________ is the primary motive for using the money market.
liquidity
FInancial markets bring together ______ and _________ of financial securities,
buyers and sellers
The three most importabt financial instruments in corporate finance are ___________, _____________, and _____________.
Corporate bonds, common stock, and preferred stock
The _________ rate if interest is the rate of interest charged by the lender and includes premiums for inflation and risk.
nominal
The nominal risk-free rate of interest is equal to the real rate of interest plus an expected ___________ premium.
inflation
An example of a Federal Government security issued with a maturity of less than one year is a _________ bill.
treasury
Common stockholders receive a return on their investment in the form of common stock _________.
dividends
The prevailing rate of interest in any situation is called the _______ interest rate.
nominal
The adjustments lenders make to their current interest rates to compensate for the uncertainty about future changes in rates for long-term securities is called the ________ risk premium.
maturity
Investment bankers arrange securities sales on either an _______ basis or a ________ basis.
underwriting basis or a best efforts basis
The two types of corporate stock are _______ stock and ________ stock
common and preferred
Bonds issued by state and local governments are known as _______ bonds.
municipal
The three special features of a bond are _________, __________, and ___________.
par or face value, maturity date, and interest payment or coupon interest or payments
You wish to purchase stock from your broker. Your purchase will most likely occur in the ________ market
secondary or capital
Bonds that do not pay any coupon interests are called ________-_________ bonds.
zero-coupon
A short-term promissory note issued by large corporation with a strong credit rating is called _______ _________.
commercial paper
In an efficient market, securities can be traded _______, ________, and ________.
easily, quickly, and at a low cost
Short-term securities are traded in the __________ market, and long-term securities trade in the __________ market.
money market and the capital market
The shape of the yield curve gives _______ and ________ useful information for financial decisions.
borrowers and lenders
A typical yield curve is __________-________, reflecting a greater maturity risk premium associated with long-term bonds.
upward-sloping
If a market has no fixed locations of business, it is said to be ________.
OTC or over-the-counter
___________ ___________ can be negative
interest rates
A business or household that has more income than expenses is called a _________ economic unit
surplus
Someone that has expenditures greater than their income is called a ________ economic unit
deficit
The nominal interest rates includes premiums for risk, ________ and other various things.
inflation
Preferred stock is ________ risky than common stock
less
A ________ occurs when a borrower fails to pay interest and principal on a loan on time
default
The ________ markets trade securities with maturities greater than one year, expose the investor to somewhat higher risk, have higher expected rates of return, and are less liquid.
capital
If a market has no fixed locations of business, it is said to be ________-_______-________.
OTC or over-the-counter
Three types of financial intermediaries are investment bankers, _______, and dealers.
brokers
_______ make their living buying securities and reselling them to others
dealers
The nominal risk-free interest rate is the ________ rate of interest plus an ________premium.
real rate and inflation
The _______ curve is a plot of interest rates and time to maturity of bonds with similar characteristics.
yield
The main types of economic units include _________, businesses, and households.
government
Rather than borrowing money by issuing bonds, a corporation may choose to raise money by selling ______
stock
_______ stockholders own a portion of the company
common
__________ would NOT be considered a financial security.
inventory
_________, __________, and _________ would be considered financial security
A treasury bond, preferred stock, and a banker's acceptance
Most businesses raise money by selling their securities in a _________ ________.
public offering
Stocks that are NOT traded on national or regional exchanges, but instead are offered for sale in a secondary market, which consists of a network of dealers trading over computers, are:
traded on the "over-the-counter market
With respect to bonds, Face value and pare value often differ due to changes in economic conditions
False
_______ is not a money market security
bonds
_______, ________, and _______ are money market securities
commercial papers, treasury bills, and negotiable certificates of deposit
Junk bonds are:
bonds that have been rated below investment grade
The nominal interest rate consists of the real interest rate plus various premiums
true
__________ ___________ is riskier than preferred stock to the investor.
Common stock