1.1 Why Study Financial Markets?
1) �
Financial markets promote economic efficiency by
A) �
channeling funds from investors to savers.
B) �
creating inflation.
C) �
channeling funds from savers to investors.
D) �
reducing investment.
Answer: �
C
Ques Status: Revised
2) �
Financial markets promote greater economic efficiency by channeling funds from
________ to ________.
A) �
investors; savers
B) �
borrowers; savers
C) �
savers; borrowers
D) �
savers; lenders
Answer: �
C
Ques Status: New
3) �
Well-functioning financial markets promote
A) �
1
,inflation.
B) �
deflation.
C) �
unemployment.
D) �
growth.
Answer: �
D
Ques Status: Revised
4) �
Markets in which funds are transferred from those who have excess funds avail-
able to those who have a shortage of available funds are called
A) �
commodity markets.
B) �
fund-available markets.
C) �
derivative exchange markets.
D) �
financial markets.
Answer: �
D
Ques Status: Previous Edition
5) �
________ markets transfer funds from people who have an excess of available
funds to people who have a shortage.
A) �
Commodity
B) �
Fund-available
2
,C) �
Financial
D) �
Derivative exchange
Answer: �
C
Ques Status: New
6) �
Poorly performing financial markets can be the cause of
A) �
wealth.
B) �
poverty.
C) �
financial stability.
D) �
financial expansion.
Answer: �
B
Ques Status: Revised
7) �
The bond markets are important because they are
A) �
easily the most widely followed financial markets in the United States.
B) �
the markets where foreign exchange rates are determined.
C) �
the markets where interest rates are determined.
D) �
the markets where all borrowers get their funds.
Answer: �
3
, C
Ques Status: Revised
8) �
The price paid for the rental of borrowed funds (usually expressed as a percent-
age of the rental of $100 per year) is commonly referred to as the
A) �
inflation rate.
B) �
exchange rate.
C) �
interest rate.
D) �
aggregate price level.
Answer: �
C
Ques Status: Previous Edition
9) �
Compared to interest rates on long-term U.S. government bonds, interest rates
on three-month Treasury bills fluctuate ________ and are ________ on
average.
A) �
more; lower
B) �
less; lower
C) �
more; higher
D) �
less; higher
Answer: �
A
Ques Status: Previous Edition
10) �
4
1) �
Financial markets promote economic efficiency by
A) �
channeling funds from investors to savers.
B) �
creating inflation.
C) �
channeling funds from savers to investors.
D) �
reducing investment.
Answer: �
C
Ques Status: Revised
2) �
Financial markets promote greater economic efficiency by channeling funds from
________ to ________.
A) �
investors; savers
B) �
borrowers; savers
C) �
savers; borrowers
D) �
savers; lenders
Answer: �
C
Ques Status: New
3) �
Well-functioning financial markets promote
A) �
1
,inflation.
B) �
deflation.
C) �
unemployment.
D) �
growth.
Answer: �
D
Ques Status: Revised
4) �
Markets in which funds are transferred from those who have excess funds avail-
able to those who have a shortage of available funds are called
A) �
commodity markets.
B) �
fund-available markets.
C) �
derivative exchange markets.
D) �
financial markets.
Answer: �
D
Ques Status: Previous Edition
5) �
________ markets transfer funds from people who have an excess of available
funds to people who have a shortage.
A) �
Commodity
B) �
Fund-available
2
,C) �
Financial
D) �
Derivative exchange
Answer: �
C
Ques Status: New
6) �
Poorly performing financial markets can be the cause of
A) �
wealth.
B) �
poverty.
C) �
financial stability.
D) �
financial expansion.
Answer: �
B
Ques Status: Revised
7) �
The bond markets are important because they are
A) �
easily the most widely followed financial markets in the United States.
B) �
the markets where foreign exchange rates are determined.
C) �
the markets where interest rates are determined.
D) �
the markets where all borrowers get their funds.
Answer: �
3
, C
Ques Status: Revised
8) �
The price paid for the rental of borrowed funds (usually expressed as a percent-
age of the rental of $100 per year) is commonly referred to as the
A) �
inflation rate.
B) �
exchange rate.
C) �
interest rate.
D) �
aggregate price level.
Answer: �
C
Ques Status: Previous Edition
9) �
Compared to interest rates on long-term U.S. government bonds, interest rates
on three-month Treasury bills fluctuate ________ and are ________ on
average.
A) �
more; lower
B) �
less; lower
C) �
more; higher
D) �
less; higher
Answer: �
A
Ques Status: Previous Edition
10) �
4
