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

C. debentures.
D. shares.
 
72. A company that issues promissory notes into the short-term debt markets is conducting a transaction in the:
A. commercial paper market.
B. inter-bank market.
C. bills market.
D. official short-term money market.
 
73. A company with a high credit rating can issue _____ directly into the money markets.
A. CDs
B. Commercial paper
C. unsecured notes
D. debentures
 
74. The market that generally involves the buying and selling of discount securities is the:
A. securities market.
B. money market.
C. share market.
D. capital market.
 
75. A source of short-term liquidity funding for banks is the issue of:
A. bank bills.
B. debentures.
C. certificates of deposit.
D. commercial paper.
 
76. The market that includes individuals, companies and governments in the buying and selling of long-term debt and equity securities is the:
A. currency market.
B. debt market.
C. capital market.
D. financial market.
 
77. When a company issues a long-term debt instrument with no security attached it is selling _____ to investors.
A. shares
B. debentures
C. unsecured notes
D. term loans
 
78. From the viewpoint of a corporation, which source of long-term funding does not have to be repaid?
A. Equity
B. Commercial paper
C. Corporate bonds
D. Bank bills
 
79. The term ‘liquidity’ refers to:
A. the length of time required to sell an asset.
B. the price discount received from buying an asset.
C. the price discount received from selling an asset.
D. access to cash and other sources of funds to meet day-to-day expenses.
 
80. The major financial assets traded in the capital market are:
A. bank bills and commercial paper.
B. Treasury notes and certificates of deposits.
C. bonds and convertible securities.
D. shares and bonds.
 
81. Compared with Treasury bonds, Treasury notes generally:
A. have a longer maturity.
B. pay interest annually.
C. are issued in the capital markets.
D. are discount securities.
 
82. If you purchase an Australian government bond, that bond is:
A. an asset to you but a liability for the Australian government.
B. an asset to you as well as an asset for the Australian government.
C. a liability to you but an asset for the Australian government.
D. a liability to you as well as a liability for the Australian government.
 
83. When government borrowing reduces the amount of funds available for lending to businesses, this is called:
A. credit rationing.
B. crowding out.
C. capital rationing.
D. government quotas.
 
84. All of the following are key financial services provided by the financial system except:
A. liquidity.
B. risk transfer.
C. profitability.
D. information.
 
85. Which of the following would be most likely to use financial markets to borrow?
A. A household with a small amount saved
B. A small business wanting to borrow to buy some machinery
C. A government authority wanting to borrow to finance highway construction
D. A company with a poor credit rating
 
86. Generally, financial instruments are divided into three broad categories of equity, debt and derivatives. Which of the following are usually issued by a company to raise new funds?
i. Unsecured notes
ii. Ordinary shares
iii. Debentures
iv. Bills of exchange
v. Futures contracts
vi. Preference shares
A. ii, iii, iv, v
B. ii, iv, v, vi
C. i, ii, iii, iv
D. i, ii, iv, v
 
87. The movement of funds between the four sectors of a domestic economy and the rest of the world is called:
A. flow of funds.
B. sector analysis.
C. sectorial flows.
D. cross-sector flows.
 
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.
 
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.
 
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