Which do factors and insurance companies have in common? Both are primary participants in money market mutual funds (MMMFs) Both are federally or state chartered as commercial banks in the U.S. Both allow extending credit to customers without putting a firm directly at risk Both are nonbank financial institutions

Which do factors and insurance companies have in common? Both are primary participants in money market mutual funds (MMMFs) Both are federally or state chartered as commercial banks in the U.S. Both allow extending credit to customers without putting a firm directly at risk Both are nonbank financial institutions

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter3: International Financial Markets

Section: Chapter Questions

Problem 1QA

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Financial intermediation is not confined to bank lending but is also carried out by nonbank firms such as mutual fund companies. How do mutual funds help overcome information problems in financial markets?
Which of the following is not an example of financial institutions? a. HSBC mutual Funds b. Muscat Security Market c. Axa insurance company d. National Bank of Oman
Advantage and Disadvantage of Non-stock savings and loan associations from private non bank thrift institutions?
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Which of the following statements is CORRECT? A. Capital market instruments include both mortgages and U.S. Treasury bonds. B. An example of a primary market transaction would be your uncle transferring 100 shares of Wal-Mart stock to you as a birthday gift. C. The NYSE does not exist as a physical location. Rather it represents a loose collection of dealers who trade stock electronically. D. While the two frequently perform similar functions, investment banks generally specialize in lending money, whereas commercial banks generally help companies raise large blocks of capital from investors.
How would economic transactions between suppliers of funds (e.g., households) and users of funds (e.g., corporations) occur in a world without financial institutions?
Which of the following statements are true?I. Money markets are used to facilitate the transfer of short-term funds from individuals, corporations, or governments with excess funds to those with deficient funds. Even investors who focus on long-term securities tend to hold some money market securities because this enables them to maintain liquidity.II. Financial institutions manage their liquidity by participating in money markets. They may issue moneymarket securities when they experience cash shortages and need to boost liquidity. They can also sell holdings of money market securities to obtain cash.III. The value of a money market security represents the future value of the present cash flows generated by that security. Since money market securities represent debt, their expected cash flows are typically known.IV. The pricing of money market securities changes in response to a shift in the required rate of return by investors. The required rate of return changes in response to…
Which of the following statements is CORRECT? a. Hedge funds are legal in Europe and Asia, but they are not permitted to operate in the United States. b. Hedge funds have more in common with commercial banks than with any other type of financial institution. c. Hedge funds have more in common with investment banks than with any other type of financial institution. d. Hedge funds are legal in the United States, but they are not permitted to operate in Europe or Asia. e. The justification for the "light" regulation of hedge funds is that only "sophisticated" investors with high net worths and high incomes are permitted to invest in these funds, and such investors supposedly can do the necessary "due diligence" on their own rather than have it done by the SEC or some other regulator.
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