FIN310 EXAM 1 CSU FRANK SMITH
Those financial markets that facilitate the flow of long-term funds are known as
a. money markets.
b. capital markets.
c. primary markets.
d. secondary markets. - Answers -b. capital markets.
If a corporation wants to borrow funds, it can issue bonds in the ______ market.
a. secondary
b. primary
c. deficit
d. surplus - Answers -b. primary
Indiana Bank purchased corporate bonds with a 10-year maturity 3 years ago. If it now
needs funds, it could sell those bonds in the ______ market.
a. secondary
b. primary
c. deficit
d. surplus - Answers -a. secondary
Which of the following is a money market security?
a. six-month treasury bill
b. municipal bond
c. mortgage
d. corporate bond - Answers -a. six-month treasury bill
The _______________________ required complete disclosure of relevant financial
information for publicly offered securities in the primary market..
a. Glass-Steagall Act
b. Federal Reserve Act
c. Sarbanes-Oxley Act
d. Securities Act of 1933 - Answers -d. Securities Act of 1933
Because financial markets are ____, securities buyers and sellers do not have full
access to information and cannot always break down securities to the precise size they
desire.
a. efficient
b. inefficient
c. perfect
d. imperfect - Answers -d. imperfect
Which of the following is most likely to be described as a depository institution?
, a. savings institutions
b. securities firms
c. finance companies
d. pension funds
e. insurance companies - Answers -a. savings institutions
Which of the following financial intermediaries are NOT major investors in stocks?
a. commercial banks
b. insurance companies
c. mutual funds
d. pension funds - Answers -a. commercial banks
One reason for the __________ was that mortgage lenders did not always properly
verify the income, job status, and credit history of mortgage applicants before extending
a mortgage.
a. credit crisis in the 2008-2009 period
b. stock market crash in 2013
c. mutual fund crisis in 2015
d. oil crisis in 2012 - Answers -a. credit crisis in the 2008-2009 period
If economic conditions become more favorable, then
a. expected cash flows on various projects will decrease.
b. fewer proposed projects will have expected returns greater than the hurdle rate.
c. there would be additional acceptable business projects.
d. there would be an increased demand by business for loanable funds. - Answers -c.
there would be additional acceptable business projects.
As a result of less favorable economic conditions, there is a(n) ____ demand for
loanable funds, causing an ____ shift in the demand curve.
a. decreased; inward
b. decreased; outward
c. increased; outward
d. increased; inward - Answers -a. decreased; inward
Other things being equal, foreign governments and corporations would demand ____
U.S. funds if their local interest rates were suddenly higher than U.S. rates. For a given
foreign interest rate level, foreign demand for U.S. funds is ____ related to U.S. interest
rates.
a. less; inversely
b. more; positively
c. less; positively
d. more; inversely - Answers -d. more; inversely
If the real interest rate was large during the last year, then
a. inflation is expected to exceed the nominal interest rate in the future.
b. inflation is expected to be less than the nominal interest rate in the future.
Those financial markets that facilitate the flow of long-term funds are known as
a. money markets.
b. capital markets.
c. primary markets.
d. secondary markets. - Answers -b. capital markets.
If a corporation wants to borrow funds, it can issue bonds in the ______ market.
a. secondary
b. primary
c. deficit
d. surplus - Answers -b. primary
Indiana Bank purchased corporate bonds with a 10-year maturity 3 years ago. If it now
needs funds, it could sell those bonds in the ______ market.
a. secondary
b. primary
c. deficit
d. surplus - Answers -a. secondary
Which of the following is a money market security?
a. six-month treasury bill
b. municipal bond
c. mortgage
d. corporate bond - Answers -a. six-month treasury bill
The _______________________ required complete disclosure of relevant financial
information for publicly offered securities in the primary market..
a. Glass-Steagall Act
b. Federal Reserve Act
c. Sarbanes-Oxley Act
d. Securities Act of 1933 - Answers -d. Securities Act of 1933
Because financial markets are ____, securities buyers and sellers do not have full
access to information and cannot always break down securities to the precise size they
desire.
a. efficient
b. inefficient
c. perfect
d. imperfect - Answers -d. imperfect
Which of the following is most likely to be described as a depository institution?
, a. savings institutions
b. securities firms
c. finance companies
d. pension funds
e. insurance companies - Answers -a. savings institutions
Which of the following financial intermediaries are NOT major investors in stocks?
a. commercial banks
b. insurance companies
c. mutual funds
d. pension funds - Answers -a. commercial banks
One reason for the __________ was that mortgage lenders did not always properly
verify the income, job status, and credit history of mortgage applicants before extending
a mortgage.
a. credit crisis in the 2008-2009 period
b. stock market crash in 2013
c. mutual fund crisis in 2015
d. oil crisis in 2012 - Answers -a. credit crisis in the 2008-2009 period
If economic conditions become more favorable, then
a. expected cash flows on various projects will decrease.
b. fewer proposed projects will have expected returns greater than the hurdle rate.
c. there would be additional acceptable business projects.
d. there would be an increased demand by business for loanable funds. - Answers -c.
there would be additional acceptable business projects.
As a result of less favorable economic conditions, there is a(n) ____ demand for
loanable funds, causing an ____ shift in the demand curve.
a. decreased; inward
b. decreased; outward
c. increased; outward
d. increased; inward - Answers -a. decreased; inward
Other things being equal, foreign governments and corporations would demand ____
U.S. funds if their local interest rates were suddenly higher than U.S. rates. For a given
foreign interest rate level, foreign demand for U.S. funds is ____ related to U.S. interest
rates.
a. less; inversely
b. more; positively
c. less; positively
d. more; inversely - Answers -d. more; inversely
If the real interest rate was large during the last year, then
a. inflation is expected to exceed the nominal interest rate in the future.
b. inflation is expected to be less than the nominal interest rate in the future.
