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Exam 16: The Financial System

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Question 41

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In ____, buyers and sellers meet in a virtual stock market and trade directly with one another.

A) traditional brick-and-mortar online banking
B) nondepository financial institutions
C) open market operations
D) electronic communications networks

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Question 42

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Corporate bonds are a diverse group and often vary based on the ____ that backs it.

A) market
B) value
C) collateral
D) company

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Question 43

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Treasury bills have a minimum denomination of ____.

The Securities and Exchange Commission requires virtually all new public issues of corporate securities to be registered. As part of the registration process for a new security issue, the issuer must prepare a(n) ____.

Two types of municipal bonds exist. What are they?

Two factors determine the price of a bond: ____ and ____.

A local government agency of Nebraska issued municipal securities for the purpose of building a community hospital. Austin Hunter Corp., a financial services company, decides to purchase these securities from the government and resell them to the investing public. Which of the following describes the process undertaken by Austin Hunter Corp.?

Treasury bills have a minimum denomination of $1,000.

The _____ order is called instructs the broker to obtain the best possible price-the highest price when selling and the lowest price when buying.

Madelyn Inc., an automobile company, decides to expand its operation abroad by setting up three new manufacturing plants. Since enough funds were not available for this expansion process, Madelyn decides to list its company on its national stock exchange and issue securities for raising additional capital. The market for Madelyn's securities can be described as a _____ market.

Indirect transfer of funds occurs through _____.

Jaxon works as a senior accountant at Martinez Inc., a multinational technology giant. As a senior accountant at the company, Jaxon had exclusive access to some of the sensitive financial information of Martinez. It was later found that Jaxon had sold some of the sensitive information to a rival company for an undisclosed amount. Which of the following describes Jaxon's activity?

A _____ is a time deposit at a financial institution, such as a commercial bank, savings bank, or credit union.

The U.S. Department of Treasury sells what type of bonds?

Life insurance companies tend to invest excess funds in short-term securities, while pension funds tend to invest excess funds in long-term securities.

MATCHING Complete the following using the terms listed. -____ represent obligations on the part of issuers to provide purchasers with expected or stated returns on the funds invested or loaned.

Deposit insurance shifts most of the financial risk of bank failures from depositors to ________.

A town is considering putting in a toll road that will produce revenue for the town. To provide funding, the town will sell revenue bonds.

Bonds are issued in various denominations-face values-usually between $100 and $2,500.

Issuers tend to call bonds when market interest rates are declining.