Exam 2: An Overview of the Financial System

________ are financial intermediaries that acquire funds by selling shares to many individuals and using the proceeds to purchase diversified portfolios of stocks and bonds.

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

A financial market in which only short-term debt instruments are traded is called the ________ market.

A corporation acquires new funds only when its securities are sold in the ________.

Typically, borrowers have superior information relative to lenders about the potential returns and risks associated with an investment project. The difference in information is called ________, and it creates the ________ problem.

Which of the following statements about the characteristics of debt and equities is true?

Which of the following are short-term financial instruments?

The primary liabilities of a chartered bank are ________.

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

U.S. dollar deposits in foreign banks outside the U.S. or in foreign branches of U.S. banks are called ________.

One reason for the extraordinary growth of foreign financial markets is ________.

Which of the following financial intermediaries is not a depository institution?

An example of economies of scale in the provision of financial services is ________.