PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Textbook Question
Chapter 14, Problem 10PS
Financial markets and intermediaries. True or false?
- a. Financing for public corporations must flow through financial markets.
- b. Financing for private corporations must flow through financial intermediaries.
- c. Almost all foreign exchange trading occurs on the floors of the FOREX exchanges in New York and London.
- d. Derivative markets are a major source of finance for many corporations.
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Which of the following is true of the current state of financial regulation for financial institutions (FIs)?
Most banks can transfer risk on a greater scale and in more complex ways than before.
Most FIs now conduct virtual global business, reducing the influence of very large FIs.
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Most securities exchanges have required majority ownership by resident nationals.
Investment banks are involved in the provision
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Provide payment collection services such
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Trading of stocks, bonds, and other
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portfolio and on behalf of their clients.
Providing credit facilities to corporate
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Mobilizing international capital flows.
Which of the following statements is NOT true?
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Debt contracts tend to impose more restrictions on the actions of the borrower than the lender
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Larger corporations have easier access to the securities market
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The financial sector is one of the least regulated industries in the US economy
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Chapter 14 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 14 - Terminology Fill in the blanks, using the...Ch. 14 - Prob. 2PSCh. 14 - Sources of funds True or false? a. Net stock...Ch. 14 - Prob. 4PSCh. 14 - Company ownership What do we mean when we say that...Ch. 14 - Prob. 6PSCh. 14 - Prob. 7PSCh. 14 - Prob. 8PSCh. 14 - Corporate debt Which of the following features...Ch. 14 - Financial markets and intermediaries. True or...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Financial Market is a market in which financial assets (securities) such as stocks and bonds can be purchased or sold. Assess the following statements: I. The financial markets serve as the mechanism whereby corporations (acting as deficit units) can obtain funds from investors (acting as surplus units). II. Financial institutions serve as intermediaries to connect the investment management activity with the corporate finance activity. II. Once financial instruments such as stocks are issued in primary markets, they are then traded-that is, repurchased and resold-in secondary markets. IV. Secondary markets help support primary markets because secondary markets reduce the cost of trading the primary market claims O All of the statements are correct. O Only one statement is correct. O Two statements are correct. Three statements are correct.arrow_forwardT or F Organized security exchanges provide several benefits to both corporations and investors. They (l) provide a continuous market, (2) establish and publicize fair security prices, and (3) help businesses raise new financial capital. Financial intermediary issues its own type of security which is called an indirect security. Securities are first offered for sale in a primary market. These transactions increase the total stock of financial assets in existence in the economy.arrow_forwardWhich of the following statements is CORRECT? A. Capital market instruments include both mortgages and U.S. Treasury bonds. B. An example of a primary market transaction would be your uncle transferring 100 shares of Wal-Mart stock to you as a birthday gift. C. The NYSE does not exist as a physical location. Rather it represents a loose collection of dealers who trade stock electronically. D. While the two frequently perform similar functions, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise large blocks of capital from investors.arrow_forward
- A U.S. company has the following choices of financial markets in which to raise capital. Which one will it most often prefer? a.foreign bond b.domestic banks c.foreign bank d.a new issue of common stockarrow_forward1. Discuss the significance of an active secondary market to both issuers of securities and to investors.2. Why are investors and managers concerned about efficiency of the capital market?3. Discus the role of the Muscat Securities Market in bringing out development of the Industrial sector Oman. 4. Discuss the money market instruments role in the financial system with suitable example.arrow_forwarda. “Financial intermediaries play a crucial role in an economic crisis–they are responsible for both causing the market to crash and then helping it recover from the crisis.” Is this statement true? Discuss with an example. b. Discuss the role of banks as financial institutions that fuel the economic growth of a nation.arrow_forward
- Financial institutions engage in the purchasing and selling of foreign currencies for all of the following reasons except to: a. Hedge against foreign exchange exposures. b. Allow customers access to foreign markets to transact business. c. Avoid trading in speculative investments. d. Allow itself and/or customers to trade and invest in foreign financial markets.arrow_forwardAn 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 Thesearrow_forwardWhat is the role of regulators in the financial markets? Why are financial assets important to growth of an economy? In what ways do exchanges reduce contracting costs and risks? Is trading in an OTC market more risky for a trader than trading in an exchange? How so? What is the difference between Fed funds rate and the discount window rate?arrow_forward
- Why do financial institutions engage in foreign exchange trading activities? Discuss the motivations with examples.arrow_forwardThe financial account is divided into three subcategories: direct investment, portfolio investment, and other investment. Portfolio investment involves acquisitions of controlling interests in foreign businesses. O investments in foreign stocks and bonds that do not involve acquisitions of control. bank deposits, currency investment, trade credit, and the like. O All of the abovearrow_forwardThe is an over-the-counter market with participants (buyers and sellers) located in major commercial and investment banks around the world. OÀ. purchasing power parity O B. exchange rate parity OC. interest rate market O D. foreign exchange marketarrow_forward
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Securities Markets and Transactions Pt1; Author: Larry Byerly;https://www.youtube.com/watch?v=v0ClVlaxWFY;License: Standard Youtube License