FIN 3244 Exam 1

The central bank of the United States is Citicorp The Fed Bank of America The Treasury None of these - Answer- the fed Interest rates are important to financial institutions since an interest rate increase ________ the cost of acquiring funds and ________ the income from assets A) decreases; decreases b) increases; increases c) decreases; increases d) increases; decreases - Answer- b Financial market activities affect a) personal wealth b) spending decisions by individuals and business firms c) the economy's location in the business cycle d) all of the above - Answer- d Changes in stock prices A) affect people's wealth and their willingness to spend b) affect firms' decisions to sell stock to finance investment spending c) are characterized by considerable fluctuations d) all of these E) only: affect people's wealth and their willingness to spend AND affect firms' decisions to sell stock to finance investment spending - Answer- d Which of the following statements about financial markets and securities are true? a) Most common stocks are traded over-the-counter, although the largest corporations have their shares traded at organized stock exchanges such as the New York Stock Exchange. B) A corporation acquires new funds only when its securities are sold in the primary market. c) Money market securities are usually more widely traded than longer-term securities and so tend to be more liquid. d) All of these are true e) Only these are true: Most common stocks are traded over-the-counter, although the largest corporations have their shares traded at organized stock exchanges such as the New York Stock Exchange AND A corporation acquires new funds only when its securities are sold in the primary market. - Answer- d