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| 1 | |
Which of the following would be categorized as a primary market transaction? |
| | A) | Jim buys 100 shares of a new stock issue offered by Google. |
| | B) | Sam sells some of his Procter & Gamble stock, online, through E-Trade. |
| | C) | Jack buys some AT&T bonds from an institutional investor. |
| | D) | Alan sells some U.S. Treasury bond that he purchased two years ago. |
| | E) | (b), (c), and (d) |
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| 2 | |
Which of the following would be categorized as a money market instrument? |
| | A) | 15-year U.S. Treasury Bond |
| | B) | 91-day U.S. Treasury Bill |
| | C) | 10-year General Motors bond |
| | D) | shares of National City Bank's stock |
| | E) | (a) and (c) |
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| 3 | |
Brown National Bank receives customer deposits averaging about $800 per deposit. The bank makes loans, averaging about $30,000 per loan. This set of information best illustrates the essence of: |
| | A) | forward market transactions |
| | B) | money market transactions |
| | C) | interest rate risk |
| | D) | denomination intermediation |
| | E) | secondary market transactions |
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| 4 | |
We might call this a market for "used" securities—the securities trading here were issued sometime earlier. This is the: |
| | A) | direct market |
| | B) | secondary market |
| | C) | indirect transfer market |
| | D) | primary market |
| | E) | capital market |
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| 5 | |
One view of a bank is that it performs a sort of surveillance function on behalf of depositors. In this view, the bank is playing the role of: |
| | A) | transmission mechanism |
| | B) | transfer agent |
| | C) | delegated monitor |
| | D) | mediator |
| | E) | IPO |
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| 6 | |
The key distinguishing feature of the ________________ is that securities of up to a year in maturity are traded there. |
| | A) | money market |
| | B) | primary market |
| | C) | capital market |
| | D) | secondary market |
| | E) | credit market |
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| 7 | |
Which of the following would not be an indirect transfer? |
| | A) | M&I Bank takes in deposits from Bill and Teresa. M&I uses most of the money to make a loan to Josephine. |
| | B) | Northwestern Mutual Life Insurance sells a life insurance policy to Sharon. The premium received by Northwestern is invested in corporate bonds. |
| | C) | Jerry buys mutual fund shares from Vanguard Mutual Funds. Vanguard uses the money to purchase stocks. |
| | D) | Jennifer lends $11,000 to George. George is scheduled to pay off the loan by making 60 equal monthly payments, covering principal and interest. |
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| 8 | |
With a _____________________ transaction, no new funds are generated for the original issuer of the security. |
| | A) | capital market |
| | B) | secondary market |
| | C) | capital market |
| | D) | indirect |
| | E) | direct |
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| 9 | |
The actual amount of U.S. dollars received on a foreign investment depends on __________________ between the U.S. dollar and the foreign currency. |
| | A) | economies of scale |
| | B) | transmission mechanism |
| | C) | speculation |
| | D) | the exchange rate |
| | E) | derivatives |
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| 10 | |
A/an __________________ is a security whose payoffs are linked to other, previously issued securities. |
| | A) | secondary security |
| | B) | primary security |
| | C) | over-the-counter security |
| | D) | derivative security |
| | E) | money market security |
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| 11 | |
Money market securities are issued by various entities for the purpose of: |
| | A) | bringing in new ownership |
| | B) | raising long-term funding |
| | C) | paying taxes |
| | D) | supplying the economy with money |
| | E) | raising short-term funding |
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| 12 | |
Among the various categories of money market instruments, which one accounts for the smallest "slice" of the money market "pie"? |
| | A) | Banker's acceptance |
| | B) | U.S. Treasury bill |
| | C) | Federal funds and repurchase agreements |
| | D) | Commercial paper |
| | E) | Negotiable CD |
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| 13 | |
Of the following institution types, which have been increasing their share of total assets in all financial institutions, since the year 2000? |
| | A) | commercial banks |
| | B) | pension funds |
| | C) | investment companies |
| | D) | (a) and (b) |
| | E) | (b) and (c) |
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| 14 | |
If an asset can be more readily converted into cash, we would say that this asset is: |
| | A) | a capital asset |
| | B) | a secondary asset |
| | C) | more liquid |
| | D) | more diversified |
| | E) | a real asset |
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| 15 | |
Suppose that a financial institution issues securities of one maturity, and uses the proceeds to buy securities of a different maturity. This sort of activity would be described as: |
| | A) | transmission of monetary policy |
| | B) | maturity intermediation |
| | C) | asset diversification |
| | D) | a direct transfer of funds |
| | E) | denomination intermediation |
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