Quiz 1 Practice Solutions Spring 2016 - FI 4420 Financial System Answer Key to Quiz 1 Practice Solutions Section I Multiple Choice Questions(Total 10

Quiz 1 Practice Solutions Spring 2016 - FI 4420 Financial...

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1FI 4420: Financial System Answer Key to Quiz 1 Practice Solutions Section I: Multiple Choice Questions (Total: 10 points) Only one of the four given choices is correct. Please circle the single correct answer. No credit will be given if more than one choice is circled. Each correct answer will be awarded 1 point. 1.Which of the following is NOT a major function of the financial markets? a.Transfer funds across time and place b.Allocate capital efficiently c.Transfer and diversify risk d.Trade securities to generate abnormal returns 2.Financial market participants who provide funds are called: 3.The financial market where longer-term securities – original maturity of more than one year – are traded is usually called the 4.Commercial banks face the moral hazard problem because

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