Question 1

Direct financial markets could be broadly labelled as wholesale markets for funding.

Accepted Answer

A) True 
 B)False

Question 2

What is the generally recognised minimum denominated transaction in the direct financial markets?

Accepted Answer

A)  $10,000 
B)  $100,000 
C)  $1,000,000 
D)  $10,000,000 
A)  $10,000 
B)  $100,000 
C)  $1,000,000 
D)  $10,000,000

Question 3

The role of the financial system is to gather money from people and businesses that have funds to invest and to channel money to those that need it.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is NOT a component of the financial system?

Accepted Answer

A)  money market. 
B)  leasing market. 
C)  bond market. 
D)  share market. 
A)  money market. 
B)  leasing market. 
C)  bond market. 
D)  share market.

Question 5

The ease with which a security can be sold and converted into cash is called:

Accepted Answer

A)  convertibility. 
B)  book value. 
C)  marketability. 
D)  none of the above. 
A)  convertibility. 
B)  book value. 
C)  marketability. 
D)  none of the above.

Question 6

In Australia, the real rate of interest is generally about:

Accepted Answer

A)  1 per cent. 
B)  3 per cent. 
C)  5 per cent. 
D)  7 per cent. 
A)  1 per cent. 
B)  3 per cent. 
C)  5 per cent. 
D)  7 per cent.

Question 7

The most common reason that corporate companies use the futures and options markets is:

Accepted Answer

A)  to hedge risk. 
B)  to take risk. 
C)  to make deposits. 
D)  none of the above. 
A)  to hedge risk. 
B)  to take risk. 
C)  to make deposits. 
D)  none of the above.

Question 8

General insurance companies sell:

Accepted Answer

A)  protection against loss of income in the event of the death of the insured. 
B)  protection against loss of property from fire, theft, accidents, and other predictable causes. 
C)  protection against a loss of pension revenue for retirees. 
D)  all of the above. 
A)  protection against loss of income in the event of the death of the insured. 
B)  protection against loss of property from fire, theft, accidents, and other predictable causes. 
C)  protection against a loss of pension revenue for retirees. 
D)  all of the above.

Question 9

Secondary financial markets are similar to:

Accepted Answer

A)  direct auction markets. 
B)  new-car markets. 
C)  used-car markets. 
D)  all of the above. 
A)  direct auction markets. 
B)  new-car markets. 
C)  used-car markets. 
D)  all of the above.

Question 10

Which law is administered by the Australian Securities and Investment Commission?

Accepted Answer

A)  the Securities Act of 1933 
B)  Corporations Act of 2001 
C)  Stocks and Markets Act 1984 
D)  the Financial Services Modernisation Act of 1999 
A)  the Securities Act of 1933 
B)  Corporations Act of 2001 
C)  Stocks and Markets Act 1984 
D)  the Financial Services Modernisation Act of 1999

Question 11

If a small business opts not to borrow from a commercial bank, then what is probably its next best alternative?

Accepted Answer

A)  an insurance company. 
B)  a superannuation fund. 
C)  an investment fund. 
D)  a finance company. 
A)  an insurance company. 
B)  a superannuation fund. 
C)  an investment fund. 
D)  a finance company.

Question 12

The key difference between liquidity and marketability is that:

Accepted Answer

A)  the securities are easier to trade 
B)  the securities can be converted into cash. 
C)  the securities preserve their value. 
D)  the securities have lower funding costs. 
A)  the securities are easier to trade 
B)  the securities can be converted into cash. 
C)  the securities preserve their value. 
D)  the securities have lower funding costs.

Question 13

A surplus budget position means that an entity's:

Accepted Answer

A)  income and expenditures are equal. 
B)  income for the period exceeds expenses. 
C)  expenditures for the period exceed revenues. 
D)  none of the above. 
A)  income and expenditures are equal. 
B)  income for the period exceeds expenses. 
C)  expenditures for the period exceed revenues. 
D)  none of the above.

Question 14

Brokers are market specialists who do not bear risk.

Accepted Answer

A) True 
 B)False

Question 15

An important function of the financial system is:

Accepted Answer

A)  to direct money to the best investment opportunities in the economy. 
B)  to allow the federal government to view all financial transactions. 
C)  to help state governments to coordinate state tax levies. 
D)  all of the above. 
A)  to direct money to the best investment opportunities in the economy. 
B)  to allow the federal government to view all financial transactions. 
C)  to help state governments to coordinate state tax levies. 
D)  all of the above.

Question 16

A highly liquid financial instrument with a maturity of 90 days would be traded in:

Accepted Answer

A)  the money market. 
B)  the bond market. 
C)  the share market. 
D)  none of the above. 
A)  the money market. 
B)  the bond market. 
C)  the share market. 
D)  none of the above.

Direct financial markets could be broadly labelled as wholesale markets for funding.

What is the generally recognised minimum denominated transaction in the direct financial markets?

The role of the financial system is to gather money from people and businesses that have funds to invest and to channel money to those that need it.

Which of the following is NOT a component of the financial system?

The ease with which a security can be sold and converted into cash is called:

In Australia, the real rate of interest is generally about:

The most common reason that corporate companies use the futures and options markets is:

General insurance companies sell:

Secondary financial markets are similar to:

Which law is administered by the Australian Securities and Investment Commission?

If a small business opts not to borrow from a commercial bank, then what is probably its next best alternative?

The key difference between liquidity and marketability is that:

A surplus budget position means that an entity's:

Brokers are market specialists who do not bear risk.

An important function of the financial system is:

A highly liquid financial instrument with a maturity of 90 days would be traded in:

The Financial Manager and the Company

Financial Statements, Cash Flows and Tax

Analysing Financial Statements

The Time Value of Money

Discounted Cash Flows and Valuation

Risk and Return

Bond Valuation and the Structure of Interest Rates

Share Valuation

The Fundamentals of Capital Budgeting

Cash Flows and Capital Budgeting

Evaluating Project Economics and Capital Rationing

The Cost of Capital

Working Capital Management

How Companies Raise Capital

Capital Structure Policy

Dividends and Dividend Policy

Business Formation, Growth and Valuation

Strategic Financial Planning and Forecasting

Options and Corporate Finance

International Financial Management

Filters

Exam 2: The Financial System and the Level of Interest Rates

Direct financial markets could be broadly labelled as wholesale markets for funding.

What is the generally recognised minimum denominated transaction in the direct financial markets?

The role of the financial system is to gather money from people and businesses that have funds to invest and to channel money to those that need it.

Which of the following is NOT a component of the financial system?

The ease with which a security can be sold and converted into cash is called:

In Australia, the real rate of interest is generally about:

The most common reason that corporate companies use the futures and options markets is:

General insurance companies sell:

Secondary financial markets are similar to:

Which law is administered by the Australian Securities and Investment Commission?

If a small business opts not to borrow from a commercial bank, then what is probably its next best alternative?

The key difference between liquidity and marketability is that:

A surplus budget position means that an entity's:

Brokers are market specialists who do not bear risk.

An important function of the financial system is:

A highly liquid financial instrument with a maturity of 90 days would be traded in:

The Financial Manager and the Company

Financial Statements, Cash Flows and Tax

Analysing Financial Statements

The Time Value of Money

Discounted Cash Flows and Valuation

Risk and Return

Bond Valuation and the Structure of Interest Rates

Share Valuation

The Fundamentals of Capital Budgeting

Cash Flows and Capital Budgeting

Evaluating Project Economics and Capital Rationing

The Cost of Capital

Working Capital Management

How Companies Raise Capital

Capital Structure Policy

Dividends and Dividend Policy

Business Formation, Growth and Valuation

Strategic Financial Planning and Forecasting

Options and Corporate Finance

International Financial Management

Filters