TEST BANK For Financial Markets and Institutions, 8th Edition by Anthony Saunders, Marcia Cornett, All Chapters 1 - 25, Complete Newest Version

TEST BANK FOR tb tb




Financial Markets And Institutions 8th Edition Anthony Saunders
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Chapter 1 tb




Student name: tb




1) What factors are encouraging financial institutions to offer overlapping financial services
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such as banking, investment banking, brokerage, etc.? 1.I. Regulatory changes allowing
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institutions 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 tb




B) II and III onlytb tb tb




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
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Stanley 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. tb tb




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




D) foreign exchange transaction. tb tb




E) forward transaction. tb




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,3) IBM creates and sells additional stock to the investment banker Morgan Stanley. Morgan
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Stanley 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. tb




C) government regulator. tb




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




4) A corporation seeking to sell new equity securities to the public for the first time in order
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to 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. tb




B) corporate bonds. tb




C) municipal bonds. tb




D) Treasury bonds. tb




E) corporate stocks. tb




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




B) primary markets. tb




C) money markets. tb




D) derivatives markets. tb




E) commodities markets. tb




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




B) Price risk; collateral
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C) Free riders; regulations
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D) Monitoring; diversification tb




E) Primary markets; foreign exchange markets
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8) Depository institutions include:
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A) banks only. tb




B) thrifts only. tb




C) finance companies only. tb tb




D) banks and thrifts. tb tb




E) All of these choices are correct.
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, 9) Match the intermediary with the characteristic that best describes its function.
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t b 1.I. Provide 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.Insurer
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s
3. Pension funds tb




4. Securities firms and investment banks tb tb tb tb




5. Mutual funds tb




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




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




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




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




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




10) Secondary markets help support primary markets because secondary markets: tb tb tb tb tb tb tb tb t b 1.I.
offer primary 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 tb




B) II only tb




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




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