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Fin 308 test 1 answer key

Risk b fis closely monitor the riskiness of their

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Unformatted text preview: skiness of their assets C) The federal government requires them to do so D) Both a) and b) E) Both a) and c) Answer: D Page: 15-16 Level: Easy Saunders, Financial Markets and Institutions, 2/e 5 25. Households are increasingly likely to both directly purchase securities (perhaps via a broker) and also place some money with a bank or thrift to meet different needs. Match up the given investor's desire with the appropriate intermediary or direct security. I. Money likely to be needed within 6 months II. Money to be set aside for college in 10 years III. Money to provide supplemental retirement income IV. Money to be used to provide for children in the event of death 1. Depository institutions 2. Insurer 3. Pension fund 4. Stocks or bonds A) 2, 3, 4, 1 B) 1, 4, 2, 3 C) 3, 2, 1, 4 D) 1, 4, 3, 2 E) 4, 2, 1, 3 Answer: D Page: 12 Level: Medium 26. Which one of the following is a capital market instrument? A) Federal funds B) Treasury bills C) Commercial paper D) Common stock Answer: D Page: 8,9 Level: Easy 27. Which of the following are money market instruments? A) Federal funds B) Treasury bills C) Commercial paper D) 4 year maturity corporate bond E) A, B and C are money market instruments Answer: E Page: 7-8 Level: Easy 6 Saunders, Financial Markets and Institutions, 2/e Chapter 1 Introduction 28. The Securities Exchange Commission (SEC) does not A) Decide whether a public issue is fairly priced B) Decide whether a firm making a public issue has provided enough information for investors to decide whether the issue is fairly priced C) Require exchanges to monitor trading to prevent insider trading D) Attempt to reduce excessive price fluctuations E) Monitor the major securities exchanges Answer: A Page: 9 Level: Medium 29. Many households place funds with financial intermediaries (FIs) because many FI accounts provide A) Lower denominations than money market securities B) Better liquidity and less price risk than direct securities C) Shorter maturities than direct securities D) All of the above E) None of the above Answer: D Page: 15 Level: Easy 30. In the U.S., savings institutions must concentrate their assets in __________ lending. A) mortgage B) commercial C) consumer D) government E) money market Answer: A Page: 18 Level: Easy 31. Depository institutions (DIs) play an important role in the transmission of monetary policy from the Federal Reserve to the rest of the economy because A) Loans to corporations are part of the money supply B) Bank and thrift loans are tightly regulated C) U.S. DIs compete with foreign financial institutions D) DI deposits are a major portion of the money supply E) Thrifts provide a large amount of credit to finance residential real estate Answer: D Page: 17-18 Level: Difficult Saunders, Financial Markets and Institutions, 2/e 7 32. According to a recent SIA survey, what percentage of retail stock transactions will be conducted online by 2003? A) 30% B) 40% C) 50% D) 60% E) 70% Answer: C Page: None Level: Medium Chapter 2 True...
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