FI 412 Chapter 2
Study online at https://quizlet.com/_hycjtz
1. Every financial market performs the following function:
A) It determines the level of interest rates.
B) It allows common stock to be traded.
C) It allows loans to be made.
D) It channels funds from lenders-savers to borrowers-spenders.: D
2. Securities are ________ for the person who buys them, but ________ for the
individual/firm that sells them.
A) Assets; liabilities
B) Liabilities; assets
C) Income; liabilities
D) Liabilities; expenses: A
3. Financial markets have the basic function of
A) bringing together people with funds to lend and people who want to borrow
funds.
B) assuring that the swings in the business cycle are less pronounced.
C) assuring that governments need never resort to printing money.
D) both A and B of the above.
E) both B and C of the above.: A
4. Which of the following can be described as involving direct finance?
A) A corporation's stock is traded in an over-the-counter market.
B) People buy shares in a mutual fund.
C) A pension fund manager buys commercial paper in the secondary market.
D) An insurance company buys shares of common stock in the over-the-counter
markets.
E) None of the above.: E
5. Which of the following can be described as involving direct finance?
A) A corporation's stock is traded in an over-the-counter market.
B) A corporation buys commercial paper issued by another corporation.
C) A pension fund manager buys commercial paper from the issuing corpora-
tion.
D) Both A and B of the above.
E) Both B and C of the above.: B
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, FI 412 Chapter 2
Study online at https://quizlet.com/_hycjtz
6. Which of the following can be described as involving indirect finance?
A) A corporation takes out loans from a bank.
B) People buy shares in a mutual fund.
C) A corporation buys commercial paper in a secondary market.
D) All of the above.
E) Only A and B of the above.: E
7. Which of the following can be described as involving indirect finance?
A) A bank buys a U.S. Treasury bill from one of its depositors.
B) A corporation buys commercial paper issued by another corporation.
C) A pension fund manager buys commercial paper in the primary market.
D) Both A and C of the above.: D
8. 8) Financial markets improve economic welfare because
A) they allow funds to move from those without productive investment oppor-
tunities to those who have such opportunities.
B) they allow consumers to time their purchases better.
C) they weed out inefficient firms.
D) they do all of the above.
E) they do A and B of the above.: E
9. A country whose financial markets function poorly is likely to
A) efficiently allocate its capital resources.
B) enjoy high productivity.
C) experience economic hardship and financial crises.
D) increase its standard of living.: C
10. Wealth, either financial or physical, that is employed to produce more wealth
is referred to as
A) assets.
B) the market.
C) capital.
D) funding.: C
11. Which of the following are securities?
A) A certificate of deposit
B) A share of Texaco common stock
2/5
Study online at https://quizlet.com/_hycjtz
1. Every financial market performs the following function:
A) It determines the level of interest rates.
B) It allows common stock to be traded.
C) It allows loans to be made.
D) It channels funds from lenders-savers to borrowers-spenders.: D
2. Securities are ________ for the person who buys them, but ________ for the
individual/firm that sells them.
A) Assets; liabilities
B) Liabilities; assets
C) Income; liabilities
D) Liabilities; expenses: A
3. Financial markets have the basic function of
A) bringing together people with funds to lend and people who want to borrow
funds.
B) assuring that the swings in the business cycle are less pronounced.
C) assuring that governments need never resort to printing money.
D) both A and B of the above.
E) both B and C of the above.: A
4. Which of the following can be described as involving direct finance?
A) A corporation's stock is traded in an over-the-counter market.
B) People buy shares in a mutual fund.
C) A pension fund manager buys commercial paper in the secondary market.
D) An insurance company buys shares of common stock in the over-the-counter
markets.
E) None of the above.: E
5. Which of the following can be described as involving direct finance?
A) A corporation's stock is traded in an over-the-counter market.
B) A corporation buys commercial paper issued by another corporation.
C) A pension fund manager buys commercial paper from the issuing corpora-
tion.
D) Both A and B of the above.
E) Both B and C of the above.: B
1/5
, FI 412 Chapter 2
Study online at https://quizlet.com/_hycjtz
6. Which of the following can be described as involving indirect finance?
A) A corporation takes out loans from a bank.
B) People buy shares in a mutual fund.
C) A corporation buys commercial paper in a secondary market.
D) All of the above.
E) Only A and B of the above.: E
7. Which of the following can be described as involving indirect finance?
A) A bank buys a U.S. Treasury bill from one of its depositors.
B) A corporation buys commercial paper issued by another corporation.
C) A pension fund manager buys commercial paper in the primary market.
D) Both A and C of the above.: D
8. 8) Financial markets improve economic welfare because
A) they allow funds to move from those without productive investment oppor-
tunities to those who have such opportunities.
B) they allow consumers to time their purchases better.
C) they weed out inefficient firms.
D) they do all of the above.
E) they do A and B of the above.: E
9. A country whose financial markets function poorly is likely to
A) efficiently allocate its capital resources.
B) enjoy high productivity.
C) experience economic hardship and financial crises.
D) increase its standard of living.: C
10. Wealth, either financial or physical, that is employed to produce more wealth
is referred to as
A) assets.
B) the market.
C) capital.
D) funding.: C
11. Which of the following are securities?
A) A certificate of deposit
B) A share of Texaco common stock
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