Question 1

Mortgages are capital market debt securities.

Accepted Answer

A) True 
 B)False  True

Question 2

Explain how and why the secondary capital markets play an important role in our economy. How do secondary markets assist the primary market?

Accepted Answer

Secondary markets provide investors with liquidity and the ability to re-balance their portfolios at any time. Constant trading provides a base for selling additional securities (primary issue) into the market and constant price discovery promotes continuing evaluation and feedback. Secondary markets also enable investors to choose their own holding periods

Question 3

Primary markets are markets where users of funds raise cash by selling securities to funds suppliers.

Accepted Answer

A) True 
 B)False  True

Question 4

Direct finance requires a more or less exact match of preferences between DSUs and SSUs

Accepted Answer

A) True 
 B)False

Question 5

Privately placed securities are usually sold to one or more investment bankers and then resold to the general public.

Accepted Answer

A) True 
 B)False

Question 6

A household is a surplus spending units when income for the period exceeds spending.

Accepted Answer

A) True 
 B)False

Question 7

Competition among financial intermediaries tends to force borrowing rates downward.

Accepted Answer

A) True 
 B)False

Question 8

Depository intermediaries issue claims that are for the most part highly liquid.

Accepted Answer

A) True 
 B)False

Question 9

The money market is a market where liquidity is bought and sold.

Accepted Answer

A) True 
 B)False

Question 10

Businesses are never deficit spending units (DSUs).

Accepted Answer

A) True 
 B)False

Question 11

Most Federal agency financial activity is designed to increase funding and reduce the cost of borrowing for certain targeted sectors of the economy.

Accepted Answer

A) True 
 B)False

Question 12

Life insurance liabilities are generally more predictable than property and casualty insurer claims.

Accepted Answer

A) True 
 B)False

Question 13

"Futures contract" and "forward contract" are identical terms.

Accepted Answer

A) True 
 B)False

Question 14

Households are the major source of funds to the financial system.

Accepted Answer

A) True 
 B)False

Question 15

List and briefly describe the main risks managed by financial intermediaries.

Accepted Answer

Credit Risk (or default risk) is

Question 16

The purpose of the financial system is to bring savers and borrowers together.

Accepted Answer

A) True 
 B)False

Question 17

A financial claim is an "IOU" from a deficit spending unit.

Accepted Answer

A) True 
 B)False

Question 18

Explain financial intermediation and its benefits.

Accepted Answer

Financial institutions mediate unmatched

Question 19

The New York Stock Exchange is an example of an organized exchange.

Accepted Answer

A) True 
 B)False

Question 20

Discuss the problem of systemically risky banks. What is a systemically risky bank and what is the government doing to limit the risk from these institutions? Is it likely to work and prevent another financial crisis?

Accepted Answer

A systemically risky bank is one the fed

Mortgages are capital market debt securities.

Explain how and why the secondary capital markets play an important role in our economy. How do secondary markets assist the primary market?

Primary markets are markets where users of funds raise cash by selling securities to funds suppliers.

Direct finance requires a more or less exact match of preferences between DSUs and SSUs

Privately placed securities are usually sold to one or more investment bankers and then resold to the general public.

A household is a surplus spending units when income for the period exceeds spending.

Competition among financial intermediaries tends to force borrowing rates downward.

Depository intermediaries issue claims that are for the most part highly liquid.

The money market is a market where liquidity is bought and sold.

Businesses are never deficit spending units (DSUs).

Most Federal agency financial activity is designed to increase funding and reduce the cost of borrowing for certain targeted sectors of the economy.

Life insurance liabilities are generally more predictable than property and casualty insurer claims.

"Futures contract" and "forward contract" are identical terms.

Households are the major source of funds to the financial system.

List and briefly describe the main risks managed by financial intermediaries.

The purpose of the financial system is to bring savers and borrowers together.

A financial claim is an "IOU" from a deficit spending unit.

Explain financial intermediation and its benefits.

The New York Stock Exchange is an example of an organized exchange.

Discuss the problem of systemically risky banks. What is a systemically risky bank and what is the government doing to limit the risk from these institutions? Is it likely to work and prevent another financial crisis?

The Federal Reserve and Its Powers

The Fed and Interest Rates

The Level of Interest Rates

Bond Prices and Interest Rate Risk

The Structure of Interest Rates

Money Markets 1

Bond Markets

Mortgage Markets and Mortgagebacked Securities

Equity Markets

Derivatives Markets

International Markets

Commercial Bank Operations

International Banking

Regulation of Financial Institutions

Thrift Institutions and Finance Companies

Insurance Companies and Pension Funds

Investment Banking

Investment Companies

Risk Management in Financial Institutions

Filters

Exam 1: An Overview of Financial Markets and Institutions

Mortgages are capital market debt securities.

Explain how and why the secondary capital markets play an important role in our economy. How do secondary markets assist the primary market?

Primary markets are markets where users of funds raise cash by selling securities to funds suppliers.

Direct finance requires a more or less exact match of preferences between DSUs and SSUs

Privately placed securities are usually sold to one or more investment bankers and then resold to the general public.

A household is a surplus spending units when income for the period exceeds spending.

Competition among financial intermediaries tends to force borrowing rates downward.

Depository intermediaries issue claims that are for the most part highly liquid.

The money market is a market where liquidity is bought and sold.

Businesses are never deficit spending units (DSUs).

Most Federal agency financial activity is designed to increase funding and reduce the cost of borrowing for certain targeted sectors of the economy.

Life insurance liabilities are generally more predictable than property and casualty insurer claims.

"Futures contract" and "forward contract" are identical terms.

Households are the major source of funds to the financial system.

List and briefly describe the main risks managed by financial intermediaries.

The purpose of the financial system is to bring savers and borrowers together.

A financial claim is an "IOU" from a deficit spending unit.

Explain financial intermediation and its benefits.

The New York Stock Exchange is an example of an organized exchange.

Discuss the problem of systemically risky banks. What is a systemically risky bank and what is the government doing to limit the risk from these institutions? Is it likely to work and prevent another financial crisis?

The Federal Reserve and Its Powers

The Fed and Interest Rates

The Level of Interest Rates

Bond Prices and Interest Rate Risk

The Structure of Interest Rates

Money Markets 1

Bond Markets

Mortgage Markets and Mortgagebacked Securities

Equity Markets

Derivatives Markets

International Markets

Commercial Bank Operations

International Banking

Regulation of Financial Institutions

Thrift Institutions and Finance Companies

Insurance Companies and Pension Funds

Investment Banking

Investment Companies

Risk Management in Financial Institutions

Filters