Money and Banking

Question 1

markets in which funds are
transferred from people and firms who have an
excess of available funds to people and firms who
have a need of fund

Answer 1

Financial Markets

Question 2

reduce the
cost of providing intermediation services and
developing derivatives

Answer 2

Financial Innovations

Question 3

provide risk

reduction.

Answer 3

Derivatives

Question 4

is anything that can be used to store

wealth.

Answer 4

Asset

Question 5

is a claim on

the issuer’s future income or assets.

Answer 5

Securitiy

Question 6

is a debt security that promises to make
periodic payments for a specified time and then
return the principal.

Answer 6

Bond

Question 7

is the cost of borrowing or the

the price paid for the rental of money

Answer 7

Interest Rate

Question 8

represents a share of
ownership in a corporation and that conveys
voting rights in electing the corporate Board
of Directors.

Answer 8

Common Stock

Question 9

have no voting rights

attached and so are more like bonds.

Answer 9

Preferred Stock

Question 10

is a claim on the residual

earnings and assets of the corporation

Answer 10

A share of stock