FIN 385-‐ANALYSIS OF FINANCIAL MARKETS & INSTITUTIONS Quiz 1 & 2
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quiz_1__2.docxQuestion 11 pts
If financial markets were ____, all information about any securities for sale in primary and secondary markets would be continuously and freely available to investors.
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imperfect |
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efficient |
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perfect |
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inefficient |
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Question 21 pts
Without the participation of financial intermediaries in financial market transactions,
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transaction costs would be higher but information costs would be unchanged. |
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information and transaction costs would be higher. |
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information and transaction costs would be lower. |
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information costs would be higher but transaction costs would be unchanged. |
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Question 31 pts
When a securities firm acts as a broker, it
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purchases securities for its own account. |
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makes a market in specific securities by adjusting its own inventory. |
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guarantees the issuer a specific price for newly issued securities. |
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executes transactions between two parties. |
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Question 41 pts
____ securities have a maturity of one year or less; ____ securities are generally more liquid.
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Money market; capital market |
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Capital market; capital market |
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Money market; money market |
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Capital market; money market |
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Question 51 pts
Which of the following transactions would not be considered a secondary market transaction?
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An institutional investor sells some Disney stock through its broker. |
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A firm that was privately held engages in an offering of stock to the public. |
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All of the above are secondary market transactions. |
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An individual investor purchases some existing shares of stock in IBM through his broker. |
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Question 61 pts
The equilibrium interest rate should
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fall when the aggregate supply funds exceeds aggregate demand for funds. |
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B and C |
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fall when the aggregate demand for funds exceeds aggregate supply of funds. |
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rise when the aggregate supply of funds exceeds aggregate demand for funds. |
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rise when aggregate demand for funds equals aggregate supply of funds. |
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Question 71 pts
Which of the following is likely to cause a decrease in the equilibrium U.S. interest rate, other things being equal?
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pessimistic economic projections that cause businesses to reduce expansion plans |
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a decrease in savings by U.S. households |
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an increase in inflation |
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a decrease in savings by foreign savers |
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Question 81 pts
The level of installment debt as a percentage of disposable income is generally ____ during recessionary periods.
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higher |
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lower |
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negative |
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zero |
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Question 91 pts
Due to expectations of lower inflation in the future, we would typically expect the supply of loanable funds to ____ and the demand for loanable funds to ____.
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increase; decrease |
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decrease; decrease |
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increase; increase |
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decrease; increase |
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Question 101 pts
Which of the following is least likely to affect household demand for loanable funds?
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an increase in interest rates |
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a decrease in tax rates |
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a reduction in positive net present value (NPV) projects available |
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All of the above are equally likely to affect household demand for loanable funds. |
