Exam 2: An Overview of the Financial System

Corporations receive funds when their stock is sold in the primary market.Why do corporations pay attention to what is happening to their stock in the secondary market?

A breakdown of financial markets can result in

In the United States,loans from ________ are far ________ important for corporate finance than are securities markets.

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

Describe the two methods of organizing a secondary market.

Money market mutual fund shares function like

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

Financial markets have the basic function of

Financial markets improve economic welfare because

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

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

Distinguish between direct finance and indirect finance.Which of these is the most important source of funds for corporations in the United States?

Which of the following can be described as direct finance?

Which of the following are NOT contractual savings institutions?

If the maturity of a debt instrument is less than one year,the debt is called

Distinguish between a foreign bond and a Eurobond.

Equity holders are a corporation's ________.That means the corporation must pay all of its debt holders before it pays its equity holders.

Which of the following is NOT a secondary market?

Hedge funds require large minimum investments ranging from ________ to ________ or more.

Secondary markets make financial instruments more