Module 1 MBA 727 CORRECT
QUESTIONS & ANSWERS|| LATEST
UPDATE 2025
Financial Market - ANSWER A market in which financial assets (securities) such as
stocks and bonds can be purchased
Surplus Units - ANSWER participants who receive more money than they spend, such
as investors
Deficit Units - ANSWER participants who spend more money than they receive, such as
borrowers
Securities - ANSWER represent a claim on the issuers
Debt Securities - ANSWER debt (also called credit, or borrowed funds) incurred by the
issuer.
Equity Securities - ANSWER (also called stocks) represent equity or ownership in the
firm
Role of Financial Markets - ANSWER 1. Accommodate Corporate Finance needs
2. Accommodate Investment Needs
Primary Markets Role Financial Markets - ANSWER Facilitate the issuance of new
securities
Secondary Markets Role of Financial Markets - ANSWER Facilitate the trading of
existing securities, which allows for a change in the ownership of securities
Liquidity - ANSWER Is the degree to which securities can easily be liquidated(sold)
without a loss of value
Securities Can be classified as - ANSWER money market securities, capital market
securities, or derivative securities
Bonds - ANSWER long-term debt securities issued by the Treasury, government
agencies, and corporations to finance their operations.
Mortgages - ANSWER long-term debt obligations created to finance the purchase of
real estate
, Finance companies - ANSWER obtain funds by issuing securities and lend the funds to
individuals and small businesses .
Mutual funds are: - ANSWER sell shares to surplus units and use the funds received to
purchase a portfolio of securities .
Securities firms - ANSWER provide a wide variety of functions in financial markets .
( Broker , Underwriter , Dealer , Advisory )
Insurance companies - ANSWER provide insurance policies that reduce the financial
burden associated with death , illness , and damage to property premiums and invest in
financial markets
Pension funds - ANSWER manage funds until they are withdrawn for retirement
- ANSWER Is the spread of financial problems among financial institutions and across
financial markets that could cause a collapse in the financial system
Crisis Emergency Economic Stabilization Act - October 2008 - ANSWER Intended to
resolve the liquidity problems of financial institutions and to restore the confidence of the
investors who invest in them .
Federal Reserve Actions - ANSWER Fed provided emergency loans to many securities
firms that were not subject to its regulation .
Financial Reform Act of 2010 - ANSWER Also referred to as Wall Street Reform Act or
Consumer Protection Act Mortgage lenders must verify the income , job status , and
credit history of mortgage applicants before approving mortgage applications
State and Local Government Bonds ( Municipals - ANSWER Long - term instruments
issued by state and local governments to finance expenditures on schools , roads , and
so on .
Revenue Bonds - ANSWER Bonds used to finance specific projects with the proceeds
of those projects being used to pay off the bondholders
General Obligation Bonds - ANSWER Bonds that are paid out of the general revenues
and backed by the full faith and credit of the issuer
Market Makers - ANSWER Dealers who link up buyers and sellers of financial securities
and sometimes take positions in the securities .
Broker - ANSWER A person who arranges trades between buyers and sellers .
Dealer - ANSWER A person who arranges trades between buyers and sellers and who
stands ready to be a principal in a transaction ; a market maker
QUESTIONS & ANSWERS|| LATEST
UPDATE 2025
Financial Market - ANSWER A market in which financial assets (securities) such as
stocks and bonds can be purchased
Surplus Units - ANSWER participants who receive more money than they spend, such
as investors
Deficit Units - ANSWER participants who spend more money than they receive, such as
borrowers
Securities - ANSWER represent a claim on the issuers
Debt Securities - ANSWER debt (also called credit, or borrowed funds) incurred by the
issuer.
Equity Securities - ANSWER (also called stocks) represent equity or ownership in the
firm
Role of Financial Markets - ANSWER 1. Accommodate Corporate Finance needs
2. Accommodate Investment Needs
Primary Markets Role Financial Markets - ANSWER Facilitate the issuance of new
securities
Secondary Markets Role of Financial Markets - ANSWER Facilitate the trading of
existing securities, which allows for a change in the ownership of securities
Liquidity - ANSWER Is the degree to which securities can easily be liquidated(sold)
without a loss of value
Securities Can be classified as - ANSWER money market securities, capital market
securities, or derivative securities
Bonds - ANSWER long-term debt securities issued by the Treasury, government
agencies, and corporations to finance their operations.
Mortgages - ANSWER long-term debt obligations created to finance the purchase of
real estate
, Finance companies - ANSWER obtain funds by issuing securities and lend the funds to
individuals and small businesses .
Mutual funds are: - ANSWER sell shares to surplus units and use the funds received to
purchase a portfolio of securities .
Securities firms - ANSWER provide a wide variety of functions in financial markets .
( Broker , Underwriter , Dealer , Advisory )
Insurance companies - ANSWER provide insurance policies that reduce the financial
burden associated with death , illness , and damage to property premiums and invest in
financial markets
Pension funds - ANSWER manage funds until they are withdrawn for retirement
- ANSWER Is the spread of financial problems among financial institutions and across
financial markets that could cause a collapse in the financial system
Crisis Emergency Economic Stabilization Act - October 2008 - ANSWER Intended to
resolve the liquidity problems of financial institutions and to restore the confidence of the
investors who invest in them .
Federal Reserve Actions - ANSWER Fed provided emergency loans to many securities
firms that were not subject to its regulation .
Financial Reform Act of 2010 - ANSWER Also referred to as Wall Street Reform Act or
Consumer Protection Act Mortgage lenders must verify the income , job status , and
credit history of mortgage applicants before approving mortgage applications
State and Local Government Bonds ( Municipals - ANSWER Long - term instruments
issued by state and local governments to finance expenditures on schools , roads , and
so on .
Revenue Bonds - ANSWER Bonds used to finance specific projects with the proceeds
of those projects being used to pay off the bondholders
General Obligation Bonds - ANSWER Bonds that are paid out of the general revenues
and backed by the full faith and credit of the issuer
Market Makers - ANSWER Dealers who link up buyers and sellers of financial securities
and sometimes take positions in the securities .
Broker - ANSWER A person who arranges trades between buyers and sellers .
Dealer - ANSWER A person who arranges trades between buyers and sellers and who
stands ready to be a principal in a transaction ; a market maker
