Deck 1: Finance and Real Estate

Question 1

The following are insured by the FDIC:

A) commercial banks
B) savings and loan associations
C) insurance companies
D) credit unions
E) a and b

Answer 1

a and b

Question 2

The secondary mortgage market:

A) is called secondary because it is less important than the primary mortgage market
B) is where an investor goes after the primary mortgage market has turned down his request for credit
C) increases liquidity risk due to its inefficiency
D) purchases and sells mortgages that have been previously originated by other lenders

Answer 2

purchases and sells mortgages that have been previously originated by other lenders

Question 3

Financial markets can be partitioned into two categories:

A) primary and secondary
B) liquid and non-liquid securities
C) long-term and temporary instruments
D) money markets and capital markets

Answer 3

money markets and capital markets

Question 4

Money market instruments are those that mature in less than:

A) one year
B) five years
C) ten years
D) twenty years

Question 5

Savings and Loan Associations and Mutual Savings Banks:

A) have the same form of ownership-both are stock companies
B) differ in their form of ownership-one is a cooperative,the other is a stock company are also called thrifts
C) a and c
D) none of the above

Question 6

Risk:

A) is the same as risk-return tradeoff
B) is the possibility that the actual result will differ from the expected outcome
C) states that investors require additional expected returns for taking on additional risk
D) doesn't need to be considered when analyzing a potential investment

Question 7

For the economy the concept that the amount of savings equals the total amount that is invested is referred to as:

A) the debt-equity ratio
B) not important to potential creditors because there are better methods of measuring credit worthiness
C) the savings-investment cycle
D) cash flow

Question 8

Intermediaries:

A) are financial institutions that channel funds from the surplus income units to deficit income units
B) channel funds from deficit income units to surplus income units
C) are not controlled by government regulations
D) help consumers obtain funds but do not assume risk

Question 9

Money markets:

A) deal strictly in cash or checks
B) deal in short-term (matures in one year or less)securities
C) deal in short-term (matures in eighteen months or less)securities
D) help corporations finance their assets with long-term bonds

Question 10

The following is an accurate statement:

A) the fields of finance and economics are unrelated for the most part
B) finance is a segment of the more general field of economics
C) finance focuses on profits,whereas economics focuses on cash flows
D) b and c

Question 11

The definition of real property includes:

A) only that property that can be seen and touched
B) all of the rights and privileges of the use of real estate
C) only land and buildings,the rights and privileges cannot be included
D) a and c

Question 12

Capital markets:

A) deal in long-term securities
B) deal in short-term Treasury bills and long-term Treasury bonds to finance their deficits
C) rarely are involved in real estate transactions
D) consider mortgages only for short-term,interim financing

Question 13

The most accurate definition of finance is:

A) the study of the allocation of resources
B) the process of maximizing profits through money transfers
C) the study of the transfer of money and credit between individuals,businesses,and governments
D) the one you are about to marry