TEST BANK FOR Financial Markets And Institutions 8th Edition Anthony Saunders 2025/2026 | A+

TEST BANK FOR
Financial Markets And Institutions 8th Edition Anthony Saunders
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Chapter 1 th




Student name: th




1) What factors are encouraging financial institutions to offer overlapping financial services s
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uch as banking, investment banking, brokerage, etc.? 1.I. Regulatory changes allowing institutio
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ns to offer more services
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2.II. Technological improvements reducing the cost of providing financial services
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3.III. Increasing competition from full-service global financial institutions
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4.IV. Reduction in the need to manage risk at financial institutions
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A) I only th




B) II and III onlyth th th




C) I, II, and III only
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D) I, II, and IV only
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E) I, II, III, and IV
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2) IBM creates and sells additional stock to the investment banker Morgan Stanley. Morgan St
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anley then resells the issue to the U.S. public through its mutual funds.
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This transaction is an example of a(n):
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A) primary market transaction. th th




B) asset transformation by Morgan Stanley.
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C) money market transaction. th th




D) foreign exchange transaction. th th




E) forward transaction. th




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,3) IBM creates and sells additional stock to the investment banker Morgan Stanley. Morgan St
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anley then resells the issue to the U.S. public through its mutual funds.
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Morgan Stanley is acting as a(n)
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A) asset transformer.
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B) asset broker. th




C) government regulator. th




D) foreign service representative.
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E) derivatives trader. th




4) A corporation seeking to sell new equity securities to the public for the first time in order to
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raise cash for capital investment would most likely:
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A) conduct an IPO with the assistance of an investment banker.
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B) engage in a secondary market sale of equity.
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C) conduct a private placement to a large number of potential buyers.
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D) place an ad in the Wall Street Journal soliciting retail suppliers of funds.
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E) issue bonds with the assistance of a dealer.
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5) The largest capital market security outstanding in 2019 measured by market value was:
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A) securitized mortgages. th




B) corporate bonds. th




C) municipal bonds. th




D) Treasury bonds. th




E) corporate stocks. th




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,6) The diagram below is a diagram of the:
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A) secondary markets. th




B) primary markets. th




C) money markets. th




D) derivatives markets. th




E) commodities markets. th




7) and th




allow a financial intermediary to offer safe liquid liabilities such as deposits while investin
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g the depositors' money in riskier illiquid assets.
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A) Diversification; high equity returns th th th




B) Price risk; collateral th th




C) Free riders; regulations
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D) Monitoring; diversification th




E) Primary markets; foreign exchange markets th th th th




8) Depository institutions include: th th




A) banks only. th




B) thrifts only. th




C) finance companies only. th th




D) banks and thrifts. th th




E) All of these choices are correct.
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, 9) Match the intermediary with the characteristic that best describes its function. 1.I. P
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rovide protection from adverse events
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2.II. Pool funds of small savers and invest in either money or capital markets
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3.III. Provide consumer loans and real estate loans funded by deposits
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4.IV. Accumulate and transfer wealth from work period to retirement period
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5.V. Underwrite and trade securities and provide brokerage services
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1. Thrifts 2 th




.Insurers
3. Pension funds th




4. Securities firms and investment banks th th th th




5. Mutual funds th




A) 1, 3, 2, 5, 4 th th th th




B) 4, 2, 3, 5, 1 th th th th




C) 2, 5, 1, 3, 4 th th th th




D) 2, 4, 5, 3, 1 th th th th




E) 5, 1, 3, 2, 4 th th th th




10) Secondary markets help support primary markets because secondary markets: 1.I. offer p
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rimary market purchasers liquidity for their holdings.
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2. II. update the price or value of the primary market claims.
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3. III. reduce the cost of trading the primary market claims.
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A) I only th




B) II only th




C) I and II only
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D) II and III only th th th




E) I, II, and III
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11) Financial intermediaries (FIs) can offer savers a safer, more liquid investment than a c
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apital market security, even though the intermediary invests in risky illiquid instruments beca
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use:


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