Question 1

For any business, individual or government, wealth is:

Accepted Answer

Wealth encompasses all assets a business, individual, or government has accumulated and currently holds, including cash. This definition covers both tangible and intangible assets, making options A, B, and C correct.

Question 2

At the end of last year the wealth was $48,000, with a return on the accumulated wealth was 2% during this year and $1700 was saved this year. At the end of this year the accumulated wealth is:

Accepted Answer

The wealth at the end of last year was $48,000. With a 2% return on this amount, the wealth increases by $48,000 * 0.02 = $960. Adding the $1700 saved this year, the total increase is $960 + $1700 = $2660. Therefore, the accumulated wealth at the end of this year is $48,000 + $2660 = $50,660.

Question 3

Wealth created income results in:

Accepted Answer

Wealth created income often leads to new savings as individuals have more disposable income to save, and increased consumption as they can afford to buy more goods and services.

Question 4

Every year the volume of financial wealth is growing in the United States. In 2009 the total securities, deposits and other financial assets held by domestic nonfinancial businesses, households, the US government and foreign investors was:

Accepted Answer

In 2009, the total securities, deposits, and other financial assets held by domestic nonfinancial businesses, households, the US government, and foreign investors was $67 trillion.

Question 5

Perfect liquidity is a trait held by the following:

Accepted Answer

Money is considered to have perfect liquidity because it can be easily and quickly converted into goods or services without a loss in value. Stocks, bonds, and even 30-year U.S. Treasury bonds, while relatively liquid, do not possess perfect liquidity due to potential price fluctuations and the time it may take to convert them into cash.

Question 6

When a purchaser is issued a bill online and can make payments online, this is referred to as:

Accepted Answer

Electronic bill presentment is the process where bills are issued and can be paid online, fitting the description provided. Stored value cards, contactless payment devices, ATM cards, and credit cards are all methods of payment but do not specifically refer to the online issuance and payment of bills.

Question 7

In the financial marketplace, secondary markets provide:

Accepted Answer

Secondary markets provide liquidity by allowing investors to buy and sell existing securities. They also offer similar returns to the primary market, where securities are first issued.

Question 8

Lower savings rates in the United States could be due to:

Accepted Answer

All the options provided can contribute to lower savings rates in the United States. Low unemployment and long periods of prosperity can lead to increased consumer confidence and spending, reducing the perceived need to save. Lack of direct experience of the Great Depression might result in less caution and lower savings rates, as the lessons of extreme economic hardship are not personally felt. Lastly, if the value of homes has risen substantially, homeowners might feel wealthier (due to increased home equity) and thus be more inclined to spend rather than save.

Question 9

Please classify the following financial transactions as to whether they fit in (a) the money market or the capital market; (b) the primary or secondary market; (c) the open or negotiated market; and (d) the spot or futures/forward market. (Note: The transactions below may fit in more than one of the above categories of markets. Be sure to include all the appropriate types of markets that each transaction fits.)
a. You visit a local bank today and secure a three-year loan to finance the purchase of a new car and some furniture.
b. You purchase a new U.S. Treasury bill through the Federal Reserve bank in a neighboring city for delivery today.
c. Responding to a rise in the price of Texaco common stock, you have just purchased 100 shares of that company's stock through a phone call to your broker who is linked to a major stock exchange.

Accepted Answer

The answer of Please classify the following financial transactions as...

Question 10

What functions of the financial system of markets and institutions do the following transactions illustrate or represent? (Note: Some transactions may involve more than one function. Be sure to identify all the financial system functions involved in each transaction.)
a. James Rhodes purchases health and accident insurance policies through the company where he works. 
b. Sharon MacArthur uses her credit card to purchase wallpaper for a home remodeling project. 
c. Fearing a slowdown in the rate of economic growth and increased joblessness, the Federal Reserve System and the Bank of England move to lower interest rates.

Accepted Answer

The answer of What functions of the financial system of...

Question 11

What functions of the financial system do the following transactions illustrate or represent? (Note: Some transactions may involve more than one function. Be sure to identify all the financial system functions involved in each transaction.)
a. Dynamic Corporation places some of its current earnings in a bank CD, anticipating a need for funds in about a year in order to build a new warehouse. 
b. The Italian government sells new bonds in the open market to cover a large budget deficit.
c. Cal and Jane Lewis hope to put their three young children through college someday. Accordingly, they begin buying U.S. savings bonds.
d. Needing immediate spending power, Hillcrest Corporation sells its holdings of Denton County bonds through a security broker.

Accepted Answer

The answer of What functions of the financial system do...

Question 12

In a recent year the following amounts of money market and capital market instruments - loans and securities - were issued and outstanding in the United States. Based on the discussion in this chapter classify each of the instruments as to whether they usually qualify as (a) a money market instrument or (b) a capital market instrument. If the listed instruments represent all U. S. money and capital market instruments outstanding, what was the total dollar size of the U.S. money market? The total size of the U.S. capital market?

Accepted Answer

The answer of In a recent year the following amounts...

Question 13

What roles of the global system of financial markets and institutions are being described in the items listed below?
a. Exxon Corporation issues new shares of stock to finance its expansion into foreign markets. 
b. The Williams family withdraws its bank deposit in order to purchase new furniture for their new home.
c. Robert Enlow plans to purchase a new home in three years, but in the interim, he makes a loan to a friend who needs ready cash for a down payment on an automobile.

Accepted Answer

The answer of What roles of the global system of...

Question 14

What roles of the global system of financial markets and institutions are being described in the items listed below?
a. Deutsche Bank develops and offers to its customers a new savings plan that combines traditional bank deposits with the availability of shares in a growth-oriented mutual fund.
b. Randy Bose plans to retire in 18 months but elects to loan a portion of his long-term savings to his son Robert who is starting a new business and has recently married. 
c. The Greater Asia Insurance Corporation has managed to attract $100 million in annuity investments from savers over the past six months and plans to make a loan to Eastman Hotel Corporation, which is beginning construction on a series of luxury resorts in Honolulu and Singapore.

Accepted Answer

The answer of What roles of the global system of...

Question 15

What concept, institution or instrument is described by each of the phrases or sentences listed below?
a. Trading of loans and securities in which any individual or institution can participate. 
b. Mechanisms set up by society to trade newly issued loans and securities. 
c. Set up to channel temporary cash surpluses into temporary loans. 
d. Immediately spendable cash. 
e. Assets minus liabilities held by an economic unit.

Accepted Answer

The answer of What concept, institution or instrument is described...

Question 16

What concept, institution or instrument is described by each of the phrases or sentences listed below?
a. Expenditures on capital goods or raw materials.
b. Current earnings retained in a business. 
c. Funds left over out of current income after deducting current consumption expenditures. 
d. An institutional mechanism for trading goods and services. 
e. Collection of markets, individuals, institutions, laws and regulations through which financial services are produced and delivered.

Accepted Answer

The answer of What concept, institution or instrument is described...

Question 17

What concept, device or instrument is described by each of the phrases or sentences listed below?
 a. On payday, many workers are receiving this negotiable item instead of a traditional paycheck. 
b. Funds that are transferred electronically from the payor's account to the account of the payee. 
c. Provides the holder access to cash, the ability to transfer funds and the ability to check balances. 
d. Transfers information and money in using radio frequencies with no direct contact.

Accepted Answer

The answer of What concept, device or instrument is described...

Quiz 1: Understanding the Financial System and Its Impact on the Economy and Markets

For any business, individual or government, wealth is:

At the end of last year the wealth was $48,000, with a return on the accumulated wealth was 2% during this year and $1700 was saved this year. At the end of this year the accumulated wealth is:

Wealth created income results in:

Every year the volume of financial wealth is growing in the United States. In 2009 the total securities, deposits and other financial assets held by domestic nonfinancial businesses, households, the US government and foreign investors was:

Perfect liquidity is a trait held by the following:

When a purchaser is issued a bill online and can make payments online, this is referred to as:

In the financial marketplace, secondary markets provide:

Lower savings rates in the United States could be due to: