FIN 350 Week 2 Quiz – Strayer NEW



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Chapter 1—Role of Financial Markets and Institutions

     1.   Financial market participants who provide funds are called
a.
deficit units.
b.
surplus units.
c.
primary units.
d.
secondary units.


                                          
          
          

     2.   The main provider(s) of funds to the U.S. Treasury is (are)
a.
households and businesses.
b.
foreign financial institutions.
c.
the Federal Reserve System.
d.
foreign nonfinancial sectors.


                                          
          
          

     3.   The largest deficit unit is (are)
a.
households and businesses.
b.
foreign financial institutions.
c.
the U.S. Treasury.
d.
foreign nonfinancial sectors.


                                          
          
          

     4.   Those financial markets that facilitate the flow of short-term funds are known as
a.
money markets.
b.
capital markets.
c.
primary markets.
d.
secondary markets.


                                          
          
          

     5.   Funds are provided to the initial issuer of securities in the
a.
secondary market.
b.
primary market.
c.
deficit market.
d.
surplus market.


                                          
          
          

     6.   Which of the following is a capital market instrument?
a.
a six-month CD
b.
a three-month Treasury bill
c.
a ten-year bond
d.
an agreement for a bank to loan funds directly to a company for nine months


                                          
          


     7.   Which of the following is a money market security?
a.
Treasury note
b.
municipal bond
c.
mortgage
d.
commercial paper


                                          
          


     8.   The creditors in the federal funds market are
a.
households.
b.
depository institutions.
c.
firms.
d.
government agencies.


                                          
          
          

     9.   Equity securities have a ____ expected return than most long-term debt securities, and they exhibit a ____ degree of risk.
a.
higher; higher
b.
lower; lower
c.
lower; higher
d.
higher; lower


                                          
          


   10.   Money market securities generally have ____. Capital market securities are typically expected to have a ____.
a.
less liquidity; higher annualized return
b.
more liquidity; lower annualized return
c.
less liquidity; lower annualized return
d.
more liquidity; higher annualized return


                                          
          


   11.   If security prices fully reflect all available information, the markets for these securities are
a.
efficient.
b.
primary.
c.
overvalued.
d.
undervalued.


                                          
          
          

   12.   If markets are ____, investors could use available information ignored by the market to earn abnormally high returns.
a.
perfect
b.
active
c.
inefficient
d.
in equilibrium


                                          
          
          


   13.   If financial markets are efficient, this implies that all securities should earn the same return.

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