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

A. flow of funds.
B. sector analysis.
C. sectorial flows.
D. cross-sector flows.
Ans: A
AACSB: Communication
Bloom's: Comprehension
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.06 Analyse the flow of funds through the financial system and the economy, and briefly discuss the importance of ‘stability’ in relation to the flow of funds.
Section: 1.05 Flow of funds, market relationships and stability
Topic: Flow of funds, market relationships and stability


 
88. As a broad generalisation, in the sectorial flow of funds households are typically:
A. a deficit sector.
B. a surplus sector.
C. fluctuates between a deficit sector and a neutral sector.
D. borrowers.
Ans: B
AACSB: Communication
Bloom's: Knowledge
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.06 Analyse the flow of funds through the financial system and the economy, and briefly discuss the importance of ‘stability’ in relation to the flow of funds.
Section: 1.05 Flow of funds, market relationships and stability
Topic: Flow of funds, market relationships and stability


 
89. The flow of funds between the sectors of a nation-state:
A. varies from year to year.
B. depends on the business cycle.
C. depends on the levels of economic activity.
D. relates to all of the given answers.
Ans: D
AACSB: Communication
Bloom's: Knowledge
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.06 Analyse the flow of funds through the financial system and the economy, and briefly discuss the importance of ‘stability’ in relation to the flow of funds.
Section: 1.05 Flow of funds, market relationships and stability
Topic: Flow of funds, market relationships and stability


 
90. Assume that depositors want to be able to withdraw their money at almost any time and assume that businesses like to borrow funds for two years or more. As a consequence, banks will naturally _____ the matching principle. With the matching principle the amount of short-term assets approximately should equal the amount of _____.
A. meet; short-term liabilities
B. meet; long-term assets
C. not meet; short-term liabilities
D. not meet; long-term assets
Ans: C
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


 
91. From the viewpoint of a corporation primary markets _____ and secondary markets _____.
A. transfer claims; transfer claims
B. transfer claims; raise funds
C. raise funds; raise funds
D. raise funds; transfer claims
Ans: D
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


 
92. A financial market would be judged as value-creating (or efficient) when:
A. it transfers funds from those with good investment ideas to those with poor investment ideas.
B. it transfers funds from those with poor investment ideas to those with good investment ideas.
C. it creates more opportunities for most investors to make money.
D. banks are liquid.
Ans: B
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


 
93. Which factor appeared to be fundamental to the Asian financial crisis?
A. Easy bank credit
B. Anti-inflationary monetary policy
C. Weak economic performance for most of the 1990s
D. Undervalued Asian currencies
Ans: A
AACSB: Communication
Bloom's: Knowledge
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.08 Appreciate the effects, consequences and relevance of the Asian financial crisis.
Section: 1.01 Theory and facts in finance
Topic: Financial crises and the real economy


 
94. Securitisation occurs when:
A. an investor buys securities.
B. a company buys up assets of a certain type and sells claims against these assets.