FINANCE HMW2

government is typically a ____.

net demander of funds because it borrows more than it saves

the ____ market is where securties are initially issued and the ____ market is where pre-owned securites (not new issues) are traded.

primary;; secondary

which of the follwoing is a means of selling bonds or stocks to the public?

public offering

the key securities traded in the capital markets are ______.

stocks and bonds

the primary risk of mortgage-- backed securities is ______.

the homeowners may not be able to, or choose not to repay their loans

which of the following acts regulates the secondary market

the securities exhange act of 1934

firms that require funds from external sources can obtain them ___.

through financial intitutions

mortgage -- backed securities are securitites that represent claims on the cash flows generated by a pool of mortgages

true

the average tax rate paid on the firm's ordinary income can be calculated by dividing its taxable income.

true

the eurocurrency market is a market for short- term bank deposists denominated in u.s. dollars of other easily convertible currencies.

true

the marginal tax rate represents the rate at which the next dollar of income is taxed.

true

the securities act of 1933 focuses on regulating the sale of securites in the primary market, wearas the 1934 act deals with the regulations governing the transactions in the secondary market

true

a crisis in the financial sector often spills over into other industries because when financial institutions ______ barrowing, activity in most other industries.

contact; slows down

commercial banks advise firms on major transaction such as mergers or financial restructurings

false

subprime mortages are mortage loans made to barrower with high incomes and better than average credit histories

false

the glass- steagall act was impsed to allow commercial and investmetn banks to combine and work together

false

which of the following serves as intermediary channel the savings of individuals, businesses, and goernments into loans and investmetns

financial institutions

which of the following is a forum in which suppliers and demanders of funds transacted business directly?

financial markets

which of the following is true of perferred stock?

it has features of bonds and common stock

which of the following is true of a primary market?

it is the only market in which the issuer is directly involved in the transaction.

which of the following is true of a securities exchanges?

it provides a marketplace in which firms can raise funds thruough the sale of new securites and purchasers can resale seurites