Question 1

Treasury securities are debt obligations that are issued by:

Accepted Answer

A)  Municipal governments. 
B)  Nonfinancial businesses. 
C)  Central governments. 
D)  Financial enterprises. 
E)  None of the above.

Question 2

Arbitraging instruments enable investors and borrowers to take advantage of differences in costs and returns between markets.

Accepted Answer

A) True 
 B)False

Question 3

In contrast to individual investors, financial intermediaries will be willing to make longer term loans, and at a lower cost to borrowers, because:

Accepted Answer

A)  They are counting on successive deposits providing the funds until maturity. 
B)  Individual investors are more apt to make long-term loans. 
C)  All risk is eliminated. 
D)  None of the above. 
E)  All of the above.

Question 4

The advantage of liquidity which financial intermediaries offer savers means that savers may:

Accepted Answer

A)  Request the withdrawal of funds at any time. 
B)  Redeem their shares at any time. 
C)  Borrow against the cash value of their insurance policy. 
D)  All of the above. 
E)  None of the above.

Question 5

When financial intermediaries acquire financial resources in the market, they create liabilities for themselves. They use those resources to create different and more widely preferred types of securities, which become their assets.

Accepted Answer