Chapter 3--The Financial En - Copy

Chapter 3--The Financial En - Copy - Chapter 3-The...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 3--The Financial Environment: Markets, Institutions, and Investment Banking Chapter 3--The Financial Environment: Markets, Institutions, and Investment Banking Student: ___________________________________________________________________________ 1. If an individual investor buys and sells existing stocks through a broker, these are primary market transactions. True False 2. Financial asset markets deal with stocks, bonds, mortgages, and other claims on real assets with respect to the distribution of future cash flows. True False 3. The existence of financial intermediaries greatly increases the efficiency of financial markets because, without them, savers would have to provide funds directly to borrowers, which would be a much costlier process. True False 4. American depository receipts are foreign stocks that sell in American stock exchanges and are denominated in dollar prices. True False 5. Because foreign banks are less regulated and have fewer restrictions concerning the types of business activities they can pursue than their U.S. counterparts, such banks often engage in numerous aspects of multi- layer financial deals. True False 6. One advantage of using common stock as a source of funds is that common stock does not legally obligate the firm to make payments to stockholders. True False
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
7. One advantage of common stock as a source of funds is that the underwriting and distribution costs of common stock are usually much lower than those for debt. True False 8. The over-the-counter market is a network of dealers that provides for trading securities not listed on organized exchanges. True False 9. The securities exchange commission is the U.S. government agency that regulates the issuance and trading of stocks and bonds. True False 10. The OTC market is a physical exchange, much like the New York Stock Exchange, where securities dealers provide trading in unlisted securities. True False 11. A publicly owned corporation is simply a company whose shares are held by the investing public, which may include other corporations and institutions. True False 12. The money market is the market for securities with maturities over one year and includes such financial assets as stocks and long-term corporate bonds. True False 13. The debt markets are segmented based on the maturity of the debt instruments, the type of debt instruments, and the participants in the market. True False 14. One of the benefits from financial intermediation is risk diversification in that the pool of funds collected can be spread across a variety of investments. True False
Background image of page 2
15. Under a best efforts arrangement, the investment bank purchases all of the shares from the firm and then resells the shares to the public. Under this arrangement the investment banks assumes significant risk. True False
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/18/2011 for the course FIN 3604 taught by Professor Patterson during the Spring '10 term at University of South Florida - Tampa.

Page1 / 16

Chapter 3--The Financial En - Copy - Chapter 3-The...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online