FIN3100 Chapter 1 - Introduction
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