Financial Markets And Institutions Set 9
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This set of Financial Markets and Institutions Multiple Choice Questions & Answers (MCQs) focuses on Financial Markets And Institutions Set 9
Q1 | Which of the following can be described as involving direct finance?
- A corporation’s 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.
- None of the above.
Q2 | Which of the following can be described as involving direct finance?
- A corporation’s 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 (B) and (C) of the above.
Q3 | 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.
Q4 | Which of the following 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 (B) and (C) of the above.
Q5 | Financial markets improve economic welfare because
- they 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 (A) and (B) of the above.
Q6 | Which of the following are securities?
- A certificate of deposit
- A share of Texaco common stock
- A Treasury bill
- All of the above
Q7 | Which of the following statements about the characteristics of debt and equity are true?
- They can both be long-term financial instruments.
- They both involve a claim on the issuer’s income.
- They both enable a corporation to raise funds.
- All of the above
Q8 | Which of the following are long-term financial instruments?
- A negotiable certificate of deposit
- A banker’s acceptance
- A U.S. Treasury bond
- A U.S. Treasury bill
Q9 | Which of the following are short-term financial instruments?
- A negotiable certificate of deposit
- A banker’s acceptance
- A U.S. Treasury bond
- Both (A) and (B) of the above
Q10 | Which of the following are short-term financial instruments?
- A banker’s acceptance
- A share of Walt Disney Corporation stock
- A Treasury note with a maturity of 4 years
- All of the above
Q11 | Which of the following are primary markets?
- The New York Stock Exchange
- The U.S. government bond market
- The over-the-counter stock market
- None of the above
Q12 | Which of the following are secondary markets?
- The New York Stock Exchange
- The U.S. government bond market
- The over-the-counter stock markets
- All of the above
Q13 | A corporation acquires new funds only when its securities are sold
- in the secondary market by an investment bank.
- in the primary market by an investment bank.
- in the secondary market by a stock exchange broker.
- in the secondary market by a commercial bank.
Q14 | Intermediaries who are agents of investors and match buyers with sellers of securities are called
- investment bankers.
- traders
- brokers
- dealers.
Q15 | Intermediaries who link buyers and sellers by buying and selling securities at stated prices are called
- investment bankers.
- traders
- brokers
- dealers
Q16 | An important financial institution that assists in the initial sale of securities in the primary market is the
- investment bank
- commercial bank.
- stock exchange.
- brokerage house
Q17 | Which of the following statements about financial markets and securities are true?
- Most common stocks are traded over-the-counter, although the largest corporations 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.
Q18 | The lending ability of commercial bank increases when
- Reserve ratio is increased
- RBI credit is reduced
- RBI sells government securities
- None of the above
Q19 | RBI issues currency noted under
- Minimum reserve system
- Proportional reserve system
- Maximum issue system
- None of the above
Q20 | Which of the following markets is sometimes organized as an over-the-counter market?
- The stock markets
- The bond markets
- The foreign exchange markets
- all of the above
Q21 | Which of the following instruments is not traded in a money market?
- Banker’s acceptances
- U.S. Treasury Bills
- Eurodollars
- None of the above
Q22 | Which of the following instruments is not traded in a money market?
- Banker’s acceptances
- U.S. Treasury Bills
- Eurodollars
- Residential mortgages
Q23 | Which of the following instruments are traded in a capital market?
- U.S. government agency securities
- Negotiable bank CDs
- Repurchase agreements
- Eurodollars
Q24 | Which of the following instruments are traded in a capital market?
- Corporate bonds
- U.S. Treasury bills
- Banker’s acceptances
- Repurchase agreements
Q25 | Bonds that are sold in a foreign country and are denominated in that country’s currency are known as
- Foreign bonds.
- Eurobonds.
- Eurocurrencies.
- Eurodollars.