This website uses cookies to ensure you have the best experience. Learn more

Financial Markets And Institutions Essay

1671 words - 7 pages


1. You recently sold 100 shares of Microsoft stock to your brother at a family reunion. At the reunion your brother gave you a check for the stock and you gave your brother the stock certificates. Which of the following best describes this transaction?

a. This is an example of a direct transfer of capital.
b. This is an example of a primary market transaction.
c. This is an example of an exchange of physical assets.
d. This is an example of a money market transaction.
e. This is an example of a derivative market transaction.
Answer: a

2. Which of the following ...view middle of the document...

An investment banker arranges the transaction.
e. IBM sells 2,000,000 shares of treasury stock to its employees when they exercise options that were granted in prior years.
Answer: c

4. Which of the following is an example of a capital market instrument?

a. Commercial paper.
b. Preferred stock.
c. U.S. Treasury bills.
d. Banker's acceptances.
e. Money market mutual funds.
Answer: b

5. Money markets are markets for

a. Foreign currencies.
b. Consumer automobile loans.
c. Common stocks.
d. Long-term bonds.
e. Short-term debt securities such as Treasury bills and commercial paper.
Answer: e

6. Which of the following statements is CORRECT?

a. If you purchase 100 shares of Disney stock from your brother-in-law, this is an example of a primary market transaction.
b. If Disney issues additional shares of common stock through an investment banker, this would be a secondary market transaction.
c. The NYSE is an example of an over-the-counter market.
d. Only institutions, and not individuals, can engage in derivative market transactions.
e. As they are generally defined, money market transactions involve debt securities with maturities of less than one year.
Answer: e

7. You recently sold 200 shares of Disney stock, and the transfer was made through a broker. This is an example of:

a. A money market transaction.
b. A primary market transaction.
c. A secondary market transaction.
d. A futures market transaction.
e. An over-the-counter market transaction.
Answer: c

8. Which of the following statements is CORRECT?

a. Hedge funds are legal in Europe and Asia, but they are not permitted to operate in the United States.
b. Hedge funds are legal in the United States, but they are not permitted to operate in Europe or Asia.
c. Hedge funds have more in common with investment banks than with any other type of financial institution.
d. Hedge funds have more in common with commercial banks than with any other type of financial institution.
e. Hedge funds are not as highly regulated as most other types of financial institutions. The justification for this light regulation is that only "sophisticated" investors (i.e., those with high net worths and high incomes) are permitted to invest in these funds, and such investors supposedly can do any necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.
Answer: e

9. Which of the following statements is CORRECT?

a. While the distinctions are becoming blurred, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise capital from other parties.
b. The NYSE operates as an auction market, whereas Nasdaq is an example of a dealer market.
c. Money market mutual funds usually invest their money in a well-diversified portfolio of liquid common stocks.
d. Money markets are markets for long-term debt and...

Other Papers Like Financial Markets and Institutions

Term Paper of Financial Market


Financial Systems Essay

2477 words - 10 pages financial system could be defined at an international, regional or organization level. The term “system” in “Financial System” indicates a group of complex and closely linked institutions, agents, procedures, markets, transactions, claims and liabilities within a economy. Five Basic Components of Financial System * Financial Institutions * Financial Markets * Financial Instruments (Assets or Securities) * Financial Services * Money

Fins Bank

2455 words - 10 pages ’ holdings of foreign currency deposits. – Banks enabled to access funding in Eurodollar markets. Copyright  2007 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Institutions Management 2e, by Lange, Saunders, Anderson ,Thomson and Cornett Slides prepared by Maike Sundmacher 1-12 Balance Sheet and Recent Trends: Banks • Large drop of liabilities raised through Australian dollar deposits due to retail savings growth in superannuation

Universal Banking

1344 words - 6 pages stable, both banks and depositors should be insured against disruptive shocks. Under a safety net, depositors are guaranteed that their deposits are secure in the banks while the financial institutions are protected against such shocks as bank runs. Safety nets in the LMICs are also designed to mitigate one of the major institutional voids of the developing markets – lack of information. Consumers are often unable to protect themselves the way they

Islamic Banking Instituitions

2040 words - 9 pages ASSIGNMENT#1 Submitted By: Saadia 1. Accounting and Auditing Organization for Islamic financial institution (AAOIFI) The AAOIFI is a non-profit organization that focuses mainly on the area of accounting and auditing for Islamic financial institutions. While recognizing the need for standards, AAOIFI was established on February 1990 in Algeria and was registered on March 1991 in the kingdom of Bahrain. The organization is supported by 200

Warm Up Excercise

782 words - 4 pages financial institutions but also demand funds from them in the form of loans. However, individuals as a group are the net suppliers for financial institutions: They save more money than they borrow. What do you think the consequences might be in financial markets if individuals consumed more of their incomes and thereby reduced the supply of funds available to financial institutions? If individuals consumed more financial institutions

Money and Capital Market

797 words - 4 pages and capital markets Categories of Financial Institutions Financial Model Flow of goods and services and flow of funds L abour In co m e H o u s e h o ld s B u s in e s s G o o d s & S e r v ic e s E x p e n d itu r e S a v in g s In v e stm e n t F in a n c ia l I n s tr u m e n ts Finance Households or individuals (C), business (I) and government (G) access finance to meet funding needs. Linked with macroeconomic (real

Complexities of the Us Financial System

1250 words - 5 pages expanded to take into account the extensive changes in financial institutions, payments processes and markets. The Federal Reserve includes 12 regional Federal Reserve banks, each which oversees member banks in its region that provide banking services to depository institutions and to the federal government. (The Federal Reserve in the US Payment System, 2013) The primary purpose of the Federal Reserve is to regulate the United States

Corp Finance

845 words - 4 pages acquire financial assets. Business saving may be used to invest in capital or inventories or to acquire financial assets. III. Introducing the financial system—Depository institutions and other types of intermediaries A. The financial system consists of financial markets and financial intermediaries. Financial markets are markets where spending units trade financial claims. Direct finance is when net lenders lend

Commercial Banks

481 words - 2 pages are the largest group of financial institutions within a financial system andhence central to facilitating the flow of funds between savers and borrowers. Because of thewide range of services that they provide, most businesses, individuals and governmentsconsider them indispensable. 2.‘Banks have always been the dominant institutions within the financial system, but their relative importance has fluctuated due, in part, to changes in the

East Asian Crisis

1015 words - 5 pages East Asian Crisis Financial crisis is a situation in which some financial institutions or assets suddenly lose a large part of their value. East Asian crisis was a series of currency devaluations and other events that spread through many East Asian countries beginning in the summer of 1997. The countries majorly affected by this were: 1. 2. 3. 4. 5. 6. South Korea Japan Thailand Indonesia Malaysia Philippines The countries at the center of

Related Essays

Financial Markets And Institutions Essay

1073 words - 5 pages other manner, or lending in any manner.  The deposit received do not involve installment, asset financing or loans.These are registered as NBFC with the RBI.  Merchant banks  Financial advice and services, marketing of corporate securities, underwriting, loan syndication, project finance etc.  Venture Capital Funds  Funds, Management and marketing expertise, capital gainstechnology and markets eg. VCF of IDBI, VCF of UTI  Factors

Testbank Of Foundations Of Financial Markets And Institutions, 4e (Fabozzi/Modigliani/Jones)

5107 words - 21 pages Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones) Chapter 2 Financial Institutions, Financial Intermediaries, and Asset Management Firms Multiple Choice Questions 1 Financial Institutions 1) Financial enterprises, more popularly referred to as financial institutions, provide a variety of services. Which of the below is NOT one of these? A) Transform financial assets acquired through the market and

Roles Of International Financial Institutions Essay

1203 words - 5 pages .  It will be less risky for countries to join the international markets and use global financing methods because the volatility of exchange rates and asset prices in international financial markets can cause significant regulatory and economic challenges to the emerging markets as well as the established ones. International financial institutions like the International Monetary Fund (IMF) provide loans to help its members in times of financial

Marketing Essay

723 words - 3 pages  those who provide funds for those investments. ● Liquidity: Financial markets provide the holders of financial assets with a chance to resell or liquidate these assets. ● Efficiency: Financial markets reduce transaction costs and information costs. In attempting to characterize the way financial markets operate, one must consider both the various types of financial institutions that participate in such markets and the various ways