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

Ans: A
AACSB: Reflective thinking
Bloom's: Knowledge
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


 
36. Which of the following is NOT an example of primary market transactions?
A. A company issue of shares to raise funds for an investment project
B. A government issue of bonds
C. A mortgage bond
D. A mortgage loan to buy a house
Ans: C
AACSB: Reflective thinking
Bloom's: Knowledge
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


 
37. A ‘primary market' is a market:
A. only for equity issues by major or ‘primary' companies.
B. where borrowers sell new financial instruments to buyers.
C. where savers sell new financial claims to borrowers.
D. where government securities are bought and sold.
Ans: B
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


 
38. Buying bonds in the capital markets is an example of:
A. a secondary market transaction.
B. a primary market transaction.
C. companies raising new funds.
D. companies raising funds from a secondary source.
Ans: A
AACSB: Communication
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


 
39. The market where existing securities are sold is the:
A. economic market.
B. primary market.
C. secondary market.
D. financial market.
Ans: C
AACSB: Communication
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


 
40. When a large company issues a financial instrument into the financial markets:
A. funds flow indirectly from saver to borrower.
B. the cost of funds is generally higher owing to the risk involved.
C. it buys a financial claim.
D. it sells a financial claim.
Ans: D
AACSB: Communication
Bloom's: Comprehension
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


 
41. Secondary markets:
A. allow borrowers to raise long-term funds.
B. facilitate capital-raising in the primary market.
C. do not raise new funds but offer liquidity.
D. all of the given answers.
Ans: D
AACSB: Communication
Bloom's: Comprehension
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


 
42. The flow of funds through financial markets increases the volume of savings and investment by:
A. maintaining low interest rates.
B. storing large quantities of cash.
C. providing savers with a variety of ways to lend to borrowers.
D. offering lower interest rates than could be obtained directly from borrowers.
Ans: C
AACSB: Communication
Bloom's: Knowledge
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