Retake

Question 1

It involves the sale and purchase (at a future date) of an asset or security.

Answer 1

Repo / Repurchase Agreements

Question 2

Why U.S. Treasury Bills considered the safest of all money market instruments?

Answer 2

There is almost no possibility of default (?)

Question 2

Which of the following statements is the most accurate on Negotiable Bank Certificate of Deposit?

• The minimum face value required is generally USD100,000
• The bank issuing it guarantees the security and is likely to arrange for its sale in a secondary market.
• Cannot be cashed until the security has reached full maturity
• All of the above

Answer 2

All of the above

Question 2

Which is not a benefit to the investor owning a corporation’s equity?

Answer 2

Residual Claimant

Question 2

Who is the lender in the Fed Funds market?

Answer 2

Banks

Question 3

Secondary markets make securities more liquid and thus easier to sell in the __________.

Answer 3

Primary Market

Question 4

The difference between direct finance and indirect finance:

Answer 4

ung option na may securities

Question 5

These are sold in a foreign country and are denominated in that country’s currency.

Answer 5

Foreign Bonds

Question 6

Corporate stocks and corporate bonds are capital market instruments.

Answer 6

Corporate Stocks - True
Corporate Bonds - True

Question 7

U.S. Government Securities are long-term bonds issued by various government agencies such as Ginnie Mae; US Government Agency Securities are also called Municipal Bonds. The statements for both US Government Securities and US Government Agency Securities are:

Answer 7

False ; False

Question 8

Which of the following statements on US Treasury Bills is the most accurate?

Question 9

A Bank’s guarantee of payment in a banker’s acceptance means:

Answer 9

the bank’s guarantee means that it is obligated to make good on the draft

Question 10

An Australian company that issued a Eurobond in Japan that is denominated in US dollars may __________________.

Answer 10

issue the bond on any country outside the US

Question 11

A bond denominated in US dollars and sold in Dubai is an example of a _______________

Answer 11

Eurodollar Bond

Question 12

ABC Bank’s loss, when the coffee shop owner it lent money to decided to invest the company’s money in risky stocks, was due to:

Answer 12

Moral Hazard

Question 13

T or F. A Eurobond is issued in a currency other than the currency of the country or market in which it is issued.

Answer 13

TRUE

Question 14

T or F. A Eurobond is issued by an international syndicate categorized according to the currency in which it is denominated.

Answer 14

True

Question 15

T or F. A Eurodollar bond denominated in U.S. dollars and issued in Japan by an Australian company would be an example of a Eurobond.

Answer 15

True

Question 16

Common stocks are usually traded in ______ while the US government bond market is set up as a/an _______ market.

Answer 16

Over-the-counter Market ; Exchange

Question 17

Rank the following money market instruments in terms of their liquidity and their safety. 1) Commercial Paper, 2) Negotiable CD, 3) Repurchase Agreement, 4) US Treasury bill.

Answer 17

4231 (T-bills, NCDs, Repo, Commercial Paper)

Question 18

All the financial intermediaries below are depository institutions, except:

Answer 18

Depository institutions are Commercial Banks, S&L, Mutual Savings Bank, & Credit Unions

Question 19

A firm can obtain funds from the financial market in the following ways except

Answer 19

Withdraw

Question 20

It is the risk that the borrower might engage in activities that are undesirable from the lender’s point of view because they make it less likely that the loan will be paid back

Answer 20

Moral Hazard

Question 21

A Eurodollar Bond denominated in US Dollars and issued in Japan by an Australian company.

Answer 21

Eurobond

Question 22

Money Market is a financial market wherein debt instruments (with original maturity of less than one year) are traded while Capital Market is the market where longer than one year debt instruments and equities are traded. The statements for both Money Market and Capital Market are:

Answer 22

- Money Market: True - Capital Market: True

Question 23

Repurchase Agreements are collateralized short-term loans and Federal Funds are overnight loans with Federal Reserve. The statements are:

Answer 23

- Repurchase Agreement: True - Federal Funds: False Banks to banks dapat hindi Federal Reserve

Question 24

US Government Agency Securities are also called Municipal Bonds; US Government Securities are long-term bonds issued by state and local governments to finance large projects.

Answer 24

- US GOVERNMENT AGENCY SECURITIES: False - US GOVERNMENT: False

Question 25

Distinguishing Features ni External Bond Market

Answer 25

All of the above

Question 26

Reasons for regulating financial markets

Answer 26

All of the above

Question 27

Why would you lend to a fam member than a stranger?

Answer 27

- Less Asymmetrical information - Less likely to have an adverse selection

Question 28

Bank A owes Bank B some amount, what kind of market is this?

Answer 28

Money Market

Question 29

Treasury as a collateral for what instrument?

Answer 29

Repo

Question 30

Crucial Personalities that match buyers and sellers …..

Answer 30

Brokers Sellers

Question 31

Problem created by asymmetric information before the transaction occurs

Answer 31

Adverse Selection