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CHAPTER 2 FINANCIAL MARKETS AND INSTITUTIONS

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Question;Multiple Choice: True/False;(2-1) Financial intermediaries F H;[i]. A financial intermediary is a corporation;that takes funds from investors and then provides those funds to those who need;capital. A bank that takes in demand;deposits and then uses that money to make long-term mortgage loans is one;example of a financial intermediary.;a. True;b. False;(2-2) Financial markets F H;[ii]. The NYSE is defined as a "spot;market purely and simply because it has a physical location. The Nasdaq, on the other hand, is not a spot;market because it has no one central location.;a. True;b. False;(2-2) Financial markets F H;[iii]. The NYSE is defined as a "primary;market because it is one of the largest and most important stock markets in the;world.;a. True;b. False;(2-2) Financial markets F H;[iv]. Primary markets are large and important;while secondary markets are smaller and less important.;a. True;b. False;?;(2-2) Financial markets F H;[v]. Private markets are those like the NYSE;where transactions are handled by members of the organization, while public;markets are those like the Nasdaq, where anyone can make transactions.;a. True;b. False;(2-2) Financial markets F H;[vi]. A share of common stock is not a derivative;but an option to buy the stock is a derivative because the value of the option;is derived from the value of the stock.;a. True;b. False;(2-3) Financial institutions F H;[vii]. Financial institutions are more diversified;today than they were in the past, when federal laws kept investment banking;houses, commercial banks, insurance companies, and similar organizations quite;separate. Today the larger financial;corporations offer a variety of services, ranging from checking accounts, to;insurance, to underwriting securities, to stock brokerage.;a. True;b. False;(2-3) Financial institutions F H;[viii]. Hedge funds are somewhat similar to mutual;funds. The primary differences are that;hedge funds are less highly regulated, have more flexibility regarding what;they can buy, and restrict their investors to wealthy, sophisticated individuals;and institutions.;a. True;b. False

 

Paper#55048 | Written in 18-Jul-2015

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