Exam 1 Fundamental Questions - FINA 363

In what year was the New York Stock Exchange founded? A. 1492 B. 1692 C. 1792 D. 1892 E. 1992

C. 1792

Which of the following is CORRECT? A. Businesses are the primary suppliers of capital to the financial system B. Companies raise capital by issuing stock only C. Secondary markets serve no real economic function D. A well-functioning secondary market must provide sufficient liquidity to investors

D. A well-functioning secondary market must provide sufficient liquidity to investors

The Payback Period... A. Ignores Risk B. Ignores Time Value of Money C. Ignores Cash flows after payback D. All of the above

D. All of the above

Who earned more money last year? A. LeBron James B. Dwayne "The Rock" Johnson C. Clayton Kershaw D. Ray Dalio

D. Ray Dalio

If I buy 100 shares of Amazon using my online brokerage account, what type of activity is this and who receives my money? A. Primary market activity; Amazon receives it B. Primary market activity; another investor receives it C. Secondary market activity; Amazon receives it D. Secondary market activity; another investor receives it

D. Secondary market activity; another investor receives it

True or False: The primary suppliers of capital to the financial system are governments.

False

What type of investment is buying a bond from a company? A. Debt B. Equity C. Cash

A. Debt

If I buy 100 shares of Amazon, what type of investment did I just make? A. Equity B. Debt

A. Equity

In theory, the interest rate should take into account... A. Risk B. The value of the cash flow C. Growth D. The number of years

A. Risk

When discounting cash flows, if the interest rate goes up, then the value of the cash flow... A. Goes Up B. Goes Down C. Stays the same

B. Goes Down

According the Financial Times article link to the league tables, which investment bank was the top global M&A (mergers & acquisitions) advisor, as well as the top primary market equity issuer, in 2018? A. JP Morgan B. Goldman Sachs & Co C. Citi D. Morgan Stanley

B. Goldman Sachs & Co

Who is Ray Dalio? A. Baseball player B. Hedge fund manager C. CEO at JP Morgan D. This is a trick question

B. Hedge fund manager

Which of the following are features of finance as a technology? 1. It reallocates capital from those with a surplus to those with a deficit. 2. It reallocates capital over time. 3. It reallocates risk. A. Only 1. B. Only 2. C. Only 3. D. 1 and 2. E. 1 and 3. F. 2 and 3. G. All 3.

G. All 3.

True or False: In the financial system, funds flow from savers to users.

True