Styne

Primary markets are markets where users of funds raise cash by selling securities to funds' suppliers. Correct Answers Answer: True Secondary markets are markets used by corporations to raise cash by issuing securities for a short time period. Correct Answers Answer: False The NYSE is an example of a secondary market. Correct Answers Answer: True Money markets are the markets for securities with an original maturity of 1 year or less. Correct Answers Answer: True Financial intermedi...

What system of exchange did money replace? Correct Answers Money solves the problems created by the barter system. Instead of having to find someone who had the goods you wanted and wanted your goods, money could be used instead. What are the 4 main functions of money? Correct Answers 1. Medium of exchange - between buyer and seller 2. Deferred payment - it is a standard of deferred payment. 3. Unit of account 4. Store of value What are the two types of money? Correct Answers 1. Narrow ...

Importance of Financial Markets Correct Answers -Allow companies, governments and individuals to increase their utility --Savers have the ability to invest assets so they can earn a return --Borrowers have better access to capital so that they can invest in productive assets -Provided us with info about the returns that are required for various levels of risk Average Returns Correct Answers -Large Stocks 12.3% -Small Stock 17.1% -Long-term Corporate 6.2% -Long-term Government 5.8% -US ...

B) longer maturities. Correct Answers 1) Compared to money market securities, capital market securities have A) more liquidity. B) longer maturities. C) lower yields. D) less risk. C) Both are true. Correct Answers 2) (I) Securities that have an original maturity greater than one year are traded in capital markets. (II) The best known capital market securities are stocks and bonds. A) (I) is true, (II) false. B) (I) is false, (II) true. C) Both are true. D) Both are false. D) Bot...

1) Financial markets promote greater economic efficiency by channeling funds from ________ to ________. A) investors; savers B) borrowers; savers C) savers; borrowers D) savers; lenders Correct Answers C) Savers; borrowers 2) Which of the following instruments are traded in a capital market? A) U.S. Government agency securities. B) Negotiable bank CDs. C) Repurchase agreements. D) U.S. Treasury bills. Correct Answers A) U.S. Government agency securities 3) Which of the following in...

surplus- savings unit Correct Answers Savings exceeds expenditures and investments. This person is know as a net lender Deficit-savings unit Correct Answers expenditures or investments exceeds savings. This is known a a net debtor A person can be a saver and be a DSU because one's savings are less than desired investmens Broker Correct Answers financial middle men who link link buyers and sellers in the money market Three groups of brokers and dealers: 1) primary government secu...

An investor requires a 3% increase in purchasing power in order to induce her to lend. She expects inflation to be 2% next year. The nominal rate she must charge is________. Correct Answers 5% The main provider(s) of funds in the US Treasury are Correct Answers households and businesses The total US government debt is currently closest to________. Correct Answers $18.1 trillion Funds are provided to the initial issuer of securities in the Correct Answers primary market Equity securit...

What is a financial market? Correct Answers - Represents the set of arrangements - Deals with the arrangements for trading financial claims - Facilitates the flow of funds and - Allows financing and investing What are the functions of financial markets? Correct Answers - To disseminate information - promote price discovery - To provide a trading mechanism - To enable the execution of agreements What are the 4 structures of Financial markets? Correct Answers 1. Debt and equity markets ...

What are capital markets? What is their purpose? Correct Answers Markets for trading securities with maturity > 1 year. Bringing together long-term borrowers and investors. Who are major issuers (investors) in capital markets? Correct Answers Issuers: households, businesses, governments. Investors: households, foreign investors. Which economic sectors have surplus (deficit) net financial position? How did these positions change from 2005 to 2010? Correct Answers Federal government long...

Finance Correct Answers Subfield of economics. Allocations of scarce resources. How to get money from the savers to the borrowers "Fed" Correct Answers Federal Reserve Board What does the Fed do? Correct Answers Issues all of the money and controls money supply What does buying bonds do? Correct Answers Puts more money out in the economy. More supply --> lower prices. Lower prices --> lower interest rates Financial Markets Correct Answers Markets in which funds are transferre...