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

Which of the following theories states that security prices reflect all public information, but not all private information?

The existence of an active secondary market for a security will help to enhance the price of that particular security in the primary market.

The presence of a financial market increases the marketability of a financial security by:

Businesses are the principal borrower-spenders in the economy.

If your firm primarily borrows from commercial banks, then it primarily accesses the capital markets through:

The financial market where a new security is sold for the first time is:

If a firm needs to finance a new corporate headquarters building, then it would most likely seek the funds in the:

Equities with maturity of greater than one year are generally traded in the capital market.

It is impossible for the nominal rate of interest to be below the real rate of interest.

A primary market is any financial market in which owners of outstanding securities can resell them to other investors.

A privately held corporation securing a loan from its regional commercial bank is an example of a direct market transaction.

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

Today, major money center banks in U.S have been allowed back to provide investment banking services.

The downside to a private placement transaction is that, it does not require the fees and expenses associated with an SEC registration.

Which of the following is a major participant in the direct financial market?

In the United States, the real rate of interest has historically been around:

Which of the following theories states that security prices reflect all information, whether public or private?

Governments are the principal lender-savers in the economy.

The term money market is used because:

During an economic expansion, we would expect: