Financial Markets And Institutions

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Question 1

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Only small companies can go through financial markets to obtain financing.

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Question 2

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The reinvestment of cash back into the firm's operations is an example of a flow of savings to investment.

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Question 3

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Smaller businesses are especially dependent upon internally generated funds.

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Question 4

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An individual can save and invest in a corporation by lending money to it or by purchasing additional shares.

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Question 5

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Previously issued securities are traded among investors in the secondary markets.

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Question 6

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Only the IPOs for large corporations are sold in primary markets.

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Question 7

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Hedge fund managers,unlike mutual fund managers,do not receive fund-performance-related fees.

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Question 8

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The markets for long-term debt and equity are called capital markets.

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Question 9

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The stocks of major corporations trade in many markets throughout the world on a continuous or near-continuous basis.

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Question 10

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The market for derivatives is also a source of financing for corporations.

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Question 11

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During the Financial Crisis of 2007-2009,the U.S.government bailed out all firms in danger of failing.

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Question 12

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In the United States,banks are the most important source of long-term financing for corporations.

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Question 13

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A financial intermediary invests in financial assets rather than real assets.

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Question 14

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Households hold directly three quarters of U.S.corporate equities.

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Question 15

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The key to the banks' ability to make illiquid loans is their ability to pool liquid deposits from thousands of depositors.

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Question 16

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From June 2001 to June 2006,house prices in the United States rose sharply.

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Question 17

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For corporate bonds,the higher the credit quality of an issuer,the higher the interest rate.

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Question 18

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The cost of capital is the interest rate paid on a loan from a bank or some other financial institution.

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Question 19

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Like public companies,private companies can also use their stock price as a measure of performance.

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Question 20

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The opportunity cost of capital is the expected rate of return that shareholders can obtain in the financial markets on investments with the same risk as the firm's capital investments.

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