Question 1

Which of the following can be described as involving indirect finance?

Accepted Answer

A)  You make a loan to your neighbor. 
B)  A corporation buys a share of common stock issued by another corporation in the primary market. 
C)  You buy a U.S. Treasury bill from the U.S. Treasury. 
D)  You make a deposit at a bank. 
A)  You make a loan to your neighbor. 
B)  A corporation buys a share of common stock issued by another corporation in the primary market. 
C)  You buy a U.S. Treasury bill from the U.S. Treasury. 
D)  You make a deposit at a bank.

Question 2

The primary purpose of deposit insurance is to

Accepted Answer

A)  improve the flow of information to investors. 
B)  prevent banking panics. 
C)  protect bank shareholders against losses. 
D)  protect bank employees from unemployment. 
A)  improve the flow of information to investors. 
B)  prevent banking panics. 
C)  protect bank shareholders against losses. 
D)  protect bank employees from unemployment.

Question 3

Which of the following instruments are traded in a money market?

Accepted Answer

A)  State and local government bonds. 
B)  U.S. Treasury bills. 
C)  Corporate bonds. 
D)  U.S. government agency securities. 
A)  State and local government bonds. 
B)  U.S. Treasury bills. 
C)  Corporate bonds. 
D)  U.S. government agency securities.

Question 4

Which of the following are short-term financial instruments?

Accepted Answer

A)  A repurchase agreement. 
B)  A share of Walt Disney Corporation stock. 
C)  A Treasury note with a maturity of four years. 
D)  A residential mortgage. 
A)  A repurchase agreement. 
B)  A share of Walt Disney Corporation stock. 
C)  A Treasury note with a maturity of four years. 
D)  A residential mortgage.

Question 5

Which of the following are not contractual savings institutions?

Accepted Answer

A)  Life insurance companies 
B)  Credit unions 
C)  Pension funds 
D)  State and local government retirement funds 
A)  Life insurance companies 
B)  Credit unions 
C)  Pension funds 
D)  State and local government retirement funds

Question 6

Although the dominance of ________ over ________ is clear in all countries, the relative importance of bond versus stock markets differs widely.

Accepted Answer

A)  financial intermediaries; securities markets 
B)  financial intermediaries; government agencies 
C)  government agencies; financial intermediaries 
D)  government agencies; securities markets 
A)  financial intermediaries; securities markets 
B)  financial intermediaries; government agencies 
C)  government agencies; financial intermediaries 
D)  government agencies; securities markets

Question 7

The primary liabilities of depository institutions are

Accepted Answer

A)  premiums from policies. 
B)  shares. 
C)  deposits. 
D)  bonds. 
A)  premiums from policies. 
B)  shares. 
C)  deposits. 
D)  bonds.

Question 8

Financial institutions that accept deposits and make loans are called ________ institutions.

Accepted Answer

A)  investment 
B)  contractual savings 
C)  depository 
D)  underwriting 
A)  investment 
B)  contractual savings 
C)  depository 
D)  underwriting

Question 9

Which of the following is a contractual savings institution?

Accepted Answer

A)  A life insurance company 
B)  A credit union 
C)  A savings and loan association 
D)  A mutual fund 
A)  A life insurance company 
B)  A credit union 
C)  A savings and loan association 
D)  A mutual fund

Question 10

Securities are ________ for the person who buys them, but are ________ for the individual or firm that issues them.

Accepted Answer

A)  assets; liabilities 
B)  liabilities; assets 
C)  negotiable; nonnegotiable 
D)  nonnegotiable; negotiable 
A)  assets; liabilities 
B)  liabilities; assets 
C)  negotiable; nonnegotiable 
D)  nonnegotiable; negotiable

Question 11

If Microsoft sells a bond in London and it is denominated in dollars, the bond is a

Accepted Answer

A)  Eurobond. 
B)  foreign bond. 
C)  British bond. 
D)  currency bond. 
A)  Eurobond. 
B)  foreign bond. 
C)  British bond. 
D)  currency bond.

Question 12

An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.

Accepted Answer

A)  adverse selection 
B)  moral hazard 
C)  risk sharing 
D)  credit risk 
A)  adverse selection 
B)  moral hazard 
C)  risk sharing 
D)  credit risk

Which of the following can be described as involving indirect finance?

The primary purpose of deposit insurance is to

Which of the following instruments are traded in a money market?

Which of the following are short-term financial instruments?

Which of the following are not contractual savings institutions?

Although the dominance of over is clear in all countries, the relative importance of bond versus stock markets differs widely.

The primary liabilities of depository institutions are

Financial institutions that accept deposits and make loans are called ________ institutions.

Which of the following is a contractual savings institution?

Securities are for the person who buys them, but are for the individual or firm that issues them.

If Microsoft sells a bond in London and it is denominated in dollars, the bond is a

An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.

Why Study Money, Banking, and Financial Markets

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Nonbank Finance

Financial Derivatives

Conflicts of Interest in the Financial Industry

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, Inflation, and the Demand for Money

Aggregate Demand and Supply Analysis

Monetary Policy Theory

Transmission Mechanisms of Monetary Policy

Filters

Exam 2: An Overview of the Financial System

Which of the following can be described as involving indirect finance?

The primary purpose of deposit insurance is to

Which of the following instruments are traded in a money market?

Which of the following are short-term financial instruments?

Which of the following are not contractual savings institutions?

Although the dominance of ________ over ________ is clear in all countries, the relative importance of bond versus stock markets differs widely.

The primary liabilities of depository institutions are

Financial institutions that accept deposits and make loans are called ________ institutions.

Which of the following is a contractual savings institution?

Securities are ________ for the person who buys them, but are ________ for the individual or firm that issues them.

If Microsoft sells a bond in London and it is denominated in dollars, the bond is a

An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.

Why Study Money, Banking, and Financial Markets

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Nonbank Finance

Financial Derivatives

Conflicts of Interest in the Financial Industry

Central Banks and the Federal Reserve System

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, Inflation, and the Demand for Money

Aggregate Demand and Supply Analysis

Monetary Policy Theory

Transmission Mechanisms of Monetary Policy

Filters

Although the dominance of over is clear in all countries, the relative importance of bond versus stock markets differs widely.

Securities are for the person who buys them, but are for the individual or firm that issues them.