Assignment for Financial Institutional Market submit before or on 10/10/2012 E.

C
I. Write True if the statement is True otherwise False
1. Financial institutions are those organizations that facilitate the transfer of money.
2. Provision of payment mechanism is considered as the function of financial institutions.
3. Financial institutions reduce the risk through diversification.
4. The firm that performs intermediation between two or more parts in a financial context is called
financial intermediaries.
5. Commercial Banks are institutions that offer deposit and credit services.
6. Credit unions are house-holds oriented intermediaries that offer deposit and credit services to
individuals and families.
7. None-life insurance is also called property-casualty insurance.
8. Interest rate is the amount of interest due period, as a proportion of the amount lent, deposit or
borrowed.
9. Commercial paper is unsecured, short-term debt instrument issued by corporation.
10. A certificate of deposit (CD) is a saving certificate with a fixed maturity date.
II. Choose the correct answer from the given alternatives
11. Which of the following is incorrect about the liquidity of an asset?
A. the price of the asset must tend to reasonably flexible over the time
B. the asset must have an inactive resale market C. the asset must be irreversible.
D. it must be converted into cash within ≥ I year E. all
12. Assume that Alif Education Share Company is a private institution that is established in the first
half of 2010 E.C. The company sales its new issued shares to individuals, government, private
organization, non- governmental organizations and others who is in need of it, so as to raise fund
to build schools (Nursery, Elementary, High School, Preparatory, College and University) in
different parts of Ethiopia. As a result the company collected 120million Ethiopian Br in the same
year. On the other hand Rift Valley University College is one of the private organizations that
needs to buy shares of Alif Education Share Company. Now based on the above case, in which of
the following markets does Rift Valley University College can buy the share?
A. over the counter market B. secondary market C. primary market D. all E. none
13. Based on the question No 12, if Rift Valley University College wants to resale its share, in which
of the following markets does the institution sale its share?
A. OTC Market B. Money Market C. Derivative Market D. all E. none
14. Based on the question No 12, which of the following functions of financial system is performed
by Alif Share Company?
A. Liquid Function B. Wealth Function C. Credit Function D. all E. none
15. Based on the question No 12, in which of the following market does Alif Share Company can sale
the share? A. Primary Market B. Secondary Market C. Cash Market D. all E. none
16. Which of the following performs the channeling of funds from savers to investors?
A. Financial System B. Financial Market C. Both D. all E. none
17. Which of the following can be categorized as financial intermediaries?
A. Banks B. Individuals C. Credit Union D. All of the above
18. All of the following can be categorized under financial intermediaries except
A. Brokers B. Insurance Company C. Mutual Funds D. None of the above
19. Which of the following is considered as the category of financial institutions? A. Commercial
Banks B. Credit Unions C. Insurance Companies D. All of the above
20. Which of the following cost is considered as transaction costs?
A. Search Cost B. Monitoring Costs C. Enforcement Costs D. All of the above
III. Matching
A B
21. Forex market A. where bonds (corporate and government bonds) can be sold
22. OTC market B. performs the channeling of funds from savers to investors
23. Bonds market C. financial intermediaries
24. Banks D. have no market place
25. Individuals E. no barrier of entry
26. Credit Unions F. second market
27. Brokers G. primary market
28. Insurance Industry H. Finance
29. Mutual funds I. Cash market
30. Pension fund J. Capital market