Solution Manual For Financial Markets and Institutions, 8th
Edition by Anthony Saunders, Marcia Cornett, Verified
Chapters 1 - 25, Complete Newest Version
Financial markets and institutions:
A) involve the movement of huge quantities of money.
B) affect the profits of businesses.
C) affect the types of goods and services produced in an economy.
D) do all of the above.
E) do only A and B of the above. - ANSWER: D) do all of the above.
Financial market activities affect:
A) personal wealth.
B) spending decisions by individuals and business firms.
C) the economy's location in the business cycle.
D) all of the above. - ANSWER: D) all of the above.
Markets in which funds are transferred from those who have excess funds available
to those who have a shortage of available funds are called
A) commodity markets.
B) funds markets.
C) derivative exchange markets.
D) financial markets. - ANSWER: D) financial markets.
The price paid for the rental of borrowed funds (usually expressed as a percentage of
the rental of $100 per year) is commonly referred to as the
A) inflation rate.
B) exchange rate.
C) interest rate.
D) aggregate price level. - ANSWER: C) interest rate.
The bond markets are important because
A) they are easily the most widely followed financial markets in the United States.
B) they are the markets where interest rates are determined.
C) they are the markets where foreign exchange rates are determined.
D) all of the above. - ANSWER: B) they are the markets where interest rates are
determined.
,Interest rates are important to financial institutions since an interest rate increase
________ the cost of acquiring funds and ________ the income from assets.
A) decreases; decreases
B) increases; increases
C) decreases; increases
D) increases; decreases - ANSWER: B) increases; increases
Typically, increasing interest rates:
A) discourages individuals from saving.
B) discourages corporate investments.
C) encourages corporate expansion.
D) encourages corporate borrowing.
E) none of the above. - ANSWER: B) discourages corporate investments.
Compared to interest rates on long-term U.S. government bonds, interest rates on
________ fluctuate more and are lower on average.
A) medium-quality corporate bonds
B) low-quality corporate bonds
C) high-quality corporate bonds
D) three-month Treasury bills
E) none of the above - ANSWER: D) three-month Treasury bills
Compared to interest rates on long-term U.S. government bonds, interest rates on
three-month Treasury bills fluctuate ________ and are ________ on average.
A) more; lower
B) less; lower
C) more; higher
D) less; higher - ANSWER: A) more; lower
The stock market is important because:
A) it is where interest rates are determined.
B) it is the most widely followed financial market in the United States.
C) it is where foreign exchange rates are determined.
D) all of the above. - ANSWER: B) it is the most widely followed financial market in
the United States.
Stock prices since the 1980s have been:
A) relatively stable, trending upward at a steady pace.
B) relatively stable, trending downward at a moderate rate.
C) extremely volatile.
,D) unstable, trending downward at a moderate rate. - ANSWER: C) extremely
volatile.
The largest one-day drop in the history of the American stock markets occurred in:
A) 1929.
B) 1987.
C) 2000.
D) 2001. - ANSWER: 1987
A declining stock market index due to lower share prices:
A) reduces people's wealth and as a result may reduce their willingness to spend.
B) increases people's wealth and as a result may increase their willingness to spend.
C) decreases the amount of funds that business firms can raise by selling newly
issued stock.
D) both A and C of the above.
E) both B and C of the above. - ANSWER: D) both A and C of the above.
Changes in stock prices:
A) affect people's wealth and their willingness to spend.
B) affect firms' decisions to sell stock to finance investment spending.
C) are characterized by considerable fluctuations.
D) all of the above.
E) only A and B of the above. - ANSWER: D) all of the above.
(I) Debt markets are often referred to generically as the bond market.
(II) A bond is a security that is a claim on the earnings and assets of a corporation.
A) (I) is true, (II) false.
B) (I) is false, (II) true.
C) Both are true.
D) Both are false. - ANSWER: A) (I) is true, (II) false.
(I) A bond is a debt security that promises to make payments periodically for a
specified period of time. (II) A stock is a security that is a claim on the earnings and
assets of a corporation.
A) (I) is true, (II) false.
B) (I) is false, (II) true.
C) Both are true.
D) Both are false. - ANSWER: C) Both are true.
The price of one country's currency in terms of another's is called:
, A) the foreign exchange rate.
B) the interest rate.
C) the Dow Jones industrial average.
D) none of the above. - ANSWER: A) the foreign exchange rate.
A stronger dollar benefits ________ and hurts ________.
A) American businesses; American consumers
B) American businesses; foreign businesses
C) American consumers; American businesses
D) foreign businesses; American consumers - ANSWER: C) American consumers;
American businesses
A weaker dollar benefits ________ and hurts ________.
A) American businesses; American consumers
B) American businesses; foreign consumers
C) American consumers; American businesses
D) foreign businesses; American consumers - ANSWER: A) American businesses;
American consumers
From 1980 to early 1985 the dollar ________ in value, thereby benefiting American
________.
A) appreciated; businesses
B) appreciated; consumers
C) depreciated; businesses
D) depreciated; consumers - ANSWER: B) appreciated; consumers
In general, from 2001 through 2013, the dollar ________ in value relative to major
foreign currencies
A) appreciated
B) depreciated
C) remained about the same - ANSWER: B) depreciated
Money is defined as:
A) anything that is generally accepted in payment for goods and services or in the
repayment of debt.
B) bills of exchange.
C) a riskless repository of spending power.
D) all of the above.
E) only A and B of the above. - ANSWER: A) anything that is generally accepted in
payment for goods and services or in the repayment of debt.
Edition by Anthony Saunders, Marcia Cornett, Verified
Chapters 1 - 25, Complete Newest Version
Financial markets and institutions:
A) involve the movement of huge quantities of money.
B) affect the profits of businesses.
C) affect the types of goods and services produced in an economy.
D) do all of the above.
E) do only A and B of the above. - ANSWER: D) do all of the above.
Financial market activities affect:
A) personal wealth.
B) spending decisions by individuals and business firms.
C) the economy's location in the business cycle.
D) all of the above. - ANSWER: D) all of the above.
Markets in which funds are transferred from those who have excess funds available
to those who have a shortage of available funds are called
A) commodity markets.
B) funds markets.
C) derivative exchange markets.
D) financial markets. - ANSWER: D) financial markets.
The price paid for the rental of borrowed funds (usually expressed as a percentage of
the rental of $100 per year) is commonly referred to as the
A) inflation rate.
B) exchange rate.
C) interest rate.
D) aggregate price level. - ANSWER: C) interest rate.
The bond markets are important because
A) they are easily the most widely followed financial markets in the United States.
B) they are the markets where interest rates are determined.
C) they are the markets where foreign exchange rates are determined.
D) all of the above. - ANSWER: B) they are the markets where interest rates are
determined.
,Interest rates are important to financial institutions since an interest rate increase
________ the cost of acquiring funds and ________ the income from assets.
A) decreases; decreases
B) increases; increases
C) decreases; increases
D) increases; decreases - ANSWER: B) increases; increases
Typically, increasing interest rates:
A) discourages individuals from saving.
B) discourages corporate investments.
C) encourages corporate expansion.
D) encourages corporate borrowing.
E) none of the above. - ANSWER: B) discourages corporate investments.
Compared to interest rates on long-term U.S. government bonds, interest rates on
________ fluctuate more and are lower on average.
A) medium-quality corporate bonds
B) low-quality corporate bonds
C) high-quality corporate bonds
D) three-month Treasury bills
E) none of the above - ANSWER: D) three-month Treasury bills
Compared to interest rates on long-term U.S. government bonds, interest rates on
three-month Treasury bills fluctuate ________ and are ________ on average.
A) more; lower
B) less; lower
C) more; higher
D) less; higher - ANSWER: A) more; lower
The stock market is important because:
A) it is where interest rates are determined.
B) it is the most widely followed financial market in the United States.
C) it is where foreign exchange rates are determined.
D) all of the above. - ANSWER: B) it is the most widely followed financial market in
the United States.
Stock prices since the 1980s have been:
A) relatively stable, trending upward at a steady pace.
B) relatively stable, trending downward at a moderate rate.
C) extremely volatile.
,D) unstable, trending downward at a moderate rate. - ANSWER: C) extremely
volatile.
The largest one-day drop in the history of the American stock markets occurred in:
A) 1929.
B) 1987.
C) 2000.
D) 2001. - ANSWER: 1987
A declining stock market index due to lower share prices:
A) reduces people's wealth and as a result may reduce their willingness to spend.
B) increases people's wealth and as a result may increase their willingness to spend.
C) decreases the amount of funds that business firms can raise by selling newly
issued stock.
D) both A and C of the above.
E) both B and C of the above. - ANSWER: D) both A and C of the above.
Changes in stock prices:
A) affect people's wealth and their willingness to spend.
B) affect firms' decisions to sell stock to finance investment spending.
C) are characterized by considerable fluctuations.
D) all of the above.
E) only A and B of the above. - ANSWER: D) all of the above.
(I) Debt markets are often referred to generically as the bond market.
(II) A bond is a security that is a claim on the earnings and assets of a corporation.
A) (I) is true, (II) false.
B) (I) is false, (II) true.
C) Both are true.
D) Both are false. - ANSWER: A) (I) is true, (II) false.
(I) A bond is a debt security that promises to make payments periodically for a
specified period of time. (II) A stock is a security that is a claim on the earnings and
assets of a corporation.
A) (I) is true, (II) false.
B) (I) is false, (II) true.
C) Both are true.
D) Both are false. - ANSWER: C) Both are true.
The price of one country's currency in terms of another's is called:
, A) the foreign exchange rate.
B) the interest rate.
C) the Dow Jones industrial average.
D) none of the above. - ANSWER: A) the foreign exchange rate.
A stronger dollar benefits ________ and hurts ________.
A) American businesses; American consumers
B) American businesses; foreign businesses
C) American consumers; American businesses
D) foreign businesses; American consumers - ANSWER: C) American consumers;
American businesses
A weaker dollar benefits ________ and hurts ________.
A) American businesses; American consumers
B) American businesses; foreign consumers
C) American consumers; American businesses
D) foreign businesses; American consumers - ANSWER: A) American businesses;
American consumers
From 1980 to early 1985 the dollar ________ in value, thereby benefiting American
________.
A) appreciated; businesses
B) appreciated; consumers
C) depreciated; businesses
D) depreciated; consumers - ANSWER: B) appreciated; consumers
In general, from 2001 through 2013, the dollar ________ in value relative to major
foreign currencies
A) appreciated
B) depreciated
C) remained about the same - ANSWER: B) depreciated
Money is defined as:
A) anything that is generally accepted in payment for goods and services or in the
repayment of debt.
B) bills of exchange.
C) a riskless repository of spending power.
D) all of the above.
E) only A and B of the above. - ANSWER: A) anything that is generally accepted in
payment for goods and services or in the repayment of debt.
