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

The law that prohibited commercial banks from engaging investment banking activities is the Financial Services Modernization Act of 1999.

The vast preponderance of securities sales on the New York Stock Exchange are secondary market transactions.

The major players in the direct financial markets are:

A line of credit to a corporation is like _____ to an individual.

The financial system is nothing more than a collection of financial markets.

A financial system's primary concern is funneling money from:

Savings by _____ in small dollar amounts is the origin of much of the money that funds business loans in an economy.

The general level of interest rates tends to follow:

If a firm sells common stock to the public for the very first time, it is known as _____.

Direct financing occurs when:

If you are a borrower, which would you prefer to occur during the life of your loan?

The term money market reflects the idea that the instruments traded in the money market are highly marketable and easily converted into cash.

The process of converting financial securities with one set of characteristics into securities with another set of characteristics is called:

An economy with a large flow of funds requires:

If a firm needs to adjust its liquidity position, then it would participate in:

If you just purchased a share of IBM through a New York Stock Exchange-based transaction, you participated in:

Stocks that are traded in the _____ are typically those of smaller and lesser known firms.

Which of the following would not make up a major proportion of a pension fund investment portfolio?

_____ are the principal lender-savers in the economy.

Real rates of interest are perfectly observable.