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1、Viney Financial instruments,institutions and markets testbank 题库Chapter 01 A modern financial system: An overview 1: The exchange of goods and services is made more efficient by: A: barterB*: moneyC: governmentsD: some combination of government transfer and barter 2: A nation state that has only a b
2、arter system has high transaction costs because:A: the difficulties of trade result in high legal costs because of the contracts required B*: traders must spend quite a bit of time looking for trading partnersC: taxes under this system consume a large amount of outputD: the difficulties of trade req
3、uire high insurance premiums 3: The term medium of exchange for money refers to its use as: A: coinageB: currencyC*: anything that is widely accepted as payment for goods and servicesD: any standard of value that prices can be expressed in 4: The role of money as a store of value refers to: A: the v
4、alue of money falling only when the money supply fallsB: the value of money falling only when the money supply increasesC*: the fact that money allows worth to be stored readilyD: the fact that money never loses its value compared with other assets 5: Money increases economic growth by assisting tra
5、nsfers from: A: consumers to investorsB*: savers to borrowersC: businesses to consumersD: borrowers to investors 6: Financial markets have developed to facilitate the exchange of money between savers and borrowers. Which of the following is NOT a function of money?A: a store of valueB: a medium of e
6、xchange for settling economic transactionsC*: a claim to future cash flowsD: short-term protection against inflation 7: Buyers of financial claims lend their excess funds as they: A: expect to borrow extra funds in the futureB*: want surplus funds in the futureC: want to invest in the futureD: want
7、to increase their costs relative to their incomes 8: Sellers of financial claims promise to pay back borrowed funds: A: by borrowing extra funds in the futureB*: based on their expectation of having surplus funds in the futureC: by selling other assetsD: by reducing their costs relative to their inc
8、omes 9: A savings-surplus unit is one: A: that needs to borrow funds from a surplus unitB*: whose income exceeds its spendingC: whose spending exceeds its incomeD: that generally is a company 10: The process of facilitating the flow of funds between borrowers and lenders performed by the financial s
9、ystem: A: is hindered by the problem of double coincidence of wantsB: greatly reduces the probability of inflationC*: increases the rate of economic growth of a countryD: occurs only through financial intermediaries 11: Both real and financial assets have four principal attributes that are significa
10、nt factors in the investment decision process. These are: I. liquidityII. capital gainIII. riskIV. return or yieldV. time pattern of future cash flowsVI. price and cash flow volatility A: I, II, III, IVB*: I, III, IV, VC: I, III, IV, VID: II, III, IV, V 12: All of the following are associated with c
11、haracteristics of shares EXCEPT:A: part ownership of a companyB: capital gainsC*: a fixed interest paymentD: dividends 13: A financial institution that obtains most of its funds from deposits is: A: an investment bankB: a unit trustC*: a commercial bankD: a general insurer Level: 2 Question 14: Inst
12、itutions that specialise in off-balance sheet advisory services are called: A: depository financial institutionsB: contractual institutionsC: finance companiesD*: investment banks Level: 2 Question 15: A _ is a financial intermediary that receives premium payments that are used to purchase assets to
13、 cover future possible payments. A: building societyB: credit unionC: savings bankD*: life insurance office Level: 2 Question 16: Financial institutions, whose liabilities specify that, in return for the payment of periodic funds to the institution, the institution will make payments in the future,
14、if and when a specified event occurs, are: A: money market corporationsB: unit trustsC*: contractual savings institutionsD: depository financial institutions Level: 3 Question 17: Financial institutions that raise the majority of their funds by selling securities in the money markets are: A: commerc
15、ial banksB: building societiesC*: finance companiesD: life insurance offices Level: 2 Question 18: All of the following are terms associated with shares EXCEPT:A: residualB: ownershipC: voting rightsD*: contractual claim Level: 2 Question 19: All of the following are characteristics commonly associa
16、ted with preference shares EXCEPT: A: a specified, fixed returnB: no voting rightsC*: higher ranking than bondholders on claims on assetsD: no entitlement to take possession of assets if the borrower defaults on paymentLevel: 2 Question 20: Long-term debt financing instruments used by companies are
17、called:A: billsB*: debenturesC: sharesD: equities Level: 2 Question 21: All of the following are associated with features of debt instruments EXCEPT: A: contractual claim against the borrowerB: periodic interest paymentsC: higher claim on assets of borrower than equity holdersD*: do not fluctuate in
18、 price like shares Level: 3 Question 22: The following are features of futures contracts EXCEPT:A: they involve an obligation to buy or sell a specified amountB*: the contract price is settled at the end of the contractC: trading of contracts occurs on an exchangeD: trading an opposite contract usua
19、lly closes out the contract Level: 3 Question 23: All of the following are features of forward contracts EXCEPT:A: they are not standardisedB: they do not trade on organised exchangesC: the contract price may be settled at the end of the contractD*: they are closed out by trading an opposite contrac
20、t Level: 3 Question 24: All of the following are features of option contracts EXCEPT when:A: the buyer does not have the obligation to proceed with the contract B: the writer of the contract receives a feeC: the price of the designated asset is determined at the beginning of the contract D*: the rig
21、ht to buy is called a put option Level: 3 Question 25: All of the following are features of swaps EXCEPT when:A: there is a contractual arrangement to exchange cash flowsB*: interest rate swaps exchange principal at the beginning and the end C: a fixed rate obligation may be exchanged for a variable
22、 rate obligation D: a swap involves currencies as well Level: 3 Question 26: The key reason for the existence of markets of financial assets is:A*: that holders of shares occasionally want to exchange them for bonds and other financial instrumentsB: the high expenditure for many individuals and busi
23、nessesC: 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 Level: 2 Question 27: Financial markets: A: facilitate the exchanges of financial assetsB: provide information about prices of financial assetsC:
24、 provide a channel for funds to flow between the providers and users of funds D*: All of the above. Level: 2 Question 28: The most important function of a financial market is: A: to provide information about sharesB: to provide a market for sharesC*: to facilitate the flow of funds between lenders a
25、nd borrowersD: to provide employment for brokers and agents Level: 2 Question 29: Financial markets: A: act as intermediaries by holding a collection of assets and issuing claims based on them to saversB*: issue claims on future cash flows of individual borrowers directly to lenders C: transmit fund
26、s indirectly between lenders and borrowersD: usually provide lenders with lower returns than other financial intermediariesLevel: 4 Question 30: A primary financial market is: A: one that offers financial assets with the highest expected returnB: one that offers the greatest number of financial asse
27、tsC*: one that involves the sale of financial assets for the first timeD: one that offers financial assets with the highest historical return Level: 2 Question 31: Purchasing unsecured notes on the Australian Stock Exchange is an example of: A: a primary market transactionB*: a secondary market tran
28、sactionC: companies raising new financeD: companies raising finance from another financial intermediary Level: 3 Question 32: When a security is sold in the financial markets for the first time, then:A: funds flow from the borrower to the saverB*: funds flow to the issuer from the saverC: it represe
29、nts a secondary transaction to the underwriterD: it is an asset for the borrower Level: 3 Question 33: All of the following are examples of primary market transactions EXCEPT: A: a company issue of shares to raise funds for an investment projectB: a government issue of bondsC*: a mortgage bondD: a m
30、ortgage loan to buy a house Level: 3 Question 34: A primary market is a market: A: for equity by major or primary companiesB*: where borrowers sell new financial instruments to buyersC: where savers sell new financial claims to borrowersD: where government securities are bought and sold Level: 3 Que
31、stion 35: Buying bonds in the long-term debt market is an example of:A: a primary market transactionB*: a secondary market transactionC: companies raising new fundsD: companies raising funds from a secondary source Level: 2 Question 36: The market where existing securities are sold is: A: the primar
32、y marketB*: the secondary marketC: the economic marketD: the financial market Level: 2 Question 37: When a large company issues a financial instrument in the financial markets: A: it buys a financial claimB*: it sells a financial claimC: funds flow indirectly from saver to borrowerD: the cost of fun
33、ds is generally higher due to the risk involved Level: 2 Question 38: Secondary markets: A: allow borrowers to raise long-term fundsB: facilitate capital raising in the primary marketC: do not raise new funds but offer liquidityD: allow portfolio restructuringE*: All of the above. Level: 4 Question
34、39: The flow of funds through financial markets increases the volume of savings and investment by: A: maintaining low interest ratesB*: providing savers with a variety of ways to lend to borrowersC: storing large quantities of cashD: offering lower interest rates than could be obtained directly from
35、 borrowersLevel: 4 Question 40: All of the following are features of financial markets EXCEPT:A: they generally provide borrowers with lower-cost funds than through a financial intermediaryB: funds are channelled directly from savers to borrowersC: contractual agreements are issued between savers an
36、d borrowersD*: they generally deal only with the purchase and sale of government securitiesLevel: 2 Question 41: A well-functioning financial market includes all of the following EXCEPT: A: a persistent increasing liquidity for most assetsB: an increased ease of restructuring portfolios of assetsC:
37、quick assimilation of information into asset pricesD*: a selection of financial assets with similar timings of cash flow to reduce riskLevel: 4 Question 42: Financial markets: A: involve the buying and selling of existing financial securities onlyB*: involve both primary and secondary transactionsC:
38、 act as intermediaries between borrowers and saversD: directly issue claims on savers to borrowers Level: 2 Question 43: Direct financing allows a borrower to: A: easily assess the level of default risk of a lenderB: match amounts and maturity of investments with borrowersC: lower search and transac
39、tion costsD*: diversify their funding sources Level: 2 Question 44: All of the following may be disadvantages of direct financing EXCEPT:A: matching amounts of funds to be borrowed with those to be lentB: assessment of the risk of the borrowerC: cost of preparing legal contracts, taxation and accoun
40、ting adviceD*: cost of the financial intermediary involved Level: 2 Question 45: An issue of debentures is an example of: A: a secondary market transactionB: raising funding through financial intermediariesC*: a direct form of fundingD: an indirect form of funding Level: 3 Question 46: An example of
41、 an indirect form of funding is: A: an issue of debenturesB: an issue of unsecured notesC*: a term loanD: an issue of shares Level: 2 Question 47: Financial intermediaries: A*: act as a third party by holding a portfolio of assets and issuing claims based on them to saversB: issue claims on future c
42、ash flows of individual borrowers directly to lenders C: transmit funds directly between lenders and borrowersD: usually provide lenders with lower returns than other financial institutionsLevel: 4 Question 48: The flow of funds between lenders and borrowers is: A: channelled indirectly through fina
43、ncial marketsB: channelled directly through financial intermediariesC*: channelled indirectly through financial intermediariesD: channelled mainly through government agencies Level: 2 Question 49: Intermediaries, by managing the deposits they receive, are able to make long-term loans while satisfyin
44、g savers preferences for liquid claims. This statement is referring to which important attribute of financial intermediation? A: asset transformationB*: maturity transformationC: credit risk transformationD: denomination transformation Level: 3 Question 50: The main role of financial intermediaries
45、is to: A: provide advice to consumers on their financesB*: borrow funds from surplus units and lend them to borrowersC: provide funds for the government to cover budget deficitsD: help ensure enough funds in circulation in a country Level: 2 Question 51: Financial intermediaries pool the funds of: A
46、: many small savers and make loans to a few large borrowersB: a few savers and make loans to many borrowersC*: many small savers and make loans to many borrowersD: a few large savers and make loans to a few large borrowers Level: 3 Question 52: Small savers prefer to use financial intermediaries rat
47、her than lending directly to borrowers because: A: financial intermediaries offer much higher interest rates than can be obtained directly from borrowersB*: financial intermediaries offer a wide portfolio of financial instruments to the saversC: borrowers dislike dealing with saversD: savers have a claim with the
