Financial Markets And Institutions Set 10
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This set of Financial Markets and Institutions Multiple Choice Questions & Answers (MCQs) focuses on Financial Markets And Institutions Set 10
Q1 | 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 as
- foreign bonds.
- Eurobonds.
- Euro-currencies.
- Eurodollars.
Q2 | Financial intermediaries
- exist 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.
Q3 | The main sources of financing for businesses, in order of importance,are
- financial intermediaries, issuing bonds, issuing stocks.
- issuing bonds, issuing stocks, financial intermediaries.
- issuing stocks, issuing bonds, financial intermediaries.
- issuing stocks, financial intermediaries, issuing bonds.
Q4 | In primary markets, the first time issued shares to be publicly traded in stock markets is considered as
- traded offering
- public markets
- issuance offering
- initial public offering
Q5 | The transaction cost of trading of financial instruments in centralized market is classified as
- flexible costs
- low transaction costs
- high transaction costs
- constant costs
Q6 | The stocks or shares that are sold to investors without transacting through financial institutions are classified as
- direct transfer
- indirect transfer
- global transfer
- pension transfer
Q7 | The type of financial security which have linked payoff to another issued securityis classified as.
- linked security
- derivative security
- payable security
- non- issuing security
Q8 | In primary markets, the property of shares which made it easy to sell newly issued security is considered as
- increased liquidity
- decreased liquidity
- money flow
- large funds
Q9 | The depository institutions such as thrifts includes
- savings associations
- savings banks
- credit unions
- all of above
Q10 | The money market where debt and stocks are traded and maturity period is more than a year is classified as
- shorter term markets
- capital markets
- counter markets
- longterm markets
Q11 | The example of derivative securities includes
- swap contract
- option contract
- futures contract
- all of above
Q12 | In foreign financial markets, the growth is represented by the factors such as
- savings in foreign countries
- investment opportunities
- accessible information
- all of above
Q13 | The authority which intervenes directly or indirectly in foreign exchange markets by Altering the interest rates is considered as
- centralized instruments
- centralized stocks
- central government
- central corporations
Q14 | Which of the following are functions of a financial system? 1. The operation of a payments system. 2. Providing the means of portfolio adjustment. 3. Helping to reduce unemployment. 4. Channelling funds between lenders and borrowers. 5. Helping speculators to bet on price movements.
- 1 and 5
- 2, 3 and 5
- 1, 2 and 4
- 2 to 5
Q15 | The regulation of the banking industry is of particular importance in modern economies because:
- banks are large and very profitable.
- everyone in the economy has a bank account.
- banks employ many people.
- banks provide the principal means of payment for the economy.
Q16 | Statutory regulation is likely to create larger compliance costs than self-regulation because:
- self-regulation does not involve lawyers and the courts.
- consumers are better able to assess risk under self-regulation.
- statutory regulators are often over-cautious.
- statutory regulation is controlled by consumers.
Q17 | Moral hazard caused by regulation can only be removed from financial transactions if:
- regulations are regularly revised to keep pace with the changing circumstances of the market.
- the regulations prevent agency capture.
- all regulation is self-regulation.
- participants in the finance industry do not feel protected by the regulations.
Q18 | The public debt of a country is not necessarily a burden on the economy to the extent that:
- it grows less rapidly than GDP.
- people receive good public services.
- people are happy to hold government bonds.
- it can be financed without adding to inflation.
Q19 | If the public debt can be financed without adding to inflation or causing interest ratesto rise, it is said to be:
- only a burden on future generations.
- following the golden rule of the public finances.
- in primary balance.
- sustainable
Q20 | Interest rate expectations have been thought to be an important influence on bond sales because:
- government bond-holders are, by and large, are income risk averse.
- interest rates have always been very unstable.
- the bond market is dominated by people interested mainly in capital gains.
- government bond-holders hold extrapolative expectations.
Q21 | The sale of government bonds overseas:
- causes a fall in the domestic money supply.
- causes a deficit in the balance of payments.
- causes a smaller increase in interest rates than the sale of bonds to the domestic banking sector.
- causes a smaller increase in interest rates than the sale of bonds to the domestic private sector.
Q22 | In indirect finance:
- lenders loan to borrowers.
- an institution borrows from the lender and provides funds to the borrower.
- occurs between a borrower and lender, with or without an intermediary.
- the borrower is required to have collateral.
Q23 | Aloan:
- is an asset for both the lender and the borrower.
- is an asset for the lender and a liability for the borrower.
- is a liability for the lender and an asset for the borrower
- is a liability for both the lender and the borrower.
Q24 | Which of the following is not a characteristic of a financial instrument?
- The financial instrument is always issued by a bank.
- A financial instrument is a written legal obligation of one party to transfer something of value, usually money.
- The transaction in a financial instrument is specified to take place at a future date.
- A financial instrument specifies certain conditions.
Q25 | Securities backed by _______ layed an important role in the financial crisis of 2007- 2009?
- asset backed securities.
- bonds.
- sub-prime mortgages.
- small business loans