,TEST BANK FOR
Money, Banking, and the Financial System, 4th
edition Glenn Hubbard, Anthony Patrick
O'Brien
Chapter 1 Introducing Money and the Financial System
1.1 Key Components of the Financial System
1) The financial system is primarily a means by which
A) funds are transferred from savers to borrowers.
B) money is put into circulation.
C) the government puts into operation its plans for the economy.
D) business firms distribute their goods.
Answer: A
Diff: 1 Page Ref: 4
Topic: financial system
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
2) Which of the following is NOT a financial asset?
A) a bond issued by Google
B) Wells Fargo Bank
C) a home mortgage loan
D) a certificate of deposit
Answer: B
Diff: 1 Page Ref: 2
Topic: financial assets
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
3) If you buy a bond issued by Intel, the bond is a(n)
A) liability to Intel and an asset to you.
B) liability to you and an asset to Intel.
C) liability to both you and Intel.
D) asset to both you and Intel.
Answer: A
Diff: 2 Page Ref: 4
Topic: financial assets
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
1
,4) Which of the following forms the largest share of household holdings of financial assets?
A) corporate stocks
B) bonds
C) pension entitlements
D) equity in unincorporated businesses
Answer: C
Diff: 1 Page Ref: 9-10
Topic: financial assets
Special Feature: Apply the Concept: What Do People Do with Their Savings?
Objective: Identify the key components of the financial system
AACSB: Reflective Thinking
5) From 1978 to 2019, the percentage of wealth held by households decreased for all of the
following categories of assets EXCEPT
A) corporate stocks.
B) bonds.
C) deposits.
D) equity in unincorporated businesses.
Answer: A
Diff: 1 Page Ref: 9-10
Topic: financial assets
Special Feature: Apply the Concept: What Do People Do with Their Savings?
Objective: Identify the key components of the financial system
AACSB: Reflective Thinking
6) Which of the following is NOT a key financial service provided by the financial system?
A) risk sharing
B) profitability
C) liquidity
D) information
Answer: B
Diff: 1 Page Ref: 12
Topic: financial system
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
7) Economists define risk as
A) the difference between the interest rate borrowers pay and the interest rate lenders receive.
B) the chance that the value of financial assets will change from what you expect.
C) the ease with which an asset can be exchanged for other assets or for goods and services.
D) the difference between the return on common stock and the return on corporate bonds.
Answer: B
Diff: 1 Page Ref: 13
Topic: financial system
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
2
, 8) Economists define liquidity as
A) the difference between the return on the asset and the return on a long-term U.S. Treasury
bond.
B) the fraction the asset makes up of an investor's portfolio.
C) the ease with which an asset can be exchanged for money.
D) the difference between the total demand for an asset and the total supply of the asset.
Answer: C
Diff: 1 Page Ref: 13
Topic: financial system
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
9) Which of the following assets is the most liquid?
A) money market mutual fund
B) computer
C) washing machine
D) U.S. Treasury bond
Answer: A
Diff: 2 Page Ref: 13
Topic: financial system
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
10) By providing and communicating information, the financial system
A) reduces the difference between the return on three-month U.S. Treasury bills and the return
on thirty-year U.S. Treasury bonds.
B) relieves individual savers from the necessity of searching out individual borrowers.
C) eliminates the risk in investing in the stock market.
D) guarantees investors a reasonable return on their money.
Answer: B
Diff: 2 Page Ref: 14
Topic: financial system
Objective: Identify the key components of the financial system
*: Recurring
AACSB: Reflective Thinking
11) Financial securities that represent partial ownership of a corporation are known as
A) bonds.
B) stocks.
C) coupons.
D) dividends.
Answer: B
Diff: 1 Page Ref: 3
Topic: financial assets
Objective: Identify the key components of the financial system
3
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, creditcard of Stuvia-tegoed voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper Succeed. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €26,03. Je zit daarna nergens aan vast.
