FM Quiz

Investment banking refers to O A. Activities related to underwriting and distributing new issues of equity and debt securities (IPOS and Seasoned Offerings) B. Turning deposits into loans Oc. Opening checking accounts for individuals O D. Selling certificates of deposits (CDs)

Match the following money market securities with their issuers.       Securities   Issuers  a. Treasury bills                      1. depository institutions b. negotiable CDs                   2. U.S. government c. commercial paper               3. banks  d. banker’s acceptances         4. business firms and institutions

Commercial paper markets are trading   a. Municipal bonds   b. Private company bonds   c. Federal Reserve bonds   d. Treasury bonds For a commercial bank, to calculate its profitability we may look at   a. Equity Ratio   b. Return on assets   c. Return on investment   d. US Treasury bond holdings

What is the primary function of a stock exchange? a) To provide loans to businesses b) To facilitate buying and selling of securities c) To regulate interest rates d) To manufacture goods

Commercial papers are typically issued by ___.   A.  Commercial banks   B.  Large well-known companies   C.  The Federal Reserve   D.  Investment banks

1 Which of the following is least likely to be a financial intermediary? A. Finance companies 8, Mutual funds C. Pension funds D. Investment banks E. Savings banks 2 Which of the following do not have corporate stock ownership? A. Commercial banks B. Savings and loan associations C. Savings banks D. Credit uniong O All of the above 3. A financial institution that raises funds by issuing shares to the public and invests the proceeds in a diversified portfolo for a management fee is: A. Banks B. Pension FundyC)Mutual Funds D. Financn companies E. None of the above - 4. One of the following types of financial instruments derive their value from other instruments (underlying assets) A. Cash instruments B. Equity instruments O Derivative instruments D. Debt instruments

An important financial institution that assists in the initial sale of securities in the primary market is the investment bank. commercial bank. stock exchange. stock broker.

Which of the following can be described as involving direct finance? O A. People buy shares in a mutual fund. B. People buy shares of common stock in the primary markets. OC. A corporation buys a short-term corporate security in a secondary market. O D. A corporation takes out loans from a bank.

1. Statement 1: Financial securities are instruments that can be transferred or sold easily throughestablished financial markets.Statement 2: Financial securities uses physical certificates that sellers (holders) need to seek theapproval and signature of the issuer to be transferred to the buyer.Statement 3: Financial securities are tradeable through established market or over-the counter.Statement 4: Financial securities hold monetary value or face value that is equivalent to their sellingprice.Statement 5: Financial securities are fungible that can be converted into assets or cash.a.All statements are true b.Statements 1, 2 and 3 are true c.Statements 2, 3 and 4 are trued.Statements 3, 4 and 5 are true e.Statements 1, 3 and 5 are true f. Statements 2, 4 and 5 are true 2. Statement 1: Debt securities represent ownership in a firm that would entitle the holders certaindividends and claims in a firm.Statement 2: Equity securities are loans made by the issuing firm that would entitle the…