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Financial Markets and Institutions
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Chapter P6 / Exercise 6
Financial Markets and Institutions
Madura
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Format of the Final Test and Model QuestionsThe final test may consist of Multiple choice questions(80% weight) and short answers(20% weight)Model QuestionsFrom Ch 2Q1.(I) There are two types of exchanges in the secondary market for capital securities: organized exchanges and over-the-counter exchanges. (II) When firms sell securities for thevery first time, the issue is an initial public offering.Q3 Financial intermediaries promote efficiency and thereby increase people’s wealth (a)(I) is true, (II) false.(b)(I) is false, (II) true.(c)Both are true.(d)Both are false.lender and borrowers. b. to the extent that they help solve problems created by adverse selection and moral hazard. c. by providing riskless opportunities for making money d. because of only (a) and (b) of the abovee. because of ‘a’, ‘b’, ‘c’ above
(G) Financial intermediariescan substantially reduce transaction costs 7. because they can take advantage of economies of scaleQ2 Using the information from the above table, identify the pairs from the following which are not matching:(a) (A) and (6)(b) (B) and (3)(c) (C) and (1)(d) (D) and (2)(e) (E) and (4)(f) (F) and (5)(g) (G) and (7)a. by reducing the transaction cost of linking together lender and borrowers. b. to the extent that they help solve problems created by adverse selection and moral hazard. c. by providing riskless opportunities for making money d. because of only (a) and (b) of the abovee. because of ‘a’, ‘b’, ‘c’ above
From Ch 3Q4 Disadvantages of commodity money under barter include
Q5.The Canadian financial system is currently a fiat money system. This means that
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Financial Markets and Institutions
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Chapter P6 / Exercise 6
Financial Markets and Institutions
Madura
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