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1

The _______ is designed to finance long-term investments, making possible the construction of factories, office buildings, highways, bridges, schools, homes, and apartments.
A)money market
B)capital market
C)secondary market
D)negotiated market
E)primary market
2

Providing loanable funds to supplement current income in order to sustain current living standards represents what financial service area?
A)payments services
B)thrift services
C)agency services
D)credit services
E)none of the above
3

Trading in securities previously issued takes place in the:
A)open market
B)secondary market
C)primary market
D)negotiated market
E)capital market
4

The financial system and financial markets are responsible for providing which of the following services?
A)Credit services
B)Payment services
C)Liquidity
D)Facilitating the flow of savings
E)All of the above
5

A(n) _____ market exists if the market is fully competitive and the same information is available to all participants.
A)primary
B)secondary
C)perfect
D)imperfect
E)neutral
6

The role of markets in a market-oriented economy like the United States is to:
A)allocate resources.
B)distribute income.
C)produce needed goods and services.
D)all of the above.
E)none of the above.
7

The financial service supplied by the money and capital markets in which financial instruments are created to attract savings for future financial needs is called:
A)agency services
B)credit services
C)payments services
D)thrift services
E)none of the above
8

When different sets of information are available to different participants in the market, we say that there is:
A)arbitrage
B)asymmetric information
C)a hedging market
D)a brokered market
E)collusion
9

The circular flow of funds includes which of the following:
A)consumer units
B)households
C)government
D)all of the above
E)none of the above
10

The ______ is designed for the making of short-term loans where individuals and institutions with temporary surpluses of funds meet borrowers who have temporary cash shortages.
A)money market
B)capital market
C)open market
D)negotiated market
E)primary market
11

The financial system determines:
A)the cost of credit
B)how much credit is available
C)the prices of securities
D)the quantity of securities issued by borrowers
E)all of the above.
12

To gain access to the money market an institution must:
A)have an excellent credit rating
B)be well known
C)be large
D)all of the above
E)none of the above
13

The largest market in the world for a single security is:
A)the capital market
B)the money market
C)the treasury bill market
D)the federal funds market
E)none of the above
14

A market in which competition among buyers and sellers sets the terms of trade is a:
A)primary market
B)forward market
C)efficient market
D)perfect market
E)none of the above
15

The financial system provides all the following services except:
A)furnish credit
B)payment services
C)equitably distribute wealth
D)provide liquidity
E)risk protection
16

According to your text, a key trend in the financial system is:
A)increasing competition
B)greater risk
C)growth of technology
D)growth of debt
E)all of the above are key trends for the financial system
17

Which type of market is not part of the circular flow?
A)Factor market
B)Information market
C)Financial market
D)Product market
E)All of the above
18

Acting as an agent for a customer in managing retirement funds or other property represents what financial service area?
A)hedging services
B)credit services
C)thrift services
D)insurance
E)none of the above
19

The form of market efficiency in which assets are priced efficiently based on the past history of prices and all current assets' prices reflect fully the past history of information about the assets to which those prices are attached is known as: a weak form market efficiency
A)semi-strong form efficiency
B)strong form efficiency
C)market perfection
D)none of the above
20

One of the financial markets listed below is not part of the nation's capital market. Which one is not?
A)Mortgage market
B)Corporate bond market
C)Municipal bond market
D)Commercial paper market
E)Stock market





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