1/28/23, 8:45 PM Quiz 1: Attempt review

Started on Saturday, 28 January 2023, 7:55 PM

State Finished
Completed on Saturday, 28 January 2023, 8:44 PM
Time taken 48 mins 37 secs

Question 1
Complete

Marked out of 1.00

Financial intermediaries rather than financial systems are the most common agents to channel funds from the suppliers to the users of funds.

True

False

Question 2
Complete

Marked out of 1.00

Enterprise Risk Management (ERM) system is responsible for managing the totality of a firm's risk exposures.

True

False

Question 3
Complete

Marked out of 1.00

Money markets trade securities that

I. Mature in one year or less

II. Have little chance of loss of principal

III. Must be guaranteed by the national government

a. II only

b. I and III only

c. I only

d. I and II only

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Question 4

Complete

Marked out of 1.00

Depository institutions include

a. Finance companies

b. Thrifts

c. Banks and thrifts

d. Banks

Question 5

Complete

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Central banks raise interest rates in order to control inflation, strengthen the local currency however it slows down the GDP growth rate of an
economy.

True

False

Question 6

Complete

Marked out of 1.00

Primary markets are markets in which users of funds raise cash by selling securities to funds' supplier.

True

False

Question 7
Complete

Marked out of 1.00

Financial intermediation provides direct transfer of funds to the users.

True

False

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Question 8

Complete

Marked out of 1.00

Financial intermediaries such as banks typically have assets that are riskier than their liabilities.

True

False

Question 9
Complete

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Commercial banks serve a wide variety of savers and borrowers.

True

False

Question 10
Complete

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Secondary markets are markets used by corporations to raise cash by issuing securities for a short time period.

True

False

Question 11
Complete

Marked out of 1.00

Pension funds are administered by the chief financial officer of the company.

True

False

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Question 12

Complete

Marked out of 1.00

The Philippine Stock Exchange (PSE) is an example of a secondary market.

True

False

Question 13
Complete

Marked out of 1.00

Which of the following is/are money market instrument(s) ?

a. Negotiable certificates of deposit

b. Common stock

c. Preferred stock

d. Corporate bonds

Question 14
Complete

Marked out of 1.00

A corporation seeking to sell new equity securities to the public for the first time in order to raise cash for capital investment would most likely

a. None of the options

b. Engage in a secondary market sale of equity

c. Conduct a private placement to a large number of potential buyers

d. Conduct an IPO with the assistance of an investment banker

Question 15
Complete

Marked out of 1.00

The most diversified type of depository institutions is

a. Commercial banks

b. Savings associations

c. Credit unions

d. Mutual funds

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Question 16

Complete

Marked out of 1.00

An efficient financial market is essential to have a healthy economic growth in a country.

True

False

Question 17
Complete

Marked out of 1.00

Secondary markets help support primary markets because secondary markets

I. Offer primary market purchasers liquidity for their holdings

II. Update the price or value of the primary market claims

III. Reduce the cost of trading the primary market claims

a. II only

b. I and II only

c. I, II and III

d. I only

Question 18
Complete

Marked out of 1.00

Financial Intermediaries (FIs) can offer savers a safer, more liquid investment than a capital market security, even though the intermediary
invests in risky illiquid instruments because

a. FIs can diversify away some of their risk and closely monitor the riskiness of their assets

b. FIs closely monitor the riskiness of their assets

c. The federal government requires them to do so

d. FIs can diversify away some of their risk

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Question 19

Complete

Marked out of 1.00

Central governments sometimes indirectly intervene in foreign exchange markets by affecting foreign exchange rates through raising or
lowering interest rates.

True

False

Question 20

Complete

Marked out of 1.00

International Business Machine (IBM) creates and sells additional stock to the investment banker Morgan Stanley. Morgan Stanley then resells
the issue to the US public. The transaction is an example of a/an

a. Money market transaction

b. Primary market transaction

c. Foreign exchange transaction

d. Asset transformation by Morgan Stanley

Question 21
Complete

Marked out of 1.00

Money markets are markets for intermediate and long-term debt and corporate stocks.

True

False

Question 22

Complete

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Money markets are the markets for securities with an original maturity of one year or less.

True

False

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Question 23

Complete

Marked out of 1.00

Corporate security issuers are always directly involved in funds transfers in the secondary market.

True

False

Question 24
Complete

Marked out of 1.00

What factors are encouraging financial institutions to offer overlapping financial services such as banking, investment banking, brokerage etc.

I. Regulatory changes allowing institutions to offer more services

II. Technological improvements reducing the cost of providing financial services

III. Increasing competition from full service global financial institutions

IV. Reduction in the need to manage risk at financial institutions

a. I, II, III and IV

b. I, II and III only

c. II and III only

d. I only

Question 25
Complete

Marked out of 1.00

Which of the following are capital market instruments?

a. 30-year mortgages

b. Common stock

c. 10-year corporate bonds

d. All of the above

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