貨幣金融學CHAPTER 2 an overview of the financial system

1、nMultiple Choices1) Every financial market has the following characteristic:(a) It determines the level of interest rates.(b) It allows common stock to be traded.(c) It allows loans to be made.(d) It channels funds from lenders-savers to borrowers-spenders.Answer: D2) Financial markets have the basi

2、c function of(a) getting people with funds to lend together with people who want to borrow funds.(b) assuring that the swings in the business cycle are less pronounced.(c) assuring that governments need never resort to printing money.(d) both (a) and (b) of the above.(e) both (b) and (c) of the abov

3、e.Answer: A3) Which of the following can be described as direct finance?(a) You take out a mortgage from your local bank.(b) You borrow $2500 from a friend.(c) A pension fund lends money to General Motors.(d) You buy shares in a mutual fund.(e) None of the above.Answer: B4) Assume that you borrow $2

4、000 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(a) $400.(b) $201.(c) $200.(d) $199.(e) $101.Answer: B5) You can borrow $5000 to finance a new business venture. This new venture will gene

5、rate annual earnings of $251. The maximum interest rate that you would pay on the borrowed funds and still increase your income is(a) 25%.(b) 12.5%.(c) 10%.(d) 5%.(e) 0.5%.Answer: D6) Which of the following can be described as involving direct finance?(a) A corporation takes out a loan from a bank.(

6、b) People buy shares in a mutual fund.(c) A corporation buys a short-term security issued by another corporation.(d) An insurance company buys shares of common stock in the over-the-counter markets.(e) None of the above.Answer: C7) Which of the following can be described as involving direct finance?

7、(a) A corporation issues new shares of stock.(b) People buy shares in a mutual fund.(c) A pension fund manager buys a short-term corporate security in the secondary market.(d) An insurance company buys shares of common stock in the over-the-counter markets.Answer: A8) Which of the following can be d

8、escribed as involving direct finance?(a) A corporation issues new shares of stock.(b) A corporation buys a short-term security issued by another corporation.(c) A pension fund manager buys commercial paper in the secondary market.(d) Both (a) and (b) of the above.(e) Both (b) and (c) of the above.An

9、swer: D9) Which of the following can be described as involving direct finance?(a) A corporation issues new shares of stock through an investment bank.(b) A corporation buys a short-term security paper issued by another corporation.(c) A pension fund manager buys commercial paper in the primary marke

10、t.(d) All of the above.(e) Both (b) and (c) of the above.Answer: D10) Which of the following can be described as involving direct finance?(a) A corporation takes out loans from a bank.(b) People buy shares in a mutual fund.(c) A corporation buys a short-term corporate security in a secondary market.

11、(d) An insurance company buys shares of common stock in the primary markets.Answer: D11) Which of the following can be described as involving direct finance?(a) A corporations stock is traded in an over-the-counter market.(b) People buy shares in a mutual fund.(c) A pension fund manager buys a short

12、-term corporate security in the secondary market.(d) An insurance company buys shares of common stock in the over-the-counter markets.(e) None of the above.Answer: E12) Which of the following can be described as involving direct finance?(a) A corporations stock is traded in an over-the-counter marke

13、t.(b) A corporation buys a short-term security issued by another corporation.(c) A pension fund manager buys a short-term corporate security from the issuing corporation.(d) Both (a) and (b) of the above.(e) Both (b) and (c) of the above.Answer: E13) Which of the following can be described as involv

14、ing direct finance?(a) A corporation issues new shares of stock.(b) A corporation buys a short-term security issued by another corporation.(c) A pension fund manager buys a short-term security from the issuing corporation.(d) All of the above.(e) Both (b) and (c) of the above.Answer: D14) Which of t

15、he following can be described as involving indirect finance?(a) You make a loan to your neighbor.(b) A corporation buys a share of common stock issued by another corporation.(c) You buy a U.S. Treasury bill from the U.S. Treasury.(d) You make a deposit at a bank.Answer: D15) Which of the following c

16、an be described as involving indirect finance?(a) A corporation takes out loans from a bank.(b) People buy shares in a mutual fund.(c) A corporation buys a short-term security issued by another corporation.(d) Both (a) and (b) of the above.Answer: D16) Which of the following can be described as invo

17、lving indirect finance?(a) A corporation issues new shares of stock.(b) People buy shares in a mutual fund.(c) A pension fund manager buys a short-term corporate security in the secondary market.(d) Both (a) and (b) of the above.(e) Both (b) and (c) of the above.Answer: E17) Which of the following c

18、an be described as involving indirect finance?(a) A corporation issues new shares of stock.(b) A corporation buys a short-term security issued by another corporation.(c) A pension fund manager buys a short-term corporate security in the secondary market.(d) Both (a) and (b) of the above.Answer: C18)

19、 Which of the following can be described as involving indirect finance?(a) A bank buys a U.S. Treasury bill from one of its depositors.(b) A corporation buys a short-term security issued by another corporation.(c) A pension fund manager buys a short-term corporate security the primary market.(d) Bot

20、h (b) and (c) of the above.Answer: A19) Which of the following can be described as involving indirect finance?(a) A corporation takes out loans from a bank.(b) People buy shares in a mutual fund.(c) A corporation buys a short-term corporate security in a secondary market.(d) All of the above.(e) Onl

21、y (a) and (b) of the above.Answer: D20) Which of the following can be described as involving indirect finance?(a) People buy shares in a mutual fund.(b) A pension fund manager buys a short-term corporate security in the secondary market.(c) A corporations stock is issued in an over-the-counter marke

22、t.(d) All of the above.(e) Only (a) and (b) of the above.Answer: E21) Which of the following can be described as involving indirect finance?(a) A corporations stock is traded in an over-the-counter market.(b) A corporation buys a short-term security issued by another corporation.(c) A pension fund m

23、anager buys a short-term security from the issuing corporation.(d) Both (a) and (b) of the above.Answer: A22) Which of the following can be described as involving indirect finance?(a) A corporation issues new shares of stock.(b) A corporation buys a short-term security issued by another corporation.

24、(c) A bank buys a U.S. Treasury bill from one of its depositors.(d) All of the above.(e) Both (b) and (c) of the above.Answer: C23) Which of the following can be described as involving indirect finance?(a) You make a loan to your neighbor.(b) You buy a U.S. Treasury bill from the bank.(c) You buy a

25、U.S. Treasury bill from the U.S. Treasury.(d) A corporation buys a short-term security issued by another corporation.Answer: B24) Which of the following statements about the characteristics of debt and equity are true?(a) They can both be long-term financial instruments.(b) They both involve a claim

26、 on the issuers income.(c) They both enable a corporation to raise funds.(d) All of the above.(e) Only (a) and (b) of the above.Answer: D25) Securities are _ for the person who buys them, but are _ for the individual or firm that issues them.(a) assets; liabilities(b) liabilities; assets(c) negotiab

27、le; nonnegotiable(d) nonnegotiable; negotiableAnswer: A26) Forty or so dealers establish a “market” in these securities by standing ready to buy and sell them.(a) Secondary stocks(b) Surplus stocks(c) U.S. government bonds(d) Common stocksAnswer: C27) Which of the following are primary markets?(a) T

28、he New York Stock Exchange(b) The U.S. government bond market(c) The over-the-counter stock market(d) The options markets(e) None of the aboveAnswer: E28) Which of the following are secondary markets?(a) The New York Stock Exchange(b) The U.S. government bond market(c) The over-the-counter stock mar

29、ket(d) The options markets(e) All of the aboveAnswer: E29) An important function of secondary markets is to(a) make it easier to sell financial instruments to raise cash.(b) raise funds for corporations through the sale of securities.(c) create a market for bank demand deposits.(d) create a market f

30、or newly constructed houses.(e) make it easier for governments to raise taxes.Answer: A30) Secondary markets make financial instruments more(a) solid.(b) fluid.(c) liquid.(d) risky.Answer: C31) The higher a securitys price in the secondary market(a) the more funds a firm can raise by selling securit

31、ies in the primary market.(b) the more funds a firm can raise by selling securities in the secondary market.(c) the less funds a firm can raise by selling securities in the primary market.(d) the less funds a firm can raise by selling securities in the secondary market.(e) secondary market prices ha

32、ve no effect on the funds a firm can raise.Answer: A32) An important financial institution that assists in the initial sale of securities in the primary market is the(a) investment bank.(b) commercial bank.(c) stock exchange.(d) brokerage house.Answer: A33) A corporation acquires new funds only when

33、 its securities are sold(a) in the primary market by an investment bank.(b) in the primary market by a stock exchange broker.(c) in the secondary market by a securities dealer.(d) in the secondary market by a commercial bank.Answer: A34) Which of the following assets is traded only in an over-the-co

34、unter market?(a) treasury bonds(b) stocks(c) commodities(d) all of the above(e) none of the aboveAnswer: A35) Which of the following markets is sometimes organized as an over-the-counter market?(a) The stock market(b) The bond market(c) The foreign exchange market(d) The federal funds market(e) Each

35、 of the aboveAnswer: E36) Which of the following statements about financial markets and securities are true?(a) Many common stocks are traded over-the-counter, although the largest corporations usually have their shares traded at organized stock exchanges such as the New York Stock Exchange.(b) A co

36、rporation acquires new funds only when its securities are first sold in the primary market.(c) Money market securities are usually more widely traded than longer-term securities and so tend to be more liquid.(d) All of the above are true.(e) Only (a) and (b) of the above are true.Answer: D37) Bonds

37、that are sold in a foreign country and are denominated in the countrys currency in which they are sold are known as(a) foreign bonds.(b) Eurobonds.(c) equity bonds.(d) country bonds.Answer: A38) Bonds that are sold in a foreign country and are denominated in a currency other than that of the country

38、 in which it is sold are known as(a) foreign bonds.(b) Eurobonds.(c) equity bonds.(d) country bonds.Answer: B39) The presence of transaction costs in financial markets explains, in part, why(a) financial intermediaries and indirect finance play such an important role in financial markets.(b) equity

39、and bond financing play such an important role in financial markets.(c) corporations get more funds through equity financing than they get from financial intermediaries.(d) direct financing is more important than indirect financing as a source of funds.Answer: A40) Typically, borrowers have superior

40、 information relative to lenders about the potential returns and risks associated with an investment project. The difference in information is called _, and it creates the _ problem.(a) adverse selection; moral hazard(b) asymmetric information; risk sharing(c) asymmetric information; adverse selecti

41、on(d) adverse selection; risk sharing(e) moral hazard; adverse selectionAnswer: C41) A potential borrower usually has better information about the potential returns and risk of the investment projects he plans to undertake than does the lender. This inequality of information is called(a) moral hazar

42、d.(b) asymmetric information.(c) reverse causation.(d) adverse selection.Answer: B42) If bad credit risks are the ones who most actively seek loans and, therefore, receive them from financial intermediaries, then financial intermediaries face the problem of(a) moral hazard.(b) adverse selection.(c)

43、free-riding.(d) costly state verification.Answer: B43) The problem created by asymmetric information before the transaction occurs is called _, while the problem created after the transaction occurs is called _.(a) adverse selection; moral hazard(b) moral hazard; adverse selection(c) costly state ve

44、rification; free-riding(d) free-riding; costly state verificationAnswer: A44) The presence of _ in financial markets leads to adverse selection and moral hazard problems that interfere with the efficient functioning of financial markets.(a) noncollateralized risk(b) free-riding(c) asymmetric informa

45、tion(d) costly state verificationAnswer: C45) Adverse selection is a problem associated with equity and debt contracts arising from(a) the lenders relative lack of information about the borrowers potential returns and risks of his investment activities.(b) the lenders inability to legally require su

46、fficient collateral to cover a 100% loss if the borrower defaults.(c) the borrowers lack of incentive to seek a loan for highly risky investments.(d) none of the above.Answer: A46) The concept of adverse selection helps to explain(a) which firms are more likely to obtain funds from banks and other f

47、inancial intermediaries, rather than from the securities markets.(b) why indirect finance is more important than direct finance as a source of business finance.(c) why direct finance is more important than indirect finance as a source of business finance.(d) only (a) and (b) of the above.(e) only (a

48、) and (c) of the above.Answer: D47) In financial markets, lenders typically have inferior information about potential returns and risks associated with any investment project. This difference in information is called(a) comparative informational disadvantage.(b) asymmetric information.(c) variant in

49、formation.(d) caveat venditor.Answer: B48) A professional baseball player may be contractually restricted from skiing. The team owner includes this clause in the players contract to protect against(a) fraud.(b) moral hazard.(c) adverse selection.(d) regulatory circumvention.(e) risk sharing.Answer:

50、B49) An example of the problem of _ is when a corporation that uses the funds raised from selling new shares of stock to pay for Caribbean cruises for all of its employees and their families.(a) adverse selection(b) moral hazard(c) risk sharing(d) credit risk(e) prudential supervisionAnswer: B50) A

51、buyer of a used car faces the _ problem that most of her choices are lemons.(a) moral hazard(b) adverse selection(c) diversification(d) free rider(e) bureaucratic behaviorAnswer: B51) In the early 1980s, a particular bank in Oklahoma developed a reputation of readily providing loans to borrowers for

52、 the purpose of exploring for oil deposits. Many of these loans were never repaid, because this bank failed to address the (a) adverse selection problem.(b) moral hazard problem.(c) regulatory avoidance problem.(d) risk-sharing problem.(e) free-rider problem.Answer: A52) U.S. Treasury bills(a) are t

53、he safest of all money market instruments.(b) sell at a discount because they have no interest payments.(c) are the most liquid of the money market securities.(d) are all of the above.(e) are only (b) and (c) of the above.Answer: D53) U.S. Treasury bills are issued in(a) three-, six-, nine-, and twe

54、lve-month maturities.(b) three-, nine-, and twelve-month maturities.(c) three-, six-, and twelve-month maturities.(d) three-, and six-month maturities.Answer: C54) U.S. Treasury bills(a) are issued in three-, six-, nine-, and twelve-month maturities.(b) sell at a discount because they have no intere

55、st payments.(c) are the most liquid of the money market securities.(d) are all of the above.(e) are only (b) and (c) of the above.Answer: E55) A debt instrument sold by a bank to its depositors that pays annual interest of a given amount and at maturity pays back the original purchase price is calle

56、d(a) commercial paper.(b) a negotiable certificate of deposit.(c) a banker acceptance.(d) federal funds.Answer: B56) Federal funds are(a) funds raised by the federal government in the bond market.(b) loans made by the Federal Reserve System to banks.(c) loans made by banks to the Federal Reserve Sys

57、tem.(d) loans made by banks to each other.(e) none of the above.Answer: D57) Which of the following are short-term financial instruments?(a) A negotiable certificate of deposit(b) A bankers acceptance(c) A six-month loan(d) A U.S. Treasury bill(e) All of the aboveAnswer: E58) Which of the following instruments are tra