Question 1

The ASX is an example of:

Accepted Answer

A)  an over-the-counter market exchange. 
B)  an electronic organised exchange. 
C)  a physical exchange. 
D)  all of the above.

Question 2

If the supply of loanable funds decreases relative to the demand for those funds, then we would expect:

Accepted Answer

A)  interest rates to remain unchanged. 
B)  interest rates to increase. 
C)  interest rates to decrease. 
D)  the price of money to remain unchanged.

Question 3

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

Accepted Answer

A)  direct financing. 
B)  indirect financing. 
C)  a legal loophole that allows all commercial banks the ability to underwrite securities. 
D)  none of the above.

Question 4

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

Accepted Answer

A)  commercial paper 
B)  long-term corporate bonds 
C)  shares 
D)  none of the above

Question 5

The nominal rate of interest is the interest rate in the economy in the absence of inflation.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would most likely be involved in a public securities underwriting service?

Accepted Answer

A)  a regional commercial banker 
B)  a broker 
C)  a dealer 
D)  none of the above would ever be involved in underwriting.

Question 7

Savings by ________ is the origin of much of the money that funds large business loans in the economy.

Accepted Answer

A)  consumers 
B)  the Australian government 
C)  small businesses 
D)  none of the above

Question 8

A line of credit to a business is like _______ to an individual.

Accepted Answer

A)  a term loan 
B)  a bond 
C)  a credit card 
D)  none of the above

Question 9

The Australian Securities and Investment Commission regulates public securities markets in Australia.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is NOT true regarding finance companies?

Accepted Answer

A)  they obtain the majority of their funds by selling short-term debt. 
B)  their funds are used to make a variety of long term loans and leases. 
C)  typically willing to make loans to companies with higher levels of default risk. 
D)  none of the above.

Question 11

An economy with a large flow of funds requires:

Accepted Answer

A)  a lot of gold reserves. 
B)  a tightly controlled central bank. 
C)  an efficient financial system. 
D)  all of the above.

Question 12

Direct financing occurs when:

Accepted Answer

A)  an SSU borrows directly from a DSU. 
B)  a DSU borrows directly from a SSU. 
C)  an SSU borrows from the federal government. 
D)  a DSU borrows from the federal government.

Question 13

Financial markets and financial institutions are both part of:

Accepted Answer

A)  the Australian Reserve Bank. 
B)  the financial system. 
C)  the Australian Securities and Investments Commission. 
D)  none of the above.

Question 14

Without a financial market, purchasing a house would require a cash purchase.

Accepted Answer

A) True 
 B)False

Question 15

The nominal rate of interest is:

Accepted Answer

A)  the inflation-adjusted return rate. 
B)  the inflation adjusted cost rate. 
C)  a commodity cross-indexed return rate. 
D)  the unadjusted return rate.

Question 16

________ is/are the principal SSUs in the economy.

Accepted Answer

A)  Households 
B)  The federal government 
C)  State governments 
D)  Businesses

Question 17

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

Accepted Answer

A)  a primary market. 
B)  a secondary market. 
C)  an indirect market. 
D)  none of the above.

Question 18

Which of the following share exchange organisational forms has no physical location?

Accepted Answer

A)  a futures exchange 
B)  an over-the-counter market 
C)  an auction market. 
D)  none of the above.

Question 19

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

Accepted Answer

A)  money market. 
B)  capital market. 
C)  futures market. 
D)  all of the above.

Question 20

Which of the following grants the owner the right to purchase an asset at a pre-specified price for a pre-specified period of time?

Accepted Answer

A)  a call option 
B)  a put option 
C)  a futures contract 
D)  all of the above

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

The ASX is an example of:

If the supply of loanable funds decreases relative to the demand for those funds, then we would expect:

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

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

The nominal rate of interest is the interest rate in the economy in the absence of inflation.

Which of the following would most likely be involved in a public securities underwriting service?

Savings by ________ is the origin of much of the money that funds large business loans in the economy.

A line of credit to a business is like _______ to an individual.

The Australian Securities and Investment Commission regulates public securities markets in Australia.

Which of the following is NOT true regarding finance companies?

An economy with a large flow of funds requires:

Direct financing occurs when:

Financial markets and financial institutions are both part of:

Without a financial market, purchasing a house would require a cash purchase.

The nominal rate of interest is:

________ is/are the principal SSUs in the economy.

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

Which of the following share exchange organisational forms has no physical location?

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

Which of the following grants the owner the right to purchase an asset at a pre-specified price for a pre-specified period of time?