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
