The following are correct statements about the composition of Financial Markets,EXCEPT:O Financial Transactions can be categorized as Direct Finance and Indirect Financetypes.OIndirect Finance occurs when a financial intermediary conducts the transactionbetween savers and borrowers.If a Commercial Bank uses money from depositors and lend the money to acorporation, that is considered Direct Finance.OIf a Corporation issues stocks and sells it to individual investors, that isconsidered Direct Finance.

To identify the correct statement about the composition of financial markets.

Answered: The following are correct statements…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the following represents the risk of investment in order from lowest to highest? O A. certificate of deposit, mutual funds, savings, stocks O B. stocks, mutual funds, savings, certificate of deposit C. savings, certificate of deposit, mutual funds, stocks D. mutual funds, stocks, savings, certificate of deposit
Question 2 of 10. Paul owns 100 shares of stock in an S corporation which he purchased for $57 per share. He gave 10 shares to his daughter, Julie. He also sold 10 shares to his friend, Bill, for $65 a share. What are Paul, Julie, and Bill's respective bases after those transactions? Paul: $4,560Julie: $570Bill: $570 Paul: $4,560Julie: $570Bill: $650 Paul: $5,700Julie: $570Bill: $570 Paul: $5,700Julie: $570Bill: $650
Mortgage lenders often resell mortgages in secondary markets. How might this make lenders act differently than if they intended to hold the mortgages themselves?
If a corporation has $400 million in common stock, $200 million in preferred stock, and $500 million in bonds, A. How much is its capitalization?B.Theoretically, how much would it take to control it? C. Practically, how much would it take to control it?
You have decided to invest in an open-end mutual fund. You are currently looking at a fund-Washington Premier Fund-in your newspaper. The fund is quoted as: Name NAV Net Chg YTD %RET 36.25 0.15 6.95 Assume that today's opening price of Washington Premier Fund equals yesterday's closing price. If you wanted to make your investment first thing this morning, then you should expect to pay for each share of since it Yesterday, each share of sold for $35.95 $43.50 $36.25 $34.44 $0.15 less $0.15 more $6.95 less $6.95 more If you had $8,000 available to invest, you could purchase than it did the day before, and offers a return of 294 368 assesses a 0.15% fee 276 shares of. is a no-load fund charges a 6.95% fee 221 Your evaluation of the Washington Premier Fund is made easier by the fact that: your investment choices are limited. mutual funds are careful to explicitly state their investment objectives. a mutual fund broker will select a customized mix for you. 0.15% 36.25% 6.95% for the year.
Suppose instead Larry decides to buy 100 shares of NanoSpeck stock. Which of the following statements are correct? Check all that apply. O C The price of his shares will rise if NanoSpeck issues additional shares of stock. NanoSpeck earns revenue when Larry purchases 100 shares, even if he purchases them from an existing shareholder. Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Larry's shares to decline.
In chapter 7, "Financial Markets," of the book Naked Economics, the author, Charles Wheelan, states, that, "...all financial instruments - no matter how complex the bells and whistles - are based on four simple needs." Which of the below is NOT of these "simple needs"? Raising Capital. Assumption of risk. Insuring Against Risk.
Suppose Charles would like to invest $7,000 of his savings. NOTE: the dropdown choice for first question is (debt ot equity), the dropdown choice for the second question is ( [an IOU or promise to pay from] OR a claim to partial ownership in), the dropdown choice for the third question is (charles and the other stockholders or the bondholders), the dropdown choice for the LAST one is higher or lower)
5. On March 1, Bank extends a line of credit to Farmer. Farmer grants Bank a security interest in all "equipment and farm products, now owned or hereafter acquired." Bank properly files a financing statement on March 10, with the financing statement containing after-acquired language. 3 On October 1, Farmer approaches FinanceCo to request a loan for the purchase of a combine. FinanceCo agrees to make the loan and disburses the funds for the purchase directly to the equipment dealer. Farmer signs a security agreement granting FinanceCo a security interest in the combine. Farmer takes delivery of the combine on November 1. On November 26, FinanceCo properly files a financing statement describing the combine by brand, model, and serial number. Farmer subsequently defaults on his obligations to Bank and FinanceCo. Who has priority in the combine? 6. Assume similar facts as above, but that instead of filing a financing statement on November 26 FinanceCo files its financing statement on…
E3 The demand curve and supply curve for one-year discount bonds were estimated using the following equations: Bd Price=-2/5Quantity+990 Bs Price=Quantity+500 As the stock market continued to rise, the Federal Reserve felt the need to increase the interest rates. As a result, the new market interest rate increased to 19.65%, but the equilibrium quantity remained unchanged. What are the new demand and supply equations? Assume parallel shifts in the equations
Homework (Ch 26) 1. Financial institutions in the U.S. economy Suppose Kenji would like to use $2,000 of his savings to make a financial investment. One way of making a financial investment is to purchase stock or bonds from a private company. Suppose TouchTech, a hand-held computing firm, is selling bonds to raise money for a new lab-a practice known as debt v finance. Buying a bond issued by Touch Tech would give Kenji an IOU, or promise to pay, from v the firm. In the event that Touch Tech runs into financial difficulty, Kenji and the other bondholders ▼ will be paid first. Suppose instead Kenji decides to buy 100 shares of Touch Tech stock. Which of the following statements are correct? Check all that apply. V Expectations of a recession that will reduce economywide corporate profits will likely cause the value of Kenji's shares to decline. O The price of his shares will rise if Touch Tech issues additional shares of stock. O The Dow Jones Industrial Average is an example of a…
Which type of financial intermediary provides individual investors with professional management of their money and diversification in order to limit the risk of investing? A. mutual funds B. insurance companies C. hedge funds D. investment banks

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