第二章金融體系預(yù)覽英文習(xí)題及答案

1、Chapter 2 Overview of the Financial SystemSingle ChoiceEvery financial market performs the following function:It determines the level of interest rates.It allows common stock to be traded.It allows loans to be made.It channels funds from lenders-savers to borrowers-spenders.Financial markets have th

2、e basic function ofbringing together people with funds to lend and people who want to borrow funds.assuring that the swings in the business cycle are less pronounced.assuring that governments need never resort to printing money.both A and B of the above.both B and C of the above.Which of the followi

3、ng can be described as involving direct finance?A corporations stock is traded in an over-the-counter market.People buy shares in a mutual fund.A pension fund manager buys commercial paper in the secondary market.An insurance company buys shares of common stock in the over-the-counter markets.None o

4、f the above.Which of the following can be described as involving direct finance?A corporations stock is traded in an over-the-counter market.A corporation buys commercial paper issued by another corporation.A pension fund manager buys commercial paper from the issuing corporation.Both A and B of the

5、 above.Both B and C of the above.Which of the following can be described as involving indirect finance?A corporation takes out loans from a bank.People buy shares in a mutual fund.A corporation buys commercial paper in a secondary market.All of the above.Only A and B of the above.Which of the follow

6、ing can be described as involving indirect finance?A bank buys a U.S. Treasury bill from one of its depositors.A corporation buys commercial paper issued by another corporation.A pension fund manager buys commercial paper in the primary market.Both A and C of the above.Financial markets improve econ

7、omic welfare becausethey allow funds to move from those without productive investment opportunities to those who have such opportunities.they allow consumers to time their purchases better.they weed out inefficient firms.they do all of the above.they do A and B of the above.A country whose financial

8、 markets function poorly is likely toefficiently allocate its capital resources.enjoy high productivity.experience economic hardship and financial crises.increase its standard of living.Which of the following are securities?A certificate of depositA share of Texaco common stockA Treasury billAll of

9、the aboveOnly A and B of the aboveWhich of the following statements about the characteristics of debt and equity are true?They both can be long-term financial instruments.They both involve a claim on the issuers income.They both enable a corporation to raise funds.All of the above.Only A and B of th

10、e above.The money market is the market in which are traded.new issues of securitiespreviously issued securitiesshort-term debt instrumentslong-term debt and equity instrumentsLong-term debt and equity instruments are traded in the market.A) primaryB) secondaryC) capitalD) moneyWhich of the following

11、 are primary markets?The New York Stock ExchangeThe U.S. government bond marketThe over-the-counter stock marketThe options marketsNone of the aboveWhich of the following are secondary markets?The New York Stock ExchangeThe U.S. government bond marketThe over-the-counter stock marketThe options mark

12、etsAll of the aboveA corporation acquires new funds only when its securities are sold in thesecondary market by an investment bank.primary market by an investment bank.secondary market by a stock exchange broker.secondary market by a commercial bank.Intermediaries who are agents of investors and mat

13、ch buyers with sellers of securities are calledinvestment bankers.traders.brokers.dealers.none of the above.Intermediaries who link buyers and sellers by buying and selling securities at stated prices are calledinvestment bankers.traders.brokers.dealers.none of the above.An important financial insti

14、tution that assists in the initial sale of securities in the primary market is theinvestment mercial bank.stock exchange.brokerage house.Which of the following statements about financial markets and securities are true?Most common stocks are traded over-the-counter, although the largest corporations

15、 have their shares traded at organized stock exchanges such as the New York Stock Exchange.A corporation acquires new funds only when its securities are sold in the primary market.Money market securities are usually more widely traded than longer-term securities and so tend to be more liquid.All of

16、the above are true.Only A and B of the above are true.Which of the following statements about financial markets and securities are true?A bond is a long-term security that promises to make periodic payments called dividends to the firms residual claimants.A debt instrument is intermediate term if it

17、s maturity is less than one year.A debt instrument is long term if its maturity is ten years or longer.The maturity of a debt instrument is the time (term) that has elapsed since it was issued.Which of the following statements about financial markets and securities are true?Few common stocks are tra

18、ded over-the-counter, although the over-the-counter markets have grown in recent years.A corporation acquires new funds only when its securities are sold in the primary market.Capital market securities are usually more widely traded than longer term securities and so tend to be more liquid.All of th

19、e above are true.Only A and B of the above are true.Which of the following markets is sometimes organized as an over-the-counter market?The stock marketThe bond marketThe foreign exchange marketThe federal funds marketall of the aboveBonds that are sold in a foreign country and are denominated in th

20、at countrys currency are known asA) foreign bonds.B) Eurobonds.C) Eurocurrencies.D) Eurodollars.Bonds that are sold in a foreign country and are denominated in a currency other than that of the country in which they are sold are known asforeign bonds.Eurobonds.C) Eurocurrencies.D) Eurodollars.Financ

21、ial intermediariesexist because there are substantial information and transaction costs in the economy.improve the lot of the small saver.are involved in the process of indirect finance.do all of the above.do only A and B of the above.The main sources of financing for businesses, in order of importa

22、nce, arefinancial intermediaries, issuing bonds, issuing stocks.issuing bonds, issuing stocks, financial intermediaries.issuing stocks, issuing bonds, financial intermediaries.issuing stocks, financial intermediaries, issuing bonds.The presence of transaction costs in financial markets explains, in

23、part, whyfinancial intermediaries and indirect finance play such an important role in financial markets.equity and bond financing play such an important role in financial markets.corporations get more funds through equity financing than they get from financial intermediaries.direct financing is more

24、 important than indirect financing as a source of funds.Financial intermediaries can substantially reduce transaction costs per dollar of transactions because their large size allows them to take advantage ofpoorly informed consumers.standardization.economies of scale.their market power.The purpose

25、of diversification is toreduce the volatility of a portfolios return.raise the volatility of a portfolios return.reduce the average return on a portfolio.raise the average return on a portfolio.An investor who puts all her funds into one asset her portfolios .increases; diversificationdecreases; div

26、ersificationincreases; average returndecreases; average returnThrough risk-sharing activities, a financial intermediary its own risk andthe risks of its customers.reduces; increasesincreases; reducesreduces; reducesincreases; increasesThe presence of in financial markets leads to adverse selection a

27、nd moral hazard problems that interfere with the efficient functioning of financial markets.noncollateralized riskfree-ridingasymmetric informationcostly state verificationWhen the lender and the borrower have different amounts of information regarding a transaction, is said to exist.asymmetric info

28、rmationadverse selectionmoral hazardfraudWhen the potential borrowers who are the most likely to default are the ones most actively seeking a loan, is said to exist.asymmetric informationadverse selectionmoral hazardfraudWhen the borrower engages in activities that make it less likely that the loan

29、will be repaid, is said to exist.asymmetric informationadverse selectionmoral hazardfraudThe concept of adverse selection helps to explainwhich firms are more likely to obtain funds from banks and other financial intermediaries, rather than from the securities markets.why indirect finance is more im

30、portant than direct finance as a source of business finance.why direct finance is more important than indirect finance as a source of business finance.only A and B of the above.only A and C of the above.Adverse selection is a problem associated with equity and debt contracts arising fromthe lenders

31、relative lack of information about the borrowers potential returns and risks of his investment activities.the lenders inability to legally require sufficient collateral to cover a 100 percent loss if the borrower defaults.the borrowers lack of incentive to seek a loan for highly risky investments.no

32、ne of the above.When the least desirable credit risks are the ones most likely to seek loans, lenders are subject to themoral hazard problem.adverse selection problem.shirking problem.free-rider problem.principal-agent problem.Financial institutions expect thatmoral hazard will occur, as the least d

33、esirable credit risks will be the ones most likely to seek out loans.opportunistic behavior will occur, as the least desirable credit risks will be the ones most likely to seek out loans.borrowers will commit moral hazard by taking on too much risk, and this is what drives financial institutions to

34、take steps to limit moral hazard.none of the above will occur.Successful financial intermediaries have higher earnings on their investments because they are better equipped than individuals to screen out good from bad risks, thereby reducing losses due to A) moral hazard.adverse selection.bad luck.f

35、inancial panics.In financial markets, lenders typically have inferior information about potential returns and risks associated with any investment project. This difference in information is calledcomparative informational disadvantage.asymmetric information.variant information.caveat venditor.The la

36、rgest depository institution at the end of 2004 waslife insurance companies.pension funds.state retirement funds.none of the above.Which of the following financial intermediaries are depository institutions?A savings and loan associationA commercial bankA credit unionAll of the aboveOnly A and C of

37、the aboveWhich of the following is a contractual savings institution?A life insurance companyA credit unionA savings and loan associationA mutual fundWhich of the following are not investment intermediaries?A life insurance companyA pension fundA mutual fundOnly A and B of the aboveWhich of the foll

38、owing are investment intermediaries?Finance companiesMutual fundsPension fundsAll of the aboveOnly A and B of the aboveThe government regulates financial markets for three main reasons:to ensure soundness of the financial system, to improve control of monetary policy, and to increase the information

39、 available to investors.to improve control of monetary policy, to ensure that financial intermediaries earn a normal rate of return, and to increase the information available to investors.to ensure that financial intermediaries do not earn more than the normal rate of return, to ensure soundness of

40、the financial system, and to improve control of monetary policy.to ensure soundness of financial intermediaries, to increase the information available to investors, and to prevent financial intermediaries from earning less than the normal rate of return.Which of the following government regulations has the chief purpose of improving control of the money supply?deposit insurancerestrictions on entry into banking or in