Test bank for financial markets institutions 6th

,Financial Markets & Institutions 5th
D D D D D




Edition Test Bank
D D




ChapterD01DIntroductionDAnswerDKey
TrueD/DFalseDQuestions

1. PrimaryDmarketsDareDmarketsDwhereDusersDofDfundsDraiseDcashDbyDselli
ngDsecuritiesDtoDfunds’Dsuppliers.
TRUE

2. SecondaryDmarketsDareDmarketsDusedDbyDcorporationsDtoDraiseDcashDbyDissui
ngDsecuritiesDforDaDshortDtimeDperiod.
FALSE

3. InDaDprivateDplacement,DtheDissuerDtypicallyDsellsDtheDentireDissueDtoDone,DorDon
lyDaDfew,DinstitutionalDbuyers.
TRUE

4. TheDNYSEDisDanDexampleDofDaDsecondaryDmarket.
TRUE

5. PrivatelyDplacedDsecuritiesDareDusuallyDsoldDtoDoneDorDmoreDinvestmentDbanke
rsDandDthenDresoldDtoDtheDgeneralDpublic.
FALSE

6. MoneyDmarketsDareDtheDmarketsDforDsecuritiesDwithDanDoriginalDmaturityDof
D1D
yearDorDless.
TRUE

7. FinancialDintermediariesDsuchDasDbanksDtypicallyDhaveDassetsDthatDareDriski
erDthanDtheirDliabilities.
TRUE

8. ThereDareDthreeDtypesDofDmajorDfinancialDmarketsDtoday:Dprimary,Dsecondar
y,DandDderivativesDmarkets.DTheDNYSEDandDNASDAQDareDbothDexamplesDo
fDderivativesDmarkets.
FALSE

MultipleDChoiceDQuestions

9. WhatDfactorsDareDencouragingDfinancialDinstitutionsDtoDofferDoverlappin
gDfinancialDservicesDsuchDasDbanking,DinvestmentDbanking,Dbrokerage,Det
c.?

I. RegulatoryDchangesDallowingDinstitutionsDtoDofferDmoreDservices
II. TechnologicalDimprovementsDreducingDtheDcostDofDprovidingDfinanci
alDservices
III. IncreasingDcompetitionDfromDfullDserviceDglobalDfinancialDinstitutions
IV. ReductionDinDtheDneedDtoDmanageDriskDatDfinancialDinstitutions

, A. IDonly
B. IIDandDIIIDonly
C. I,DII,DandDIIIDonly
D. I,DII,DandDIVDonly
E. I,DII,DIII,DandDI

VDFigureD1-1

IBMDcreatesDandDsellsDadditionalDstockDtoDtheDinvestmentDbanker,DMorganDStanle
y.DMorganDStanleyDthenDresellsDtheDissueDtoDtheDU.S.Dpublic.

10. ThisDtransactionDisDanDexampleDofDa(n)
A. primaryDmarketDtransaction
B. assetDtransformationDbyDMorganDStanley
C. moneyDmarketDtransaction
D. foreignDexchangeDtransaction
E. forwardDtransaction

11. MorganDStanleyDisDactingDasDa(n
)DA.assetDtransformer
B. assetDbroker
C. governmentDregulator
D. foreignDserviceDrepresentative

12. ADcorporationDseekingDtoDsellDnewDequityDsecuritiesDtoDtheDpublicDforDtheDfir
stDtimeDinDorderDtoDraiseDcashDforDcapitalDinvestmentDwouldDmostDlikelyDA.c
onductDanDIPODwithDtheDassistanceDofDanDinvestmentDbanker
B. engageDinDaDsecondaryDmarketDsaleDofDequity
C. conductDaDprivateDplacementDtoDaDlargeDnumberDofDpotentialDbuyers
D. placeDanDadDinDtheDWallDStreetDJournalDsolicitingDretailDsuppliersDofDfunds
E. noneDofDtheDabove

13. TheDlargestDcapitalDmarketDsecurityDoutstandingDinD2010DmeasuredDbyDmark
etDvalueDwas
A. securitizedDmortgages
B. corporateDbonds
C. municipalDbonds
D. TreasuryDbonds
E. corporateDstocks

14. TheDdiagramDbelowDisDaDdiagramDofDth
eDA.secondaryDmarkets
B. primaryDmarkets
C. moneyDmarkets
D. derivativesDmarkets
E. commoditiesDmarkets

15. D and
allowDaDfinancialDintermediaryDtoDofferDsafe,DliquidDliabilitiesDsuchDasDdep
ositsDwhileDinvestingDtheDdepositors’DmoneyDinDriskier,DilliquidDassets.

, A.Diversification;DhighDequityDreturns
B. PriceDrisk;Dcollateral
C. FreeDriders;Dregulations
D. Monitoring;Ddiversification
E. PrimaryDmarkets;DforeignDexchangeDmarkets

16. DepositoryDinstitutionsDinclude
:DA.banks
B. thrifts
C. financeDcompanies
D. allDofDtheDabove
E. ADandDBDonly

17. MatchDtheDintermediaryDwithDtheDcharacteristicDthatDbestDdescribesDitsDfunction.

I. ProvideDprotectionDfromDadverseDevents
II. PoolDfundsDofDsmallDsaversDandDinvestDinDeitherDmoneyDorDcapitalDmarkets
III. ProvideDconsumerDloansDandDrealDestateDloansDfundedDbyDdeposits
IV. AccumulateDandDtransferDwealthDfromDworkDperiodDtoDretirementDperiod
V. UnderwriteDandDtradeDsecuritiesDandDprovideDbrokerageDservices

1. Thrifts
2. Insurers
3. PensionDfunds
4. SecuritiesDfirmsDandDinvestmentDbanks
5. MutualDfund
sDA.1,D3,D2,D5,D4
B.D4,D2,D3,D5,D1
C.D2,D5,D1,D3,D4
D.D2,D4,D5,D3,D1
E.D5,D1,D3,D2,D4

18. SecondaryDmarketsDhelpDsupportDprimaryDmarketsDbecauseDsecondaryDmarkets

I. OfferDprimaryDmarketDpurchasersDliquidityDforDtheirDholdings
II. UpdateDtheDpriceDorDvalueDofDtheDprimaryDmarketDclaims
III. ReduceDtheDcostDofDtradingDtheDprimaryDmarketDclaims
A.IDonly
B. IIDonly
C. IDandDIIDonly
D. IIDandDIIIDonly
E. I,DII,DandDIII

19. FinancialDintermediariesD(FIs)DcanDofferDsaversDaDsafer,DmoreDliquidDinvestme
ntDthanDaDcapitalDmarketDsecurity,DevenDthoughDtheDintermediaryDinvestsDinDris
kyDilliquidDinstrumentsDbecause
A.FIsDcanDdiversifyDawayDsomeDofDtheirDrisk
B. FIsDcloselyDmonitorDtheDriskinessDofDtheirDassets
C. theDfederalDgovernmentDrequiresDthemDtoDdoDso