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?

Distinguish between a foreign bond and a Eurobond.

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

An investment intermediary that lends funds to consumers is ________.

Financial markets improve economic welfare because ________.

________ are short-term loans in which Treasury bills serve as collateral.

When I purchase ________, I own a portion of a firm and have the right to vote on issues important to the firm and to elect its directors.

The Canada Deposit Insurance Corporation regulates ________.

Bonds issued by corporations are called ________ bonds.

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

Explain why only the largest and most trustworthy corporations issue the financial instruments known as commercial paper?

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

Secondary markets make financial instruments more ________.

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

The purpose of the disclosure requirements is to ________.

Which of the following is an example of an intermediate-term debt?

Well-functioning financial markets ________.

The primary liabilities of depository institutions are ________.

How does regulation reduce the problems of adverse selection and moral hazard? What regulations are or have been used to protect the public from panics?

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