Exam 1: The Financial Environment

An area of finance that involves the study of organizations or intermediaries that help the financial system operate efficiently and transfer funds from savers and investors to individuals, businesses, and governments that seek to spend or invest the funds in physical assets (inventories, buildings, and equipment) is called:

Major participants in the secondary mortgage markets include all of the following except:

Brokerage firms do not perform which of the following functions?

The financial environment:

Intermediaries that help the financial system operate efficiently and transfer funds from savers and investors to individuals, businesses, and governments that seek to spend or invest the funds are known as:

A credit score is a number that indicates the creditworthiness or likelihood that a borrower will make loan payments when due

_______________ is the study of how growth-driven, performance-focused, early-stage (from development through early rapid growth) firms raise financial capital and manage their operations and assets.

________________ involves making decisions relating to issuing and investing in stocks and bonds.

The principle of finance that "financial markets are efficient in pricing securities" implies that the prices of securities reflect some information available to the public and that when new information becomes available, prices change over time to reflect that information.

Capital markets are markets where equity securities and debt securities with maturities of greater than one year are traded.

Derivative securities may be used to speculate on the future price direction of the underlying financial assets or to reduce price risk associated with holding the underlying financial assets.

A mortgage-backed security is an investment created by using a house as collateral for a loan.

Which statement best describes the six principles of finance?

An effective financial system is a complex mix of government and policy makers, a monetary system, financial institutions, and financial markets that interact to expedite the flow of financial capital from savings into investment.

Rational investors would consider an investment in a risky business venture only if they feel the expected return is high enough to justify the

The principle of finance that "reputation matters" sometimes is harmed by the different objectives of owners and managers.

Which of the following statements is false?

Finance has its origins in:

Career opportunities in finance involving both treasury and control functions are generally associated with:

Two risky assets can be combined to lower the overall risk of a portfolio.This principle is commonly referred to as