Exam 2: An Overview of the Financial System

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

An important feature of money market mutual fund shares is ________.

Which of the following is not a goal of financial regulation?

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 ________.

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

Which of the following statements about financial markets and securities is true?

Describe the two methods of organizing a secondary market.

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

Which of the following is not a secondary market?

The process where financial intermediaries create and sell low-risk assets and use the proceeds to purchase riskier assets is known as ________.

Assume that you borrow $2000 at 10 percent annual interest to finance a new business project. For this loan to be profitable, the minimum amount this project must generate in annual earnings is ________.

Government regulations to reduce the possibility of financial panic include all of the following except ________.

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

Every financial market has which of the following characteristics?

Overnight funds are ________.

The primary assets of a pension fund are ________.

An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.

Which of the following is not a contractual savings institution?

The primary assets of a finance company are ________.

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