Chapter 16
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Western Governors University *
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Finance
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Jan 9, 2024
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Chapter 16 Quiz
1) One of the most important variables that determine how much a person saves is
d) the person’s age
2) The difference between the value of what you own and what you currently owe is called a) net worth
3) Funds can be transferred between savers and users in two ways:
c) directly and indirectly
4) The Roxy Bank of Englewood pools customer deposits and uses the funds to make loans to businesses and households. These businesses and households, now known as the borrowers, pay the bank interest, and the bank, in turn, pays depositors interest for the use
of their money. Which of the following would best describe the process used by the bank?
b) Direct transfer
5) _______, also called financial instruments, represent obligations on the part of the issuers—businesses and governments—to provide the purchasers with expected or stated returns on the funds invested or loaned. d) Securities
6) All of the following are types of securities EXCEPT d) cash
7) _____ are short-term debt securities issued by governments, financial institutions, and corporations.
d) Money market instruments
8) Amanda buys a money market instrument. It will mature within, at most,
c) 1 year
9) Treasury bills have a minimum denomination of
d) $
100
10) Two types of municipal bonds exist. What are they?
d) Revenue bonds and general obligation bonds
11) Corporate bonds are a diverse group and often vary based on the _____ that backs it.
c) collateral
12) When a company needs capital to purchase inventory, expand a plant, make major investments, acquire another firm, or pursue other business goals, it may sell a bond or stock issue to the investing public. This is done in the ______ market.
a) primary
13) Daily trading on the AMEX market is _____ shares.
d) less than 100 million
14) The _____ involves the direct trading of exchange-listed stocks off the floor of the exchange (in the case of NYSE-listed stocks) or outside the network (in the case of NASDAQ-listed stocks).
b) fourth market
15) Which of these connect major brokerages and individual traders virtually using the Internet, so that trades can be made directly without going through an intermediary?
b) Electronic communications networks
16) Which of the following statements is incorrect?
a) The number of commercial banks is declining each year.
17) The ______ order instructs the broker to obtain the best possible price—the highest price when selling and the lowest price when buying.
c) market
18) A ______ is a nondepository financial institution that has the ability to provide higher returns, albeit with greater risk.
c) hedge fund
19) Francisco made a purchase at his local Walmart. Instead of writing a check, Francisco used a card issued by his bank with a Visa logo on the front. He entered his PIN and the purchase was automatically deducted from his checking account. Francisco used his __________ card.
b) debit
20) The process used by an insurance company to determine whom to insure and how much to charge is called b) underwriting
21) There are __________ Federal Reserve districts.
c) 12
22) Which of the following statements concerning the Fed is incorrect?
b) The Fed acts as the
banker's bank.
23) M2 includes __________ M1. a) all of
24) Which of the following is not one of the four major policy tools the Fed has for controlling the growth in the supply of money and credit?
b) Check clearing
25) Which of the following interest rates does the Federal Reserve actually set?
b) Discount rate
26) The Securities and Exchange Commission requires virtually all new public issues of corporate securities to be registered. As part of the registration process for a new security issue, the issuer must prepare a(n)
b) prospectus
27) The ___ establishes and updates rules to ensure that member brokers perform their basic functions honestly and fairly.
a) NASD
28) Which of the following U.S. institutions is among the world’s 20 largest banks?
JPMorgan Chase
29) A local government in Montana issued bonds to the general public to build a community park in the locality. The primary objective of the proposed community park is to enhance the green cover in the locality. Which of the following best describes the bonds issued in this scenario?
a) General obligation bond
30) All market participants must keep detailed records of every aspect of every trade. What is this called?
b) Audit trail
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Related Questions
Give detailed explanation
arrow_forward
Short Answer Essay Question:
DAS
• Understanding Fundamentals of Personal Finance
• Career Planning
• Financial Statements, Tools, and Budgets
• Managing Income Taxes
• Managing Checking & Savings Accounts
• Building & Maintaining Good Credit
• Credit Cards & Consumer Loans
• Vehicles & Other Major Purchases
What are three key things you have learned from any of the areas above, that you have adopted in your own personal financial
management practices?
arrow_forward
6- Banks are important to the study of money and the economy because they .
Please select one;
www
a) provide a channel for linking those who want to save with those who want to invest
b) have been a source of financial innovation that is expanding the alternatives available to those
mwv m
who wanting to invest their money
c) are the only financial instution to play a role in determining the quantity of money in the economy
d) do all of the above
e) do only a and b of the aboveę
arrow_forward
is a financial product that allows an individual to lend their money to a bank
A
and be paid an interest rate for doing so.
arrow_forward
Which statement best describes the role of a credit agency?
OIt tracks the use of credit for lenders.
It predicts future earning potential for lenders.
OIt teaches how to make smart financial decisions.
OIt shows how saving money makes financial sense.
arrow_forward
Banks are important to the study of money and the economy because they
provide a channel for linking those who want to save with those who want to invest.
have been a source of financial innovation that is expanding the alternatives available to those wanting to invest their money.
are the only financial institution to play a role in determining the quantity of money in the economy.
do all of the above.
do only A and B of the above.
arrow_forward
Classify each as an asset, liability, cash inflow, or cash outflow:
arrow_forward
what are the methods to maximize the use of credit card/s as financial leverage in your business?
arrow_forward
Which will result in a higher net worth?
I. Paying down debt with cash flows.
II. Making regular periodic savings.
III. Acquiring long-term assets with a line of credit.
IV. Purchasing a condo with a mortgage and using funds from the Tax-Free Savings Account (TFSA) for the down payment.
A
I and II
B
Il and IV
I and III
D
III and IV
IV only
arrow_forward
Thank you
arrow_forward
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