LSUS MBA 727 Choi Exam 2 with 100% Correct Answers

LSUS MBA 727 Choi Exam 2 with 100% Correct Answers Financial market participants who provide funds are called *Ans* Surplus units Those financial markets that facilitate the flow of short-term funds are known as *Ans* Money markets Which of the following is a capital market instrument? *Ans* A ten-year bond Which of the following is a money market security? *Ans* commercial paper Money market securities generally have *Ans* relatively high liquidity, low expected return, and a low degree of credit risk The Securities and Exchange Commission(SEC) was established by the *Ans* Securities Exchange Act of 1934 Which of the following is a nondepository financial institution? *Ans* Mutual fund _____________securities have a maturity of one year or less; _____________securities generally have relatively high liquidity. *Ans* Money market; money market Which of the following transactions would not be considered a secondary market transaction? *Ans* A firm that was privately held engages in an offering of stock to the public Which of the following are not considered money market securities? *Ans* Mortgage backed securities The Securities Exchange Commission(SEC) does NOT *Ans* decide whether a public issue is fairly priced. Discuss how secondary markets benefit funds issuers *Ans* The secondary markets provide liquidity to investors after their initial purchase of the security. This liquidity encourages them to purchase the security at the initial offer. The current market price also reflects current prospects for the firm and the competitiveness of the issue relative to similar securities. Corporate treasurers follow their stocks' price closely because the stock price reflects how well their firm and the market are performing. The current security price also provides information about the cost of obtaining any additional funds. What determines the price of financial instruments? Which are riskier, capital market instruments or money market instruments? Why? *Ans* The price of any financial instrument is the present value of future cash flows disc