Exam 2: An Overview of the Financial System

Which of the following can be described as direct finance?

Which of the following benefit directly from any increase in the corporation's profitability?

Describe the difference between the money market and the capital market.

Reducing risk through the purchase of assets whose returns do not always move together is ________.

Risk sharing is profitable for financial institutions due to ________.

The principal lender-savers are ________.

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

The higher a security's price in the secondary market the ________ funds a firm can raise by selling securities in the ________ market.

Bonds that are sold in a foreign country and are denominated in the country's currency in which they are sold are known as ________.

The Canada Deposit Insurance Corporation regulates ________.

Which of the following is a depository institution?

Asymmetric information is a universal problem. This would suggest that financial regulations ________.

When an investment bank ________ securities, it guarantees a price for a corporation's securities and then sells them to the public.

________ work in the secondary markets matching buyers with sellers of securities.

Economies of scale enable financial institutions to ________.

Explain why Government of Canada Treasury Bills are considered as a financial instrument with very low risk.

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

The time and money spent in carrying out financial transactions are called ________.

If Volkswagen, a German company, sells a euro-denominated bond in London, the bond is a

Studies of the major developed countries show that when businesses go looking for funds to finance their activities they usually obtain these funds from ________.