Exam 1: Why Study Financial Markets and Institutions

(I)A bond is a debt security that promises to make payments periodically for a specified period of time. (II)A stock is a security that is a claim on the earnings and assets of a corporation.

(I)Debt markets are often referred to generically as the bond market. (II)A bond is a security that is a claim on the earnings and assets of a corporation.

From 1980 to early 1985 the dollar ________ in value, thereby benefiting American ________

In a bull market stock prices are rising, on average.

A weaker dollar benefits ________ and hurts ________

A financial intermediary borrows funds from people who have saved.

Banks are important to the study of money and the economy because they

Money is defined as

Economists group commercial banks, savings and loan associations, credit unions, mutual funds, mutual savings banks, insurance companies, pension funds, and finance companies together under the heading financial intermediaries. Financial intermediaries

Why is the stock market so important to individuals, firms, and the economy?

Monetary policy is chiefly concerned with

From the peak of the high-tech bubble in 2000, the stock market ________ by over ________ by late 2002.

Stock prices since the 1980s have been

What is money?

Different interest rates have a tendency to move in unison.

If you are planning a vacation to Europe, do you prefer a strong dollar or weak dollar relative to the euro? Why?

How does a bond differ from a stock?

A rising stock market index due to higher share prices

Financial innovation has provided more options to both investors and borrowers.

What are financial intermediaries and what do they do?