Question 1

In the over-the-counter market,dealers are linked with the purchasers and sellers of securities through the ________ system.
A) NASDAQ
B) NYSE
C) AMEX
D) SEC
E) NYMEX

Accepted Answer

NASDAQ is a computerized dealer market

Question 2

Money markets are markets for
A) foreign currency exchange.
B) corporate stocks.
C) long-term bonds.
D) short-term debt securities.
E) preferred securities.

Accepted Answer

In a money market, the securities are short term and highly liquid.

Question 3

The over-the-counter market is
A) the New York Stock Exchange.
B) an organized stock exchange.
C) a physical place where securities are bought and sold.
D) an intangible market for unlisted securities.
E) where commodities futures are bought and sold.

Accepted Answer

The over the counter market is an intangible market for unlisted securities.

Question 4

According to your text,major players in the money market include all of the following EXCEPT:
A) The U.S. Treasury
B) The Federal Reserve System
C) Commercial Banks
D) Companies
E) The U.S. Commerce Department

Accepted Answer

The U.S. Commerce Department is not a major player in the money market.

Question 5

________ would be the course where you learn to tell the good stocks from the bad,and the sure things from the really risky.
A) Corporate Finance
B) Investments
C) Personal Finance
D) Derivative Securities

Accepted Answer

Investments is the course where you learn to tell the good stocks from the bad, and the sure things from the really risky.

Question 6

Finance is:
A) The study of investment management
B) The study of the stock exchange
C) The study of the capital market and its many players
D) The study of money management for personal use

Accepted Answer

Finance is the study of the capital market and its many players.

Question 7

Capital markets have maturities of one year or less.

Accepted Answer

Capital markets are markets in which the securities have an original maturity greater than 1 year.

Question 8

What is the purpose of the capital market?
A) To match people with money to entrepreneurs with great business ideas or concepts
B) To more easily regulate the flow of money between parties
C) To make money without trying
D) To allow people to buy stocks for retirement

Accepted Answer

The capital market matches entrepreneurs with great business ideas or concepts to people with money.

Question 9

Preferred stock pays a variable dividend.

Accepted Answer

Preferred stockholders receive a fixed dividend that does not change.

Question 10

The ________ price is ________ the ________ price.
A) bid; above; ask
B) bid; below; ask
C) ask; below; bid
D) ask; above; bid
E) Answers (B) and (D) are correct.

Accepted Answer

The ask price is the price the seller wants to receive and the bid price is the price the buyer is willing to pay.

Question 11

Common stockholders expect to receive a return through capital gains and
A) interest payments.
B) dividends.
C) fixed periodic dividends.
D) coupon payments.
E) receiving shares of preferred stock

Accepted Answer

Common shareholders receive a dividend at the discretion of the board .

Question 12

Money market securities have maturities of one year or less.

Accepted Answer

Money Market securities mature less than 1 year from their issue date.

Question 13

T-bonds are money market securities,while T-bills and T-notes are traded in the capital market.

Accepted Answer

T-Bills are instruments of the money market.

Question 14

Which one of these would a financial advisor say is most important?
A) Making decent dough over the long haul
B) Making a quick buck
C) Avoiding paying taxes whenever possible
D) Properly financing a large purchase

Accepted Answer

Most importantly, financial advisors help you make decent dough over the long haul.

Question 15

Which of the following is not considered a capital market security?
A) Mortgage-backed Securities
B) Corporate Bonds
C) Common Stock
D) Foreign Currencies
E) Municipal Bonds

Accepted Answer

Foreign currencies are not capital market securities

Question 16

A firm raises capital to finance new equipment by selling bonds in the
A) secondary market.
B) primary market.
C) futures market.
D) options market.
E) federal funds market.

Accepted Answer

Primary markets are for securities offered for sale for the first time.

Question 17

The ________ is the financial market in which securities are initially issued.
A) private placement
B) OTC
C) primary market
D) secondary market
E) NASDAQ

Accepted Answer

Primary markets are for securities offered for sale for the first time.

Question 18

Which of these is not one of the basic questions for corporate finance?
A) How should we raise the money?
B) What are we going to make?
C) What do we do with our profits?
D) How big of a bonus should we get?

Accepted Answer

The three questions for corporate finance are: How should we raise the money? What are we going to make? Do we pay out our profits, or invest them?

Question 19

Regulating the banking institutions is one of the Federal Reserve's duties.

Accepted Answer

The Federal Reserve has 3 duties: 1) Conduct monetary policy 2) Regulate banking institutions 3) Provide financial services to depository institutions.

Question 20

Which of the following statements is true regarding common and preferred shares?
A) Preferred shareholders have more voting power than common shareholders.
B) Common shareholders are guaranteed a fixed dividend.
C) Common shareholders have a more senior claim against assets than preferred shareholders.
D) Preferred shareholders are entitled to their dividends before common shareholders
E) Common shareholders earn a better return than preferred shareholders.

Accepted Answer

Preferred shareholders are entitled to their dividends before common shareholders.

Quiz 1: Overview of Finance

In the over-the-counter market,dealers are linked with the purchasers and sellers of securities through the ________ system.

Money markets are markets for

The over-the-counter market is

According to your text,major players in the money market include all of the following EXCEPT:

________ would be the course where you learn to tell the good stocks from the bad,and the sure things from the really risky.

Finance is:

Capital markets have maturities of one year or less.

What is the purpose of the capital market?

Preferred stock pays a variable dividend.

The price is the price.

Common stockholders expect to receive a return through capital gains and

Money market securities have maturities of one year or less.

T-bonds are money market securities,while T-bills and T-notes are traded in the capital market.

Which one of these would a financial advisor say is most important?

Which of the following is not considered a capital market security?

A firm raises capital to finance new equipment by selling bonds in the

The ________ is the financial market in which securities are initially issued.

Which of these is not one of the basic questions for corporate finance?

Regulating the banking institutions is one of the Federal Reserve's duties.

Which of the following statements is true regarding common and preferred shares?