Introduction to Corporate Finance 5th Canadian Edition by Laurence Booth test bank
d) market transaction.
Answer: b
Type: Definition
Difficulty: Easy
Learning Objective: Explain how money is transferred from lenders to borrowers and the role played by market and financial intermediaries.
Section Reference: The Financial System
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
15. An example of direct intermediation would be
a) an individual borrowing money from a bank.
b) an individual borrowing money from their mother.
c) an individual using a real estate broker to finance their home purchase.
d) a stockbroker selling securities to an individual.
Answer: b
Type: Concept
Difficulty: Easy
Learning Objective: Explain how money is transferred from lenders to borrowers and the role played by market and financial intermediaries.
Section Reference: The Financial System
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
16. The three intermediation channels that transfer money from lenders to borrowers are
a) direct, indirect, and financial intermediation.
b) direct, indirect, and monetary intermediation.
c) direct, financial, and monetary intermediation.
d) indirect, financial, and monetary intermediation.
Answer: a
Type: Definition
Difficulty: Easy
Learning Objective: Explain how money is transferred from lenders to borrowers and the role played by market and financial intermediaries.
Section Reference: The Financial System
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
17. Although Canadian banks are involved in almost all areas of the financial system, which of the following is their core activity?
a) stock market investment activity
b) retirement planning
c) wealth management
d) taking deposits and lending funds
Answer: d
Type: Definition
Difficulty: Easy
Learning Objective: Explain how money is transferred from lenders to borrowers and the role played by market and financial intermediaries.
Section Reference: The Financial System
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
18. Which of the following is NOT a financial intermediary?
a) chartered banks
b) insurance companies
c) pension funds
d) mutual funds
Answer: d
Type: Definition
Difficulty: Easy
Learning Objective: Explain how money is transferred from lenders to borrowers and the role played by market and financial intermediaries.
Section Reference: The Financial System
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
19. Which of the following is NOT one of the main functions performed by mutual funds?
a) pooling sums of money to make investments
b) paying out premiums to their clients
c) providing professional management expertise
d) acting as a “pass-through” for individuals to invest in the equity and debt markets
Answer: b
Type: Concept
Difficulty: Medium
Learning Objective: Explain how money is transferred from lenders to borrowers and the role played by market and financial intermediaries.
Section Reference: The Financial System
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
20. As of 2018 what was the major proportion of Canadian households’ financial assets?
a) stocks and bonds
b) deposits
c) foreign investment
d) claims on retirement and insurance funds
Answer: d
Type: Concept
Difficulty: Easy
Learning Objective: List the major financial and real assets held by Canadians.
Section Reference: Real versus Financial Assets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
21. Two examples of marketable assets include
a) savings accounts and demand deposits held at financial institutions.
b) provincial and federal savings bonds.
c) demand deposits and provincial savings bonds.
d) equity securities and T-bills.
Answer: d
Type: Definition
Difficulty: Easy
Learning Objective: Identify the basic types of financial instruments that are available and explain how they are traded.
Section Reference: Financial Instruments and Markets
Blooms: Knowledge
AACSB: Analytic
CPA: Finance
22. Since March 2000 the Montreal Exchange (ME) has functioned as Canada’s national market for
a) hedge funds.
b) publicly traded stocks.