Overview of Financial System

Overview of Financial System

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Question 1 of 25

1. Question
Every financial market has the following characteristic:
- It determines the level of interest rates.
- It allows common stock to be traded.
- It allows loans to be made.
- It channels funds from lenders-savers to borrowers-spenders.
- None of these
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Question 2 of 25

2. Question
Financial markets have the basic function of
- getting people with funds to lend together with people who want to borrow funds.
- assuring that the swings in the business cycle are less pronounced.
- assuring that governments need never resort to printing money.
- both (a) and (b) of the above.
- both (b) and (c) of the above.
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Question 3 of 25

3. Question
Financial markets improve economic welfare because
- they allow funds to move from those without productive investment opportunities to those who have such opportunities.
- they allow consumers to time their purchase better.
- they weed out inefficient firms.
- None of theds-
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Question 4 of 25

4. Question
Well-functioning financial markets
- cause inflation.
- eliminate the need for indirect finance.
- cause financial crises.
- produce an efficient allocation of capital.
- promote political instability.
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Question 5 of 25

5. Question
A breakdown of financial markets can result in
- an efficient allocation of capital.
- rapid economic growth.
- political instability.
- stable prices
- financial stability.
Correct

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Question 6 of 25

6. Question
Which of the following can be described as direct finance?
- You take out a mortgage from your local bank.
- You borrow $2500 from a friend.
- A pension fund lends money to General Motors.
- You buy shares in a mutual fund.
- None of the above.
Correct

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Question 7 of 25

7. Question
Assume that you borrow $2000 at 10% annual interest to finance a new business project. For this
loan to be profitable, the minimum amount this project must generate in annual earnings is
- $400.
- $201.
- $200.
- $199.
- $101
Correct

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Question 8 of 25

8. Question
Which of the following can be described as involving direct finance?
- A corporation takes out a loan from a bank.
- People buy shares in a mutual fund.
- A corporation buys a short-term security issued by another corporation.
- An insurance company buys shares of common stock in the over-the-counter markets.
- None of the above.
Correct

Incorrect
Question 9 of 25

9. Question
Which of the following can be described as involving direct finance?
- A corporation issues new shares of stock.
- People buy shares in a mutual fund.
- A pension fund manager buys a short-term corporate security in the secondary market.
- An insurance company buys shares of common stock in the over-the-counter markets.
- None of these
Correct

Incorrect
Question 10 of 25

10. Question
Which of the following can be described as involving direct finance?
- A corporation issues new shares of stock
- A corporation buys a short-term security issued by another corporation.
- A pension fund manager buys commercial paper in the secondary market.
- Both (a) and (b) of the above.
- Both (b) and (c) of the above.
Correct

Incorrect
Question 11 of 25

11. Question
Which of the following can be described as involving direct finance?
- A corporation issues new shares of stock through an investment bank.
- A corporation buys a short-term security paper issued by another corporation.
- A pension fund manager buys commercial paper in the primary market.
- All of the above.
- Both (b) and (c) of the above.
Correct

Incorrect
Question 12 of 25

12. Question
Which of the following can be described as involving direct finance?
- A corporation takes out loans from a bank.
- People buy shares in a mutual fund.
- A corporation buys a short-term corporate security in a secondary market.
- An insurance company buys shares of common stock in the primary markets.
- None of these
Correct

Incorrect
Question 13 of 25

13. Question
Which of the following can be described as involving direct finance?
- A corporation’s stock is traded in an over-the-counter market.
- People buy shares in a mutual fund.
- A pension fund manager buys a short-term corporate security in the secondary market.
- An insurance company buys shares of common stock in the over-the-counter markets.
- None of the above.
Correct

Incorrect
Question 14 of 25

14. Question
Which of the following can be described as involving direct finance?
- A corporation’s stock is traded in an over-the-counter market.
- A corporation buys a short-term security issued by another corporation.
- A pension fund manager buys a short-term corporate security from the issuing corporation.
- Both (a) and (b) of the above.
- Both (b) and (c) of the above
Correct

Incorrect
Question 15 of 25

15. Question
Which of the following can be described as involving direct finance?
- A corporation issues new shares of stock.
- A corporation buys a short-term security issued by another corporation.
- A pension fund manager buys a short-term security from the issuing corporation.
- All of the above.
- Both (b) and (c) of the above.
Correct

Incorrect
Question 16 of 25

16. Question
Which of the following can be described as involving indirect finance?
- You make a loan to your neighbor.
- A corporation buys a share of common stock issued by another corporation.
- You buy a U.S. Treasury bill from the U.S. Treasury.
- You make a deposit at a bank.
- None of these
Correct

Incorrect
Question 17 of 25

17. Question
Which of the following can be described as involving indirect finance?
- A corporation takes out loans from a bank.
- People buy shares in a mutual fund.
- A corporation buys a short-term security issued by another corporation.
- Both (a) and (b) of the above.
- None of these
Correct

Incorrect
Question 18 of 25

18. Question
Which of the following can be described as involving indirect finance?
- A corporation issues new shares of stock.
- People buy shares in a mutual fund.
- A pension fund manager buys a short-term corporate security in the secondary market.
- Both (a) and (b) of the above
- Both (b) and (c) of the above.
Correct

Incorrect
Question 19 of 25

19. Question
Which of the following can be described as involving indirect finance?
- A corporation issues new shares of stock.
- A corporation buys a short-term security issued by another corporation.
- A pension fund manager buys a short-term corporate security in the secondary market.
- Both (a) and (b) of the above.
- None of these
Correct

Incorrect
Question 20 of 25

20. Question
Which of the following can be described as involving indirect finance?
- A bank buys a U.S. Treasury bill from one of its depositors.
- A corporation buys a short-term security issued by another corporation.
- A pension fund manager buys a short-term corporate security the primary market.
- Both (b) and (c) of the above.
- None of these
Correct

Incorrect
Question 21 of 25

21. Question
Which of the following can be described as involving indirect finance?
- A corporation takes out loans from a bank.
- People buy shares in a mutual fund.
- A corporation buys a short-term corporate security in a secondary market.
- All of the above.
- Only (a) and (b) of the above.
Correct

Incorrect
Question 22 of 25

22. Question
Which of the following can be described as involving indirect finance?
- People buy shares in a mutual fund.
- A pension fund manager buys a short-term corporate security in the secondary market.
- A corporation’s stock is issued in an over-the-counter market.
- All of the above
- Only (a) and (b) of the above.
Correct

Incorrect
Question 23 of 25

23. Question
Which of the following can be described as involving indirect finance?
- A corporation’s stock is traded in an over-the-counter market
- A corporation buys a short-term security issued by another corporation.
- A pension fund manager buys a short-term security from the issuing corporation.
- Both (a) and (b) of the above.
- None of these
Correct

Incorrect
Question 24 of 25

24. Question
Which of the following can be described as involving indirect finance?
- A corporation issues new shares of stock.
- A corporation buys a short-term security issued by another corporation.
- A bank buys a U.S. Treasury bill from one of its depositors.
- All of the above.
- Both (b) and (c) of the above.
Correct

Incorrect
Question 25 of 25

25. Question
Which of the following can be described as involving indirect finance?
- You make a loan to your neighbor.
- You buy a U.S. Treasury bill from the bank.
- You buy a U.S. Treasury bill from the U.S. Treasury.
- A corporation buys a short-term security issued by another corporation.
- None of these
Correct

Incorrect

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