FIN 340 test 1 UPDATED ACTUAL Exam
Questions and CORRECT Answers
financial system - CORRECT ANSWER - System that channels funds from households
and other savers to businesses
Three major components of financial system - CORRECT ANSWER - Financial assets,
financial institutions, the Federal Reserve and other regulators
financial asset - CORRECT ANSWER - Claim on someone else to pay you money
Security - CORRECT ANSWER - Asset that is tradable (e.g. stocks)
financial markets - CORRECT ANSWER - places or channels for buying or selling stocks,
bonds, and other securities
Categories of financial assets - CORRECT ANSWER - Money, stocks, bonds, foreign
exchange, securitized loans
money - CORRECT ANSWER - anything generally accepted in exchange for goods and
services
money supply - CORRECT ANSWER - the quantity of money available in the economy
Stocks - CORRECT ANSWER - financial securities that represent partial ownership of a
firm (aka. Equities)
Equities - CORRECT ANSWER - stocks that represent ownership shares in corporations
, shareholder - CORRECT ANSWER - A person who invests in a corporation by buying
stock and is a partial owner
financial capital - CORRECT ANSWER - Funds available to a firm
retained earnings - CORRECT ANSWER - An amount earned by a corporation and not yet
distributed to stockholders.
Dividends - CORRECT ANSWER - earnings distributed to stockholders
bond - CORRECT ANSWER - A financial security that represents a promise to repay a
fixed amount of funds
interest rate - CORRECT ANSWER - the cost (to the borrower) of borrowing funds,
usually expressed as a percentage of the amount borrowed
coupon - CORRECT ANSWER - the stated interest payment made on a bond
Short-term Bond - CORRECT ANSWER - a bond that matures in one year or less
Long-term bond - CORRECT ANSWER - a bond that matures in more than one year
foreign exchange - CORRECT ANSWER - units of foreign currency
Securitization - CORRECT ANSWER - the process of converting loans and other financial
assets that are not tradable into securities
mortgage - CORRECT ANSWER - A loan to purchase a home or other real estate
Questions and CORRECT Answers
financial system - CORRECT ANSWER - System that channels funds from households
and other savers to businesses
Three major components of financial system - CORRECT ANSWER - Financial assets,
financial institutions, the Federal Reserve and other regulators
financial asset - CORRECT ANSWER - Claim on someone else to pay you money
Security - CORRECT ANSWER - Asset that is tradable (e.g. stocks)
financial markets - CORRECT ANSWER - places or channels for buying or selling stocks,
bonds, and other securities
Categories of financial assets - CORRECT ANSWER - Money, stocks, bonds, foreign
exchange, securitized loans
money - CORRECT ANSWER - anything generally accepted in exchange for goods and
services
money supply - CORRECT ANSWER - the quantity of money available in the economy
Stocks - CORRECT ANSWER - financial securities that represent partial ownership of a
firm (aka. Equities)
Equities - CORRECT ANSWER - stocks that represent ownership shares in corporations
, shareholder - CORRECT ANSWER - A person who invests in a corporation by buying
stock and is a partial owner
financial capital - CORRECT ANSWER - Funds available to a firm
retained earnings - CORRECT ANSWER - An amount earned by a corporation and not yet
distributed to stockholders.
Dividends - CORRECT ANSWER - earnings distributed to stockholders
bond - CORRECT ANSWER - A financial security that represents a promise to repay a
fixed amount of funds
interest rate - CORRECT ANSWER - the cost (to the borrower) of borrowing funds,
usually expressed as a percentage of the amount borrowed
coupon - CORRECT ANSWER - the stated interest payment made on a bond
Short-term Bond - CORRECT ANSWER - a bond that matures in one year or less
Long-term bond - CORRECT ANSWER - a bond that matures in more than one year
foreign exchange - CORRECT ANSWER - units of foreign currency
Securitization - CORRECT ANSWER - the process of converting loans and other financial
assets that are not tradable into securities
mortgage - CORRECT ANSWER - A loan to purchase a home or other real estate
