Finance 3000 Exam 2 - Mizzou/Griswold
Question and answers verified to pass
financial markets - correct answers arenas through which funds flow
what are the two major market dimensions? - correct answers -primary vs
secondary
-money vs capital
primary market - correct answers markets in which corporations raise funds
through new issues of securities
secondary market - correct answers markets that trade financial instruments
once they are issued
example of secondary markets - correct answers NYSE and NASDAQ
money markets - correct answers trade debt securities or instruments with
maturities of less than one year
capital markets - correct answers trade debt and equity instruments with
maturities greater than one year
examples of money market instruments - correct answers -treasury bulls
-federal funds
-repurchase agreements
-commercial paper
, -negotiable certificates
-banker acceptances (BAs)
what does FDIC insurance do? - correct answers prevents runs on banks
foreign exchange markets - correct answers trade currencies for immediate
(spot) or some future stated delivery
foreign exchange risk - correct answers arises form the unknown value at
which foreign currency cash flows can be converted into U.S. dollars
derivative security - correct answers formalizes an agreement between 2
parties to exchange a standard quantity of an asset at a predetermined price
on a specified date in the future
what are three characteristics of derivative securities - correct answers -highly
leveraged financial securities linked to underlying security
-potentially high-risk
-used for hedging and speculating
financial institutions - correct answers perform the essential function of
channeling funds from those with surplus funds to those with shortages of
funds
what unique functions are performed by financial institutions? - correct
answers -monitoring costs
-liquidity and price risk
Question and answers verified to pass
financial markets - correct answers arenas through which funds flow
what are the two major market dimensions? - correct answers -primary vs
secondary
-money vs capital
primary market - correct answers markets in which corporations raise funds
through new issues of securities
secondary market - correct answers markets that trade financial instruments
once they are issued
example of secondary markets - correct answers NYSE and NASDAQ
money markets - correct answers trade debt securities or instruments with
maturities of less than one year
capital markets - correct answers trade debt and equity instruments with
maturities greater than one year
examples of money market instruments - correct answers -treasury bulls
-federal funds
-repurchase agreements
-commercial paper
, -negotiable certificates
-banker acceptances (BAs)
what does FDIC insurance do? - correct answers prevents runs on banks
foreign exchange markets - correct answers trade currencies for immediate
(spot) or some future stated delivery
foreign exchange risk - correct answers arises form the unknown value at
which foreign currency cash flows can be converted into U.S. dollars
derivative security - correct answers formalizes an agreement between 2
parties to exchange a standard quantity of an asset at a predetermined price
on a specified date in the future
what are three characteristics of derivative securities - correct answers -highly
leveraged financial securities linked to underlying security
-potentially high-risk
-used for hedging and speculating
financial institutions - correct answers perform the essential function of
channeling funds from those with surplus funds to those with shortages of
funds
what unique functions are performed by financial institutions? - correct
answers -monitoring costs
-liquidity and price risk
