Chapter 1-Introduction-Fin 3330 Smartbook

Two important characteristics of money market securities are

-Maturity of one year or less -Low interest rate risk

In 1992 through 2019, U.S investors' holdings of foreign financial market debt securities increased by a factor of about

13%

After hitting bottom in March 2009, the Dow Jones Industrial Average did not recover to its pre-crisis levels for

About 4 years

Regulation is an attempt to enhance the social welfare ___ and mitigate the ____ of the provision of FI services.

Benefits; Costs

The risk that financial institutions face when doing business in foreign countries is called

Country or sovereign risk

"Depreciation" of a foreign currency relative to the U.S dollar means that

Each unit of foreign currency is worth fewer U.S dollars

Which of the following is NOT a responsibility of the SEC

Ensuring that investors make good decisions

The 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

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

Financial Securities

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

Foreign exchange risk

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

A financial institution's average cost of monitoring fund users is ___ than the individual investor's cost

Lower

Which of the following is NOT specified in the derivative security contract?

The final purpose for which the asset exchanged will be used

In terms of severity, the financial crisis of 2008 is generally considered to be

The worst recession in the U.S since the Great Depression

Which of the following statements is true regarding derivative securities?

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

True or False: In the U.S, most money market securities are traded "over the counter" rather than on organized exchanges

True