Financial Markets and Institutions Test 1 Complete Questions
And Answers 100% Verified!!!
1. 4 Economic Unit Classification Groups 1) Households
2) Business Firms
3) Governments - federal, state, local
4) International Sector
2. 3 Budget Positions 1) Balanced Budget Position
2) Surplus Budget Position
3) Deficit Budget Period
3. Income and Expenditures are equal for the Balanced budget position
period
4. Income Exceeds Expenditures for the peri- Surplus Budget Position
od
5. Expenditures Exceed Income for the period Deficit Budget Period
6. Who usually is a DSU? Businesses and Government
7. Who usually is a SSU? Households
8. What is the role of the financial system? To transfer funds from SSU's to DSU's in
an eflcient manner.
9. 2 Ways DSU's can spend more than their 1) Converting some asset owned to
income. spendable funds.
2) Issuing claims against themselves: bor-
rowing and issuing IOU's to lenders. (sell-
ing stock)
10. 2 Ways of Bringing SSU's and DSU's togeth- 1) Direct Financing
er 2) Indirect (Intermediation) Financing
, Financial Markets and Institutions Test 1 Complete Questions
And Answers 100% Verified!!!
11. Where DSU's and SSU's exchange claims di- Direct Financing
rectly (through Financial Markets) and the
claims issued by DSU's are called direct
claims.
12. 3 ways DSU's and SSU's meet to exchange 1) Private Placement
funds in the direct financial market. 2) Investment Bankers and Securities Un-
derwriting
3) Brokers and Dealers
13. A corporation sells a bond issue to a single Private Placement
investor (such as a life insurance co.) or to
a small group of investors typically, insti-
tutional investors. The DSU usually retains
and pays a fee to an investment banker
to assist in . Which transaction
arrangement is this an example of?
14. The investment banker purchases the secu- Investment Bankers and Securities Un-
rity issue from the issuer and resells the se- derwriting
curities. Thus the investment banker takes
ownership of the security. This is an exam-
ple of a financial transaction in which way?
15. assist in the buying and selling of Brokers and Dealers
securities after the initial sale of the security
by the DSU. Which medium is used to make
the financial transaction?
16. serve as agents by bringing buyer Brokers
and seller together, and receive a commis-
, Financial Markets and Institutions Test 1 Complete Questions
And Answers 100% Verified!!!
sion for their services. Serve as "principals"
and make the "bid" price
17. "make a market" in one or more secu- Dealers
rities. They carry an inventory (own) of se-
curities in which they make a market. Make
the "bid" price
18. The difference between the investment Underwriting Spread
banker's purchase price and sale price.
19. The difference between the dealer's "bid" Dealer's Spread
and "ask" price
20. is a way of bringing SSU's and DSU's Indirect Financing
together through the use of an intermedi-
ary between the ultimate supplier of the
funds (SSU) and the user of funds (DSU).
21. 12 Financial Intermediaries (Indirect Financ- 1) Commercial Banks
ing) 2) Savings and Loans
3) Savings Banks
4) Credit Unions
5) Mutual Funds
6) Money Market Funds
7) Life Insurance Companies
8) Casualty Insurance Companies
9) Private Pension Funds
10) State and Local Gov. Pension Funds
11) Finance Companies
12) Federal Agencies
And Answers 100% Verified!!!
1. 4 Economic Unit Classification Groups 1) Households
2) Business Firms
3) Governments - federal, state, local
4) International Sector
2. 3 Budget Positions 1) Balanced Budget Position
2) Surplus Budget Position
3) Deficit Budget Period
3. Income and Expenditures are equal for the Balanced budget position
period
4. Income Exceeds Expenditures for the peri- Surplus Budget Position
od
5. Expenditures Exceed Income for the period Deficit Budget Period
6. Who usually is a DSU? Businesses and Government
7. Who usually is a SSU? Households
8. What is the role of the financial system? To transfer funds from SSU's to DSU's in
an eflcient manner.
9. 2 Ways DSU's can spend more than their 1) Converting some asset owned to
income. spendable funds.
2) Issuing claims against themselves: bor-
rowing and issuing IOU's to lenders. (sell-
ing stock)
10. 2 Ways of Bringing SSU's and DSU's togeth- 1) Direct Financing
er 2) Indirect (Intermediation) Financing
, Financial Markets and Institutions Test 1 Complete Questions
And Answers 100% Verified!!!
11. Where DSU's and SSU's exchange claims di- Direct Financing
rectly (through Financial Markets) and the
claims issued by DSU's are called direct
claims.
12. 3 ways DSU's and SSU's meet to exchange 1) Private Placement
funds in the direct financial market. 2) Investment Bankers and Securities Un-
derwriting
3) Brokers and Dealers
13. A corporation sells a bond issue to a single Private Placement
investor (such as a life insurance co.) or to
a small group of investors typically, insti-
tutional investors. The DSU usually retains
and pays a fee to an investment banker
to assist in . Which transaction
arrangement is this an example of?
14. The investment banker purchases the secu- Investment Bankers and Securities Un-
rity issue from the issuer and resells the se- derwriting
curities. Thus the investment banker takes
ownership of the security. This is an exam-
ple of a financial transaction in which way?
15. assist in the buying and selling of Brokers and Dealers
securities after the initial sale of the security
by the DSU. Which medium is used to make
the financial transaction?
16. serve as agents by bringing buyer Brokers
and seller together, and receive a commis-
, Financial Markets and Institutions Test 1 Complete Questions
And Answers 100% Verified!!!
sion for their services. Serve as "principals"
and make the "bid" price
17. "make a market" in one or more secu- Dealers
rities. They carry an inventory (own) of se-
curities in which they make a market. Make
the "bid" price
18. The difference between the investment Underwriting Spread
banker's purchase price and sale price.
19. The difference between the dealer's "bid" Dealer's Spread
and "ask" price
20. is a way of bringing SSU's and DSU's Indirect Financing
together through the use of an intermedi-
ary between the ultimate supplier of the
funds (SSU) and the user of funds (DSU).
21. 12 Financial Intermediaries (Indirect Financ- 1) Commercial Banks
ing) 2) Savings and Loans
3) Savings Banks
4) Credit Unions
5) Mutual Funds
6) Money Market Funds
7) Life Insurance Companies
8) Casualty Insurance Companies
9) Private Pension Funds
10) State and Local Gov. Pension Funds
11) Finance Companies
12) Federal Agencies
