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6. Secondary markets make financial instruments more

  • liquid
  • solid
  • vapid
  • risky

7. A financial market in which only short-term debt instruments are traded is called the --- market

  • stock
  • bond
  • money
  • capital

8. Which of the following financial intermediaries is NOT a depository institution?

  • savings and loan association
  • a commercial bank
  • a finance company
  • a credit union

9. The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100 per year) is commonly referred to as the

  • inflation rate
  • interest rate
  • exchange rate
  • aggregate price level

10. A short-term debt instrument issued by well-knows corporations is called

  • commercial paper
  • commercial mortgages
  • corporate bonds
  • municipal bonds

11. The time and money spent in carrying out financial transactions are called

  • economies of scale
  • economics of scope
  • transaction costs
  • liquidity services

12. Financial Markets promote economic efficiency?

  • Channeling funds from savers to investors
  • Reducing investment
  • Creating inflation
  • Channeling funds from investors to savers

13. Another possible solution for when DGAP>0?

  • Lengthening liability durations e.g. issue longer term CD's, obtain more core transactions accounts from stable sources
  • Shortening liability durations e.g issue longer term CD's, obtain more core transactions accounts from stable sources

14. A debt instrument sold by a bank to its depositors that pays annual interest of a given amount and at maturity pays back the original purchase is called

  • a certificate of deposit
  • commercial paper
  • a municipal bond
  • federal funds

15. Which of the following is a contractual savings institution?

  • a life insurance company
  • a mutual fund
  • a credit union
  • a savings and loan association

16. The primary purpose of deposit insurance is

  • prevent banking panics
  • improve the flow of information to investors
  • protect bank shareholders against losses
  • protect bank employees from unemployment

17. A Financial crisis is

  • not possible in the modern financial environment
  • a major disruption in the financial markets
  • typically followed by an economic boom
  • a feature of developing economies only

18. Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called

  • fund-available markets
  • commodity markets
  • financial markets
  • derivative exchange markets

19. When an investment bank---securities, it guarantees a price for a corporation's securities and then sells them to the public

  • overtakes
  • undertakes
  • underwrites
  • overwrites

20. Which of the following can be described as involving direct finance?

  • people buy shares of common stock in the primary markets
  • people buy shares in a mutual fund
  • a corporation takes out loans from a bank
  • a corporate buys a short-term corporate security in a secondary market