TEST BANK FOR
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Financial Markets And Institutions 8th Edition Anthony Saunders
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Chapter 1 uo
Student name:
uo
1) What uofactors uoare uoencouraging uofinancial uoinstitutions uoto uooffer uooverlapping uofinancial
uoservices uosuch uoas uobanking, uoinvestment uobanking, uobrokerage, uoetc.? u o 1.I. uoRegulatory
uochanges uoallowing uoinstitutions uoto uooffer uomore uoservices
2.II. uoTechnological uoimprovements uoreducing uothe uocost uoof uoproviding uofinancial uoservices
3.III. uoIncreasing uocompetition uofrom uofull-service uoglobal uofinancial uoinstitutions
4.IV. uoReduction uoin uothe uoneed uoto uomanage uorisk uoat uofinancial uoinstitutions
A) I uoonly
B) II uoand uoIII uoonly
C) I, uoII, uoand uoIII uoonly
D) I, uoII, uoand uoIV uoonly
E) I, uoII, uoIII, uoand uoIV
2) IBM uocreates uoand uosells uoadditional uostock uoto uothe uoinvestment uobanker uoMorgan uoStanley.
uoMorgan uoStanley uothen uoresells uothe uoissue uoto uothe uoU.S. uopublic uothrough uoits uomutual uofunds.
This uotransaction uois uoan uoexample uoof uoa(n):
A) primary uomarket uotransaction.
B) asset uotransformation uoby uoMorgan uoStanley.
C) money uomarket uotransaction.
D) foreign uoexchange uotransaction.
E) forward uotransaction.
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,3) IBM uocreates uoand uosells uoadditional uostock uoto uothe uoinvestment uobanker uoMorgan uoStanley.
uoMorgan uoStanley uothen uoresells uothe uoissue uoto uothe uoU.S. uopublic uothrough uoits uomutual uofunds.
Morgan uoStanley uois uoacting uoas uoa(n)
A) asset uotransformer.
B) asset uobroker.
C) government uoregulator.
D) foreign uoservice uorepresentative.
E) derivatives uotrader.
4) A uocorporation uoseeking uoto uosell uonew uoequity uosecurities uoto uothe uopublic uofor uothe uofirst uotime
uoin uoorder uoto uoraise uocash uofor uocapital uoinvestment uowould uomost uolikely:
A) conduct uoan uoIPO uowith uothe uoassistance uoof uoan uoinvestment uobanker.
B) engage uoin uoa uosecondary uomarket uosale uoof uoequity.
C) conduct uoa uoprivate uoplacement uoto uoa uolarge uonumber uoof uopotential uobuyers.
D) place uoan uoad uoin uothe u o u o Wall uoStreet uoJournal uosoliciting uoretail uosuppliers uoof uofunds.
E) issue uobonds uowith uothe uoassistance uoof uoa uodealer.
5) The uolargest uocapital uomarket uosecurity uooutstanding uoin uo2019 uomeasured uoby uomarket uovalue
uowas:
A) securitized uomortgages.
B) corporate uobonds.
C) municipal uobonds.
D) Treasury uobonds.
E) corporate uostocks.
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,6) The uodiagram uobelow uois uoa uodiagram uoof uothe:
A) secondary uomarkets.
B) primary uomarkets.
C) money uomarkets.
D) derivatives uomarkets.
E) commodities uomarkets.
7) and uo allow uoa uofinancial uointermediaryuoto uooffer uosafe uoliquid
uoliabilities uosuch uoas uodeposits uowhile uoinvesting uothe uodepositors' uomoney uoin uoriskier uoilliquid
uoassets.
A) Diversification; uohigh uoequity uoreturns
B) Price uorisk; uocollateral
C) Free uoriders; uoregulations
D) Monitoring; uodiversification
E) Primary uomarkets; uoforeign uoexchange uomarkets
8) Depository uoinstitutions uoinclude:
A) banks uoonly.
B) thrifts uoonly.
C) finance uocompanies uoonly.
D) banks uoand uothrifts.
E) All uoof uothese uochoices uoare uocorrect.
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, 9) Match uothe uointermediary uowith uothe uocharacteristic uothat uobest uodescribes uoits
uofunction. u o 1.I. uoProvide uoprotection uofrom uoadverse uoevents
2.II. uoPool uofunds uoof uosmall uosavers uoand uoinvest uoin uoeither uomoney uoor uocapital uomarkets
3.III. uoProvide uoconsumer uoloans uoand uoreal uoestate uoloans uofunded uoby uodeposits
4.IV. uoAccumulate uoand uotransfer uowealth uofrom uowork uoperiod uoto uoretirement uoperiod
5.V. uoUnderwrite uoand uotrade uosecurities uoand uoprovide uobrokerage uoservices
1. Thrifts
uo2.Insurer
s
3. Pension uofunds
4. Securities uofirms uoand uoinvestment uobanks
5. Mutual uofunds
A) 1, uo3, uo2, uo5, uo4
B) 4, uo2, uo3, uo5, uo1
C) 2, uo5, uo1, uo3, uo4
D) 2, uo4, uo5, uo3, uo1
E) 5, uo1, uo3, uo2, uo4
10) Secondary uomarkets uohelp uosupport uoprimary uomarkets uobecause uosecondary uomarkets:
u o 1.I. uooffer uoprimary uomarket uopurchasers uoliquidity uofor uotheir uoholdings.
2. II. uoupdate uothe uoprice uoor uovalue uoof uothe uoprimary uomarket uoclaims.
3. III. uoreduce uothe uocost uoof uotrading uothe uoprimary uomarket uoclaims.
A) I uoonly
B) II uoonly
C) I uoand uoII uoonly
D) II uoand uoIII uoonly
E) I, uoII, uoand uoIII
11) Financial uointermediaries uo(FIs) uocan uooffer uosavers uoa uosafer, uomore uoliquid uoinvestment
uothan uoa uocapital uomarket uosecurity, uoeven uothough uothe uointermediary uoinvests uoin uorisky
uoilliquid uoinstruments uobecause:
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