Quiz chapter 8 Money Markets Flashcards Preview

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Flashcards in Quiz chapter 8 Money Markets Deck (19):
1

1. The money markets are a collection of markets, each trading a distinctly different financial
instrument in a central exchange market.
a. True
b. False

F

2

2. Dealers and brokers buy securities for their own positions and sell from their security inventories
when a trade takes place.
a. True
b. False

F

3

3. Treasury bills are sold on a discount basis, with interest paid separately at maturity.
a. True
b. False

F

4

4. The money markets are wholesale markets involve in large transactions.
a. True
b. False

T

5

5. For large corporations, commercial paper is more expensive but is a more assured alternative to
bank borrowing.
a. True
b. False

F

6

6. Commercial paper is more likely to be placed directly by large finance companies.
a. True
b. False

T

7

7. The most important economic function of the money market is to provide an efficient means for
economic units to adjust their liquidity positions.
a. True
b. False

T

8

8. Bank Accepted Bills (BAB) are used primarily for financing international trade.
a. True
b. False

T

9

9. Consumers most often have only indirect access to the money market through commercial banks.
a. True
b. False

F

10

10. The money market is a dealer market, not an exchange, and has no specific location.
a. True
b. False

T

11

11. Money market borrowers are small in number compared to money market lenders.
a. True
b. False

T

12

12. T-notes are considered risk free with little price risk because they are guaranteed by the
government.
a. True
b. False

T

13

13. Commercial banks are the major issuer and investor of money market securities.
a. True
b. False

T

14

14. A negotiable CD is a bank deposit that can be traded in the secondary market before its maturity.
a. True
b. False

T

15

15. Dealers bring buyer and seller together; brokers make a market.
a. True
b. False

F

16

16. Lower marginal tax rates increase the demand for tax-exempt securities.
a. True
b. False

F

17

17. Semi-government securities are securities issued by state and territory borrowing authorities.
a. True
b. False

F

18

18. T-notes are sold to investors on a discount basis because they are backed by the government
a. True
b. False

F

19

19. Reverse repos are contracts that require a firm to first sell securities with the agreement to buy
them back in a short period at a higher price.
a. True
b. False

F