FIN 801 - TMU COMPREHENSIVE STUDY
GUIDE 2026 FULL QUESTIONS AND
SOLUTIONS GRADED A+
◍ Classifications of financial market:Primary market.
Answer: The investor pays the corporation directly
◍ Classifications of financial market: Secondary Market.
Answer: Investors pay investors for shares - NYSE
◍ Classifications of financial market: Spot market.
Answer: The exchange is happening right now
◍ Classifications of financial market: Futures market.
Answer: Contractually agreeing to pay a certain rate in the future: used for
currency exchanges or the farmer example
◍ Classifications of financial market: Money Markets.
Answer: Markets where securities with a maturity of less then a year are
traded. Example: T-bills, CDs
◍ Classifications of financial market: Capital Markets.
Answer: Markets where capital assets are traded. Example: bonds, preferred
or common stock
◍ Can debt be traded?.
Answer: Yes, examples of this a T-bills or government bonds
◍ Depository institutions.
Answer: Financial institutions that accept deposits from individuals and
provide loans. Example commercial banks or credit unions
◍ non-depository institutions.
Answer: do not handle deposits, but they do act as an intermediary between
, savers and borrowers. Examples : insurance companies or pension funds
◍ Fixed income market.
Answer: The market by which debt is traded
◍ How would the world look without financial intermediaries?.
Answer: People would not be able to issue debt or equity, everything would
have to be paid in cash
◍ How does a mutual fund work?.
Answer: This is a portfolio managed by a company in which investors can
buy shares. The managers take a fee then the extra is split between investors.
◍ How does a hedge fund work?.
Answer: Similar to a mutual fund by using pooled money through investors
but these investments are generally less liquid and riskier. Example:
Investment in real estate
◍ What is an exchange traded fund?.
Answer: a type of investment fund with various assest that is traded on a
stock exchange
◍ Risks to financial intermediaries.
Answer: Credit risk: Not being paid backForeign exchange rates
changesSovereign risk: Institution is not able to pull money out of a country
◍ Transport purchasing power forward.
Answer: Take a loan out and pay it back later
◍ Transport purchasing power backward.
Answer: Save money and pull it out later
◍ Enterprise risk management.
Answer: a process used by a company to identify its risks and develop
responses to them that enable it to be reasonably assured of meeting its goals
◍ The Securities Act of 1933.
Answer: Full and fair disclosure and securities registration
GUIDE 2026 FULL QUESTIONS AND
SOLUTIONS GRADED A+
◍ Classifications of financial market:Primary market.
Answer: The investor pays the corporation directly
◍ Classifications of financial market: Secondary Market.
Answer: Investors pay investors for shares - NYSE
◍ Classifications of financial market: Spot market.
Answer: The exchange is happening right now
◍ Classifications of financial market: Futures market.
Answer: Contractually agreeing to pay a certain rate in the future: used for
currency exchanges or the farmer example
◍ Classifications of financial market: Money Markets.
Answer: Markets where securities with a maturity of less then a year are
traded. Example: T-bills, CDs
◍ Classifications of financial market: Capital Markets.
Answer: Markets where capital assets are traded. Example: bonds, preferred
or common stock
◍ Can debt be traded?.
Answer: Yes, examples of this a T-bills or government bonds
◍ Depository institutions.
Answer: Financial institutions that accept deposits from individuals and
provide loans. Example commercial banks or credit unions
◍ non-depository institutions.
Answer: do not handle deposits, but they do act as an intermediary between
, savers and borrowers. Examples : insurance companies or pension funds
◍ Fixed income market.
Answer: The market by which debt is traded
◍ How would the world look without financial intermediaries?.
Answer: People would not be able to issue debt or equity, everything would
have to be paid in cash
◍ How does a mutual fund work?.
Answer: This is a portfolio managed by a company in which investors can
buy shares. The managers take a fee then the extra is split between investors.
◍ How does a hedge fund work?.
Answer: Similar to a mutual fund by using pooled money through investors
but these investments are generally less liquid and riskier. Example:
Investment in real estate
◍ What is an exchange traded fund?.
Answer: a type of investment fund with various assest that is traded on a
stock exchange
◍ Risks to financial intermediaries.
Answer: Credit risk: Not being paid backForeign exchange rates
changesSovereign risk: Institution is not able to pull money out of a country
◍ Transport purchasing power forward.
Answer: Take a loan out and pay it back later
◍ Transport purchasing power backward.
Answer: Save money and pull it out later
◍ Enterprise risk management.
Answer: a process used by a company to identify its risks and develop
responses to them that enable it to be reasonably assured of meeting its goals
◍ The Securities Act of 1933.
Answer: Full and fair disclosure and securities registration
