chapter 1

the first time issue of stock by a corporation going public is called

IPO

main issuers of money market securities

corporation the govt

which of the following statements is true regarding derivative securities

value is linked to another previously issued security

the volvker rule was passed as part of what important act of congress

wall street reform and consumer protection act of 2010

the decline of the share of assets held by commercial banks between 1948 and 2016 is due to

-strict capital regulations regualtions imposed during the financial crisis -low interest rates

when financial institution accepts short term deposits from investors and uses those funds to issue long term loans to borrowers they are engaging in

asset transformation

in primary markets the users of funds are frequently

corporations needing funds for new projects

originate and hold model

credit risk liquidity risk interest rate risk

appreciation of a foreign currency relative to the US dollar means that

each unit is worth more US dollars

not a responsibility of the SEC

ensuring investors make good decisions

passage of the securities act of 1933 stated that the main emphasis of SEC regulations should be focused on

ensuring the full and fair disclosure of securities information

__ are sold in secondary financial markets by __

financial instruments; agents in need of funds

consolidation of financial services such as commercial banking, insurance and investment banking under one roof has led to the creation of a business entity called the

financial services holding company

the problem that arises when individual investors leave it to each other to collect information and monitor the fund users is called

free rider problem

two important characteristics of capital market securities are

greater than 1 year, wider price fluctuations

following the brexit vote in june 2016, the british pond dropped in value to its lowest point since 1955. This was due to

investors selling off pound denominated assets and investing the funds in safe assets like gold and US govt bonds

secondary markets offer buyers of securities the ability to convert them to cash quickly at fair market value a characteristic known as

liquidity

a financial institution average cost of monitoring fund user is __ than the individual investors cost

lower

suppliers cost of ensuring that the user of funds does not steal or waste the funds is called

monitoring cost

the financial crisis of 2008 was triggered by

problems in the subprime mortgage market

In the "ordinate and distribute" model, financial institutions issue loans then

sell loans quickly as possible

the main issuers of money market securities are

the govt corporations