Question 1

Which of the following statements is CORRECT?

Accepted Answer

A)   The New York Stock Exchange is an auction market,and it has a physical location.
B)   Home mortgage loans are traded in the money market.
C)   If an investor sells shares of stock through a broker,then it would be a primary market transaction.
D)   Capital markets deal only with common stocks and other equity securities.
E)   While the distinctions are blurring,investment banks generally specialize in lending money,whereas commercial banks generally help companies raise capital from other parties.F) A) and D)
G) C) and D)

Question 2

​If you decide to buy 100 shares of Google,you would probably do so by calling your broker and asking him or her to execute the trade for you.This would be defined as a secondary market transaction,not a primary market transaction.

Accepted Answer

A) True 
 B)False

Question 3

Financial institutions are more diversified today than they were in the past,when federal laws kept investment banks,commercial banks,insurance companies,and similar organizations quite separate.Today the larger financial services corporations offer a variety of services,ranging from checking accounts,to insurance,to underwriting securities,to stock brokerage.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is an example of a capital market instrument?

Accepted Answer

A)   Commercial paper.
B)   Preferred stock.
C)   U.S.Treasury bills.
D)   Banker's acceptances.
E)   Money market mutual funds.F) B) and E)
G) A) and E)

Question 5

​Each stock's rate of return in a given year consists of a dividend yield (which might be zero)plus a capital gains yield (which could be positive,negative,or zero).Such returns are calculated for all the stocks in the S&P 500.A simple average of those returns (which gives equal weight to each company in the S&P 500)is then calculated.That average is called "the return on the S&P Index," and it is often used as an indicator of the "return on the market."

Accepted Answer

A) True 
 B)False

Question 6

You recently sold 100 shares of Microsoft stock to your brother at a family reunion.At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates.Which of the following best describes this transaction?

Accepted Answer

A)   This is an example of a direct transfer of capital.
B)   This is an example of a primary market transaction.
C)   This is an example of an exchange of physical assets.
D)   This is an example of a money market transaction.
E)   This is an example of a derivative market transaction.F) C) and D)
G) A) and B)

Question 7

Which of the following statements is CORRECT?

Accepted Answer

A)   Hedge funds are legal in Europe and Asia,but they are not permitted to operate in the United States.
B)   Hedge funds are legal in the United States,but they are not permitted to operate in Europe or Asia.
C)   Hedge funds have more in common with investment banks than with any other type of financial institution.
D)   Hedge funds have more in common with commercial banks than with any other type of financial institution.
E)   Hedge funds are not as highly regulated as most other types of financial institutions.The justification for this light regulation is that only "sophisticated" investors (i.e. ,those with high net worths and high incomes) are permitted to invest in these funds,and these investors supposedly can do any necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.F) None of the above
G) C) and D)

Question 8

When a corporation's shares are owned by a few individuals who are associated with the firm's management,we say that the stock is closely held.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is CORRECT?

Accepted Answer

A)   While the distinctions are becoming blurred,investment banks generally specialize in lending money,whereas commercial banks generally help companies raise capital from other parties.
B)   The NYSE operates as an auction market,whereas NASDAQ is an example of a dealer market.
C)   Money market mutual funds usually invest their money in a well-diversified portfolio of liquid common stocks.
D)   Money markets are markets for long-term debt and common stocks.
E)   A liquid security is a security whose value is derived from the price of some other "underlying" asset.F) A) and B)
G) C) and D)

Question 10

A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital.A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary.

Accepted Answer

A) True 
 B)False

Question 11

Each stock's rate of return in a given year consists of a dividend yield (which might be zero)plus a capital gains yield (which could be positive,negative,or zero).Such returns are calculated for all the stocks in the S&P 500.A weighted average of those returns,using each stock's total market value,is then calculated,and that average return is often used as an indicator of the "return on the market."

Accepted Answer

A) True 
 B)False

Question 12

​Which of the following statements is CORRECT?

Accepted Answer

A)   ​If you purchase 100 shares of Disney stock from your brother-in-law,this is an example of a primary market transaction.
B)   ​If Disney issues additional shares of common stock through an investment banker,this would be a secondary market transaction.
C)   ​The NYSE is an example of an over-the-counter market.
D)   ​Only institutions,and not individuals,can engage in derivative market transactions.
E)   ​As they are generally defined,money market transactions involve debt securities with maturities of less than one year.F) C) and E)
G) A) and C)

Question 13

A publicly owned corporation is a company whose shares are held by the investing public,which may include other corporations as well as institutional investors.

Accepted Answer

A) True 
 B)False

Exam 2: Financial Markets and Institutions

Which of the following statements is CORRECT?

Correct Answer
verified

A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital.A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary.

Correct Answer
verified

If you decide to buy 100 shares of Google,you would probably do so by calling your broker and asking him or her to execute the trade for you.This would be defined as a secondary market transaction,not a primary market transaction.

Correct Answer
verified

Which of the following statements is CORRECT?

Correct Answer
verified

Which of the following statements is CORRECT?

Correct Answer
verified

A publicly owned corporation is a company whose shares are held by the investing public,which may include other corporations as well as institutional investors.

Correct Answer
verified

When a corporation's shares are owned by a few individuals who are associated with the firm's management,we say that the stock is closely held.

Correct Answer
verified

Correct Answer
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Which of the following statements is CORRECT?

Correct Answer
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Which of the following is an example of a capital market instrument?

Correct Answer
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Correct Answer
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Correct Answer
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You recently sold 100 shares of Microsoft stock to your brother at a family reunion.At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates.Which of the following best describes this transaction?

Correct Answer
verified

Exam 2: Financial Markets and Institutions

Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital.A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary.

Correct AnswerverifiedShow Answer

​If you decide to buy 100 shares of Google,you would probably do so by calling your broker and asking him or her to execute the trade for you.This would be defined as a secondary market transaction,not a primary market transaction.

Correct AnswerverifiedShow Answer

​Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

A publicly owned corporation is a company whose shares are held by the investing public,which may include other corporations as well as institutional investors.

Correct AnswerverifiedShow Answer

When a corporation's shares are owned by a few individuals who are associated with the firm's management,we say that the stock is closely held.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is CORRECT?

Correct AnswerverifiedShow Answer

Which of the following is an example of a capital market instrument?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

You recently sold 100 shares of Microsoft stock to your brother at a family reunion.At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates.Which of the following best describes this transaction?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

If you decide to buy 100 shares of Google,you would probably do so by calling your broker and asking him or her to execute the trade for you.This would be defined as a secondary market transaction,not a primary market transaction.

Correct Answer
verified

Which of the following statements is CORRECT?

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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