Financial Institutions, Instruments and Markets 9th Edition by Christopher Viney Test bank

B. the high expenditure for many individuals and businesses.
C. that the lack of money in an economy makes trade in financial assets necessary.
D. the refusal of most modern governments to print money on demand.
Ans: A
AACSB: Reflective thinking
Bloom's: Synthesis
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
29. Financial markets:
A. facilitate the exchange of financial assets.
B. provide information about prices of financial assets.
C. provide a channel for funds to flow between the providers and users of funds.
D. all of the given choices.
Ans: D
AACSB: Reflective thinking
Bloom's: Knowledge
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
30. The most important function of a financial market is to:
A. provide information about shares.
B. provide a market for shares.
C. facilitate the flow of funds between lenders and borrowers.
D. provide employment for brokers and agents.
Ans: C
AACSB: Reflective thinking
Bloom's: Knowledge
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
31. Secondary financial markets
A. are where companies issue new debt and equity capital.
B. provide liquidity to primary markets financial markets.
C. transmit funds indirectly between lenders and borrowers.
D. usually provide investors with lower liquidity than primary markets.
Ans: B
AACSB: Reflective thinking
Bloom's: Knowledge
Difficulty: Hard
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
32. A primary financial market is one that:
A. offers financial assets with the highest expected return.
B. offers the greatest number of financial assets.
C. involves the sale of financial assets for the first time.
D. offers financial assets with the highest historical return.
Ans: C
AACSB: Reflective thinking
Bloom's: Knowledge
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
33. A secondary financial market is one that:
A. offers financial assets with the highest expected return.
B. offers the greatest number of financial assets.
C. involves the sale of existing financial assets.
D. offers financial assets with the highest historical return.
Ans: C
AACSB: Reflective thinking
Bloom's: Knowledge
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
34. Purchasing shares on the Australian Securities Exchange is an example of:
A. a primary market transaction.
B. companies raising finance from another financial intermediary.
C. companies raising new finance.
D. a secondary market transaction.
Ans: D
AACSB: Reflective thinking
Bloom's: Knowledge
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.04 Discuss the nature of the flow of funds between savers and borrowers, including primary markets, secondary markets, direct finance and intermediated finance.
Section: 1.04 Financial markets
Topic: Financial markets


 
35. When a security is sold in the financial markets for the first time:
A. funds flow from the saver to the issuer.
B. funds flow from the borrower to the saver.
C. it represents a secondary transaction to the underwriter.
D. it is an asset for the borrower.