All financial intermediary institutions in the intermediation market O borrow in small denominations and lend in large O borrow short and lend long O buy primary securities and sell secondary securities O buy from brokers and dealers and sell to the public
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- Which of the following is not a main core function of the financial system?a. Provide a payments system for the exchange of goods and services.b. Provide mechanisms to separate funds for smaller-scale investmentc. Provide the channels to transfer funds and economic resources across industriesd. Provide ways to manage uncertainty and mitigate risk According to the market segmentation theory of the term structure,a. the interest rate for bonds of one maturity is determined by the supply and demand for bonds of that maturity.b. bonds of one maturity are not substitutes for bonds of other maturities; therefore, interest rates on bonds of different maturities do not move together over time.c. investors' strong preference for short-term relative to long-term bonds explains why yield curves typically slope downward.d. only A and B of the above. Costs associated with the correspondent bank process include:a. Interestb. Currency conversion spreadc. Reputation costsd. Payroll costsThis type of financing involves a syndicate of financial institutions to provide debt financing. SEO Shelf registration Private placement Securitization Syndicated loans Project financingWhich of the following are issued by large commercial banks that can be bought and sold among investors and carry a fixed interest rate? a. Eurodollar CD O b. Certificate of Deposits c. Commercial Papers d. Treasury Bills
- An open market operation is an instrument of monetary policy which involves buying or selling of ________from or to the public and banks: a. Bonds and Other local securities b. Debentures and Shares c. Government Securities d. None of TheseA bond issue that does NOT trade on the public market but instead is sold to a small group of investors is called a(n): O A. syndicated bond. O B. revolving line of credit. OC. syndicated bank loan. D. Eurobond. O E. prívate placement.Title Every financial market has the following characteristic: Description Function of Financial Markets 1) Every financial market has the following characteristic: A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. 2) Financial markets have the basic function of A) getting people with funds to lend together with people who want to borrow funds. B) assuring that the swings in the business cycle are less pronounced. C) assuring that governments need never resort to printing money. D) providing a risk-free repository of spending power. 3) Financial markets improve economic welfare because A) they channel funds from investors to savers. B) they allow consumers to time their purchase better. C) they weed out inefficient firms. D) eliminate the need for indirect finance.
- Match the following money market securities with their issuers. Securities Issuers a. Treasury bills 1. depository institutions b. negotiable CDs 2. U.S. government c. commercial paper 3. banks d. banker’s acceptances 4. business firms and institutionsCommercial paper markets are trading a. Municipal bonds b. Private company bonds c. Federal Reserve bonds d. Treasury bonds For a commercial bank, to calculate its profitability we may look at a. Equity Ratio b. Return on assets c. Return on investment d. US Treasury bond holdings1. Which of the following is a function of every financial market? A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. 2. Securities are for the person who purchases them, but they are for the person/firm who sells them. A) assets; liabilities B) liabilities; assets C) income; liabilities D) liabilities; expenses 3. Which of the following is/are money market instrument(s)? A) Negotiable certificates of deposits B) Common stock C) T-bonds D) 4-year maturity corporate bond 4. Who has voting rights at a shareholders' meeting? A) All common stock owners. B) Common stock owners who own more than 1% of the company. C) Only the company's managers. D) All preferred stock owners. 5. These are investments where shareholders become the owners of the portfolio of the account. These portfolios of securities could be made up of equity securities or debt securities. A)…
- Investment bank trade securities in the ? a. Secondary market b. Primary and secondary market c. Primary market d. Investment bank typacally do not trade securities2. Two depository institutions have composite CAMELS ratings of 1 or 2 and are “well capitalized.” Thus, each institution falls into the FDIC Risk Category I deposit insurance assessment scheme. Further, the institutions have the following financial ratios and CAMELS ratings: Calculate the initial deposit insurance assessment for each institution. Institution A Institution B Finanical Ratios: Leverage Ratio 8.55 8.25 Nonperforming Loans and Lease/Gross Assets 0.35 5.12 Other Real Estate owned/Gross Assets 0.42 0.75 Net Income Before taxes/ Total Assets 2.00 1.65 Brokered Deposit Ratio 82.2 76.5 One-Year Asset Growth 4.35 6.8 Loans as a Percent of Total Assets Construction & Development 0 0 Commerical & Industrial 10.56 18.68 Leases 0.65 2.15 Other Consumer 17.55 18.95 Loans to Foreign Government 0 0.6 Real Estate Loans Residual 0 0 Mutlifamily Residential 0 1.1 Nonfarm Nonresidential 0 0 1-4…The primary difference among various kinds of depository institutions is in the composition of their loan portfolios the amount of capotial they hold the amount of reserves they hold the amount of securities that they hold
