FIN3100 Chapter 1 - Introduction

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From 1992 through 2015 foreign investors holdings of the US financial market debt securities increased by a factor of about

10x

the term "thrifts" refers to which of the following types of depository institution

Credit unions savings banks savings associations

In a world without financial institutions where suppliers provided funds directly to users, suppliers of funds would face three types of risks/costs these are :

Liquidity Cost monitoring cost price risk

two of the important payment services provided by financial institutions to the economy are ___ and ___

check clearing wire transfers

which country has the greatest number of banks among the list of top 10 global banks by size?

china

the major suppliers of securities for capital markets are

corporations governments

financial institutions frequently pool small deposits from individual savers and invest the funds in large denominations securities this is called

denomination intermediation

Financial institutions are able to guaruntee the liquidity and safety of investors funds despite investing in risky assets by

diversifying their investments across many uncorrelated assets

passage of the securities act of 1933

ensuring the full and fair disclosure of securities information

in primary markets, fund users raise new capital through the sale of

financial securities

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

financial services holding company

the risk that the value of a foreign investment may change due to appreciation or depreciation of the FX currency is

foreign exchange risk

maturity intermediation may expose financial institutions to

interest rate risk

intermediaries in secondary market transactions are usually ___ and ____

investment banks securities brokers

two important characteristics of money market securities are

low interest rate risk maturity of one year or less

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

low interest rates strict capital regulations regulations imposed during financial crisis

a financial institutions average cost of monitoring fund users is ___ than the individual investors cost

lower

as a result of increase globalization, movements in foreign financial markets now have a ___ impact on US financial markets

much greater

financial INST reduce individual investors monitoring costs by

pooling their funds and hiring employees to monitor the fund users

the risk that the price of a security may change between the time it is purchased and the time it is sold is

price risk

in a world without instituions where suppliers proied funds directly to users, suppliers of funds would face three types of risks/costs these are

price risk liquidity cost monitoring cost

the financial crisis of 2008 was triggered by

problms in the subprime mortgage market

during the past 30 years, some of the trends that have reshaped the fin industry are

removal of regulatory barriers financial innovation increased use of technology

in the US savings banks and savigns associations ave been directed to provide financing primarily for

residential mortgages

secondary markets offer issuers of securities important info about how the issuer is performing and how much it will cost to raise additional capital, this info is conveyed through the

security market price

in the orginate and distribute model, financial institutions issue loans then:

sell the loans quickly

the term "brexit" refers to

the decision of the people of the united kingdom to leave the european union after 43 years

the act of congress that overturned glass steaall and made the creation of financial services holding companies possbile was

the financial services modernization act of 1994

the main issuers of money market securities are

the government corporations

which of the following statements is true regarding derivative securities

their value is linked to the value of another previously issued security

in addition to commericial banks___ also showed a decline in their share of total FI assets between 1948 and 2016

thrifts

true or false : in the us most money market securities are traded over the counter rather than on organized exchanges

true

two important characteristics of capital market securities are

wider price fluctuations than MM securities maturity greater than one year


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