have relatively high
| | | | |
liquidity. - Correct Answer-Money market; money market
| | | | | | |
Which of the following transactions would not be considered a
| | | | | | | | |
secondary market transaction? - Correct Answer-A firm that
| | | | | | | |
was privately held engages in an offering of stock to the public
| | | | | | | | | | | |
Which of the following are not considered money market
| | | | | | | |
securities? - Correct Answer-Mortgage backed securities
| | | | | |
The Securities Exchange Commission(SEC) does NOT - Correct
| | | | | | |
Answer-decide whether a public issue is fairly priced.
| | | | | | | |
Discuss how secondary markets benefit funds issuers - Correct
| | | | | | | |
Answer-The secondary markets provide liquidity to investors
| | | | | | |
after their initial purchase of the security. This liquidity
| | | | | | | | |
encourages them to purchase the security at the initial offer.
| | | | | | | | | |
The current market price also reflects current prospects for the
| | | | | | | | | |
firm and the competitiveness of the issue relative to similar
| | | | | | | | | |
securities. Corporate treasurers follow their stocks' price
| | | | | | |
| pg. |2 professoraxel
, | closely because the stock price reflects how well their firm and
| | | | | | | | | |
| the market are performing. The current security price also
| | | | | | | |
| provides information about the cost of obtaining any
| | | | | | |
| additional funds. |
What determines the price of financial instruments? Which are
| | | | | | | |
riskier, capital market instruments or money market
| | | | | | |
instruments? Why? - Correct Answer-The price of any financial
| | | | | | | | |
instrument is the present value of future cash flows
| | | | | | | | |
discounted at an appropriate rate. A small change in interest
| | | | | | | | | |
rates causes a large change in present value of distant cash
| | | | | | | | | | |
flows. Hence, the prices of long-term instruments. In addition,
| | | | | | | | |
distant cash flows for stocks are not known with certainty.
| | | | | | | | | |
Changing economic prospects can cause very large changes in
| | | | | | | | |
current stock values. Money market instruments have
| | | | | | |
predictable cash flows and mature in one year or less, so they
| | | | | | | | | | | |
are much less risky.
| | | |
Distinguish between primary and secondary markets.
| | | | |
Distinguish between money and capital markets. - Correct
| | | | | | | |
Answer-primary markets are used for the issuance of new
| | | | | | | | |
securities while secondary markets are used for trading of
| | | | | | | | |
existing securities. Money markets facilitate the trading of
| | | | | | | |
short-term(money market) instruments while capital markets
| | | | | |
facilitate the trading of long-term (capital market)
| | | | | | |
instruments.
|
| pg. |3 professoraxel
