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

7. Sellers of financial claims promise to pay back borrowed funds:
A. by borrowing extra funds in the future.
B. based on their expectation of having surplus funds in the future.
C. by selling other assets.
D. by reducing their costs relative to their incomes.
Ans: B
AACSB: Reflective thinking
Bloom's: Synthesis
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: Introduction
Topic: Introduction


 
8. A savings-surplus unit is an entity:
A. that needs to borrow funds from a surplus unit.
B. which has an income that exceeds its spending.
C. whose spending exceeds its income.
D. called a company.
Ans: B
AACSB: Communication
Bloom's: Knowledge
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: Introduction
Topic: Introduction


 
9. The process of facilitating the flow of funds between borrowers and lenders performed by the financial system:
A. is hindered by the problem of ‘double coincidence of wants'.
B. greatly reduces the probability of inflation.
C. increases the rate of economic growth of a country.
D. occurs only through financial intermediaries.
Ans: C
AACSB: Communication
Bloom's: Knowledge
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: Introduction
Topic: Introduction


 
10. Both real and financial assets have four principal attributes that are significant factors in the investment decision process. These are:
i. liquidity
ii. capital gain
iii. risk
iv. return or yield
v. time pattern of future cash flows
vi. price and cash flow volatility
A. i, ii, iii, iv
B. i, iii, iv, v
C. i, iii, iv, vi
D. ii, iii, iv, v
Ans: B
AACSB: Reflective thinking
Bloom's: Evaluation
Difficulty: Medium
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: 1.02 The financial system and financial institutions
Topic: The financial system and financial institutions


 
11. Which of the following is NOT associated with characteristics of shares?
A. Part ownership of a company
B. Capital gains
C. A fixed interest payment
D. Dividends
Ans: C
AACSB: Diverse and multicultural
Bloom's: Evaluation
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.03 Define the main classes of financial instruments that are issued into the financial system, that is, equity, debt, hybrids and derivatives.
Section: 1.02 The financial system and financial institutions
Topic: The financial system and financial institutions


 
12. A financial institution that obtains most of its funds from deposits is a/an:
A. investment bank.
B. unit trust.
C. commercial bank.
D. general insurer.
Ans: C
AACSB: Reflective thinking
Bloom's: Analysis
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.
Section: 1.02 The financial system and financial institutions
Topic: The financial system and financial institutions


 
13. Institutions that specialise in off-balance-sheet advisory services are called:
A. depository financial institutions.
B. contractual institutions.
C. finance companies.
D. investment banks.
Ans: D
AACSB: Communication
Bloom's: Comprehension
Difficulty: Easy
Est time: <1 minute
Learning Objective: 1.02 Explain the functions of a modern financial system and categorise the main types of financial institutions, including depository financial institutions, investment banks, contractual savings institutions, finance companies and unit trusts.