Test Bank for Financial Markets and Institutions: 2024 Release by Anthony Saunders
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Course
FINC - Finance
Institution
FINC - Finance
Test Bank for Financial Markets and Institutions: 2024 Release Evergreen 8e 8th Edition by Anthony Saunders, Marcia Cornett and Otgo Erhemjamts. All Chapters (Chap 1 to 25)are included with complete answers.
PART 1: INTRODUCTION AND OVERVIEW OF FINANCIAL MARKETS
1 Introduction
2 Determinants...
Chap 01 2024 Release Saunders
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Primary markets are markets in which users of funds raise cash by selling securities to funds
suppliers.
1) ______
⊚ true
⊚ false
2) Secondary markets are markets used by corporations to raise cash by issuing securities for a
short time period.
2) ______
⊚ true
⊚ false
3) Corporate security issuers are always directly involved in funds transfers in the secondary
market.
3) ______
⊚ true
⊚ false
4) The NYSE is an example of a secondary market.
4) ______
⊚ true
⊚ false
5) Central governments sometimes indirectly intervene in foreign exchange markets by
affecting foreign exchange rates through raising or lowering interest rates.
5) ______
⊚ true
⊚ false
1
,6) Money markets are the markets for securities with an original maturity of one year or less.
6) ______
⊚ true
⊚ false
7) Financial intermediaries rather than financial systems are the most common agents to channel
funds from the suppliers to the users of funds.
7) ______
⊚ true
⊚ false
8) There are three types of major financial markets today: primary, secondary, and derivatives
markets. The NYSE and NASDAQ are both examples of derivatives markets.
8) ______
⊚ true
⊚ false
9) Asset transformation by financial intermediaries involves increasing the risk attributes of
securities such as mortgages, bonds, and stocks.
9) ______
⊚ true
⊚ false
10) One of the factors responsible for globalization of financial markets and institutions is
deregulation.
10) ______
⊚ true
⊚ false
11) The average cost incurred by financial institutions to collect information is larger than that of
individuals.
11) ______
⊚ true
⊚ false
2
,12) The Vol-cker Rule prohibits U.S. depository institutions from engaging in proprietary
trading.
12) ______
⊚ true
⊚ false
13) Financial intermediation provides direct transfer of funds to the users.
13) ______
⊚ true
⊚ false
14) In the United States, the SEC provides deposit insurance for $250,000 per person per bank.
14) ______
⊚ true
⊚ false
15) An Enterprise Risk Management (ERM) system is responsible for managing the totality of a
firm’s risk exposures.
15) ______
⊚ true
⊚ false
16) Financial markets are distinguished among three major dimensions: domestic, national, and
global.
16) ______
⊚ true
⊚ false
17) Most U.S. markets as said to be over-the-counter markets because stock certificates are
traded a physical counter in a central location.
17) ______
⊚ true
⊚ false
3
, MULTIPLE CHOICE - Choose the one alternative that best completes the statement or
answers the question.
18) What factors are encouraging financial institutions to offer overlapping financial services
such as banking, investment banking, and brokerage?
1. Regulatory changes allowing institutions to offer more services
2. Technological improvements reducing the cost of providing financial services
3. Increasing competition from full-service global financial institutions
4. Reduction in the need to manage risk at financial institutions
18) ______
A) I1 only
B) II and III only
C) I1, II, and III only
D) I1, II, and IV only
E) I1, II, III, and IV
19) IBM creates and sells additional stock to the investment banker Morgan Stanley. Morgan
Stanley then resells the issue to the U.S. public through its mutual funds.
This transaction is an example of a(n):
19) ______
A) primary market transaction.
B) asset transformation by Morgan Stanley.
C) money market transaction.
D) foreign exchange transaction.
E) forward transaction.
20) IBM creates and sells additional stock to the investment banker Morgan Stanley. Morgan
Stanley then resells the issue to the U.S. public through its mutual funds.
Morgan Stanley is acting as a(n):
20) ______
A) asset transformer.
B) asset broker.
C) government regulator.
D) foreign service representative.
E) derivatives trader.
4
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