Exam 2: Overview of the Financial System

The presence of ________ in financial markets leads to adverse selection and moral hazard problems that interfere with the efficient functioning of financial markets.

The largest depository institution (value of assets)at the end of 2009 was

Which of the following are secondary markets?

Financial intermediaries

The government agency that insures each depositor at a commercial bank, savings and loan association, or mutual savings bank up to a loss of $100,000 per account ($250,000 for individual retirement accounts)is the Securities and Exchange Commission (SEC).

Which of the following are securities?

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

A financial intermediary's risk-sharing activities are also referred to as asset transformation.

Which of the following are not investment intermediaries?

The concept of adverse selection helps to explain

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

What are adverse selection and moral hazard?

A bond denominated in euros and issued in a country that uses the euro as its currency is an example of a Eurobond.

What are some of the differences between an organized exchange and an over-the-counter market?

Many common stocks are traded at organized exchanges, although a majority of the largest corporations have their shares traded over the counter.

Financial markets improve economic welfare because

Which of the following is a contractual savings institution?

The country whose banks are the most restricted in the range of assets they may hold is

A mutual fund is not a depository institution.

Adverse selection refers to those with high credit risks, being most aggressive in their search for funds.