Financial Markets And Institutions 8th Edition By Anthony Saunders

TEST BANK For Financial Markets And Institutions 8th Edition
By Anthony Saunders
Money is anything accepted by anyone as payment for services or goods. -
ANSWER:True

Interest rates are determined in the bond markets. - ANSWER:True

A stock is a debt security that promises to make periodic payments for a specific
period of time. - ANSWER:False

Monetary policy affects interest rates but has little effect on inflation or business
cycles. - ANSWER:False

The government organization responsible for the conduct of monetary policy in the
United States is the U.S. Treasury. - ANSWER:False

Interest rates can be accurately described as the rental price of money. -
ANSWER:True

Holding everything else constant, as the dollar weakens vacations abroad become
less attractive. - ANSWER:True

In recent years, financial markets have become more stable and less risky. -
ANSWER:False

Financial innovation has provided more options to both investors and borrowers. -
ANSWER:True

A financial intermediary borrows funds from people who have saved. - ANSWER:True

From 2001 to 2008, the dollar depreciated substantially. - ANSWER:True

From 2007 to 2009, the U.S. economy was hit by the worst financial crisis since the
Great Depression. - ANSWER:True

Holding everything else constant, as the dollar strengthens foreigners will buy more
U.S. exports. - ANSWER:False

In a bull market stock prices are rising, on average. - ANSWER:True

In a bear market stock prices are rising, on average. - ANSWER:False

Financial institutions are among the largest employers in the country and frequently
pay very high salaries. - ANSWER:True

,Different interest rates have a tendency to move in unison. - ANSWER:True

Financial markets are what makes financial institutions work. - ANSWER:False

In recent years, financial markets have become more risky. However, only a limited
number of tools (such as derivatives) are available to assist in managing this risk. -
ANSWER:False

Although the internet has changed many aspects of our lives, it hasn't proven very
useful for collecting and/or analyzing financial and economic data. - ANSWER:False

Every financial market allows loans to be made. - ANSWER:True

Most people's involvement with the financial system is through financial
intermediaries rather than financial markets. - ANSWER:True

A critical function of financial markets is an efficient allocation of capital. -
ANSWER:True

The New York Stock Exchange is an example of a primary market. - ANSWER:False

Equity represents an ownership interest in a firm and entitles the holder to the
residual cash flows. - ANSWER:True

The capital market is a financial market in which only short-term debt instruments
(generally those with an original maturity of less than one year) are traded. -
ANSWER:False

Many common stocks are traded over the counter, although a majority of the largest
corporations have their shares traded at organized stock exchanges. - ANSWER:True

Many common stocks are traded at organized exchanges, although a majority of the
largest corporations have their shares traded over the counter. - ANSWER:False

Corporations that issue new securities to raise capital now conduct more of this
business in financial markets in Europe and Asia than in the U.S. - ANSWER:True

Currently, over 80% of the new issues in the international bond market are
Eurobonds. - ANSWER:False

American investors pay attention to only the Dow Jones Industrial Average. -
ANSWER:False

A bond denominated in euros and issued in a country that uses the euro as its
currency is an example of a Eurobond. - ANSWER:False

, An example of direct financing is if you were to lend money to your neighbor. -
ANSWER:True

Liquidity services are services that make it easier for customers to conduct financial
transactions. - ANSWER:True

A financial intermediary's risk-sharing activities are also referred to as asset
transformation. - ANSWER:True

The process of financial intermediation is also known as direct finance. -
ANSWER:False

Through economies of scale, financial intermediaries can lower the cost of
information production for each service by applying one information resource to
many different services. - ANSWER:True

Adverse selection refers to those with high credit risks, being most aggressive in their
search for funds. - ANSWER:True

A mutual fund is not a depository institution. - ANSWER:True

A pension fund is not a contractual savings institution. - ANSWER:False

"Thrift institutions" include savings and loan associations, mutual savings banks, and
credit unions. - ANSWER:True

The government agency that insures each depositor at a commercial bank, savings
and loan association, or mutual savings bank up to a loss of $100,000 per account
($250,000 for individual retirement accounts) is the Securities and Exchange
Commission (SEC). - ANSWER:False

In the U.S., financial intermediaries are restricted in what they are allowed to do and
what assets they can hold. - ANSWER:True

Unlike regulations in other countries, there are very few federal regulations
governing who is allowed to set up a financial intermediary. - ANSWER:False

A bond's current market value is equal to the present value of the coupon payments
plus the present value of the face amount. - ANSWER:True

Discounting the future is the procedure used to find the future value of a dollar
received today. - ANSWER:False

The current yield is the best measure of an investor's return from holding a bond. -
ANSWER:False