金融市场与金融机构基础Fabozzi Chapter01
【免费下载】金融市场与金融机构基础Fabozzi Chapter01
Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones) Chapter 1 IntroductionMultiple Choice Questions1 Financial Assets1) An asset is a possession that has value in an exchange and can be classified as ________.A) financial or intangible.B) financial or variable.C) tangible or intangible.D) fixed or variable.Answer: CDiff: 2Topic: 1.1 Financial AssetsObjective: 1.5: the various ways to classify financial markets2) The financial asset is referred to as a ________ if the claim is a fixed dollar.A) debt instrument.B) common equity instrument.C) derivative instrument.D) preferred equity instrument.Answer: ADiff: 2Topic: 1.1 Financial AssetsObjective: 1.4: the distinction between debt instruments and equity instruments3) A basic economic principle is that the price of any financial asset ________ the present value of its expected cash flow, even if the cash flow is not known with certainty.A) is greater thanB) is equal toC) is less thanD) is equal to or greater thanAnswer: BDiff: 2Topic: 1.1 Financial AssetsObjective: 1.1: what a financial asset is and the principal economic functions of financial assets4) A(n) ________ such as plant or equipment purchased by a business entity shares at least one characteristic with a financial asset: Both are expected to generate future cash flow for their owner.A) tangible assetB) intangible assetC) balance sheet assetD) cash assetAnswer: ADiff: 1Topic: 1.1 Financial AssetsObjective: 1.2: the distinction between financial assets and tangible assets5) Financial assets have two principal economic functions. Which of the below is ONE of these?A) A principal economic function is to transfer funds from those who have surplus funds to borrow to those who need funds to invest in intangible assets.B) A principal economic function is to transfer funds in such a way as to redistribute the avoidable risk associated with the cash flow generated by intangible assets among those seeking and those providing the funds.C) A principal economic function is to transfer funds in such a way as to redistribute the unavoidable risk associated with the cash flow generated by tangible assets among those seeking and those providing the funds.D) A principal economic function is to transfer funds from those who have surplus funds to invest to those who need funds to invest in intangible assets.Answer: CComment: Financial assets have two principal economic functions.(1) The first is to transfer funds from those who have surplus funds to invest to those who need funds to invest in tangible assets.(2) The second economic function is to transfer funds in such a way as to redistribute the unavoidable risk associated with the cash flow generated by tangible assets among those seeking and those providing the funds.Diff: 3Topic: 1.1 Financial AssetsObjective: 1.1: what a financial asset is and the principal economic functions of financial assets6) A principal economic function to transfer funds from those who have ________ to invest to those who need funds to invest in ________.A) deficit funds; tangible assets.B) surplus funds; intangible assets.C) deficit funds; intangible assets.D) surplus funds; tangible assets.Answer: DComment: Financial assets have two principal economic functions.(1) The first is to transfer funds from those who have surplus f unds to invest to those who need funds to invest in tangible assets.(2) The second economic function is to transfer funds in such a way as to redistribute the unavoidable risk associated with the cash flow generated by tangible assets among those seeking and those providing the funds.Diff: 2Topic: 1.1 Financial AssetsObjective: 1.1: what a financial asset is and the principal economic functions of financial assets 2 Financial Markets1) Financial markets provide three economic functions. Which of the below is NOT one of these?A) The interactions of buyers and sellers in a financial market determine the price of the traded asset.B) Financial markets provide a mechanism for an investor to sell a financial asset.C) Financial markets increases the cost of transacting.D) The interactions of buyers and sellers in a financial market determine the required return on a financial asset.Answer: CComment: Financial markets provide three economic functions.First, the interactions of buyers and sellers in a financial market determine the price of the traded asset. Or, equivalently, they determine the required return on a financial asset. As the nducement for firms to acquire funds depends on the required return that investors demand, it is this feature of financial markets that signals how the funds in the economy should be allocated among financial assets. This is called the price discovery process.Second, financial markets provide a mechanism for an investor to sell a financial asset. Because of this feature, it is said that a financial market offers liquidity, an attractive feature when circumstances either force or motivate an investor to sell. If there were not liquidity, the owner would be forced to hold a debt instrument until it matures and an equity instrument until the company is either voluntarily or involuntarily liquidated.While all financial markets provide some form of liquidity, the degree of liquidity is one of the factors that characterize different markets.The third economic function of a financial market is that it reduces the cost of transacting. There are two costs associated with transacting: search costs and information costs.Diff: 3Topic: 1.2 Financial MarketsObjective: 1.3: what a financial market is and the principal economic functions it performs2) The shifting of the financial markets from dominance by retail investors to institutional investors is referred to as the ________ of financial markets.A) globalizationB) institutionalizationC) securitizationD) diversificationAnswer: BDiff: 2Topic: 1.2 Financial MarketsObjective: 1.5: the various ways to classify financial markets3) Financial markets can be categorized as those dealing with newly issued financial claims that are called the ________, and those for exchanging financial claims previously issued that are called the ________.A) secondary market; primary market.B) financial market; secondary market.C) OTC market; NYSE/AMEX market.D) primary market; secondary market.Answer: DDiff: 2Topic: 1.2 Financial MarketsObjective: 1.6: the differences between the primary and secondary markets4) Business entities include nonfinancial and financial enterprises. ________ manufacture products such as cars and computers and/or provide nonfinancial services such as transportation and utilities.A) Financial enterprisesB) Nonfinancial enterprisesC) Both financial and nonfinancial enterprisesD) None of theseAnswer: BDiff: 1Topic: 1.2 Financial MarketsObjective: 1.7: the participants in financial markets3 Globalization of Financial Markets1) Which of the below is NOT a factor that has led to the integration of financial markets?A) A factor is liberalization of markets and the activities of market participants in key financial centers of the world.B) A factor is deregulation of markets and the activities of market participants in key financial centers of the world.C) A factor is technological advances for monitoring world markets, executing orders, and analyzing financial opportunities.D) A factor is decreased institutionalization of financial markets.Answer: DComment: The factors that have led to the integration of financial markets are (1) deregulation or liberalization of markets and the activities of market participants in key financial centers of the world; (2) technological advances for monitoring world markets, executing orders, and analyzing financial opportunities; and (3) increased institutionalization of financial markets. Diff: 3Topic: 1.3 Globalization of Financial MarketsObjective: 1.8: reasons for the globalization of financial markets2) A factor leading to the integration of financial markets is ________.A) decreased institutionalization of financial markets.B) increased monitoring of markets.C) technological advances for monitoring domestic markets, executing orders, and analyzing financial opportunities.D) technological advances for monitoring world markets, executing orders, and disregarding financial opportunities.Answer: DComment: The factors that have led to the integration of financial markets are (1) deregulation or liberalization of markets and the activities of market participants in key financial centers of the world; (2) technological advances for monitoring world markets, executing orders, and analyzing financial opportunities; and (3) increased institutionalization of financial markets. Diff: 2Topic: 1.3 Globalization of Financial MarketsObjective: 1.8: reasons for the globalization of financial markets3) From the perspective of a given country, financial markets can be classified as either internal or external. The internal market is composed of two parts: the domestic market and the foreign market. The domestic market is ________.A) where the securities of issuers not domiciled in the country are sold and traded.B) where issuers domiciled in a country issue securities and where those securities are subsequently traded.C) where securities are offered simultaneously to investors in a number of countries.D) where issuers domiciled in a country issue securities and where those securities are NOT subsequently traded.Answer: BDiff: 2Topic: 1.3 Globalization of Financial MarketsObjective: 1.10: the distinction between a domestic market, a foreign market, and the Euromarket4) A reason for a corporation using ________ is a desire by issuers to diversify their source of funding so as to reduce reliance on domestic investors.A) EuromarketsB) domestic equity marketsC) domestic government marketsD) None of theseAnswer: ADiff: 1Topic: 1.3 Globalization of Financial MarketsObjective: 1.11: the reasons why entities use foreign markets and Euromarkets4 Derivative Markets1) The two basic types of derivative instruments are ________ and ________.A) insurance contracts; options contractsB) futures/forward contracts; indenturesC) futures/forward contracts; legal contractsD) futures/forward contracts; options contractsAnswer: DDiff: 2Topic: 1.4 Derivative MarketsObjective: 1.12: what a derivative instrument is and the two basic types of derivative instruments2) Derivative instruments derive their value from ________.A) market conditions at time of delivery.B) market conditions at time of issue.C) the underlying instruments to which they relate.D) variations in the future claims conveyed from spot markets.Answer: CDiff: 2Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments3) Derivative contracts provide ________.A) issuers and investors an expensive but efficient way of controlling some major risks.B) issuers and investors an inexpensive way of controlling some major risks.C) issuers and investors an inexpensive but inefficient way of controlling all major risks.D) issuers and investors an expensive way of controlling some minor risks.Answer: BDiff: 1Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments4) Derivative markets may have at least three advantages over the corresponding cash (spot) market for the same financial asset. Which of the below is ONE of these advantages?A) Transactions typically can be accomplished faster in the derivatives market.B) It will always cost more to execute a transaction in the derivatives market in order to adjust the risk exposure of an investor's portfolio to new economic information than it would cost to make that adjustment in the cash market.C) All derivative markets can absorb a greater dollar transaction without an adverse effect on the price of the derivative instrument; that is, the derivative market may be more liquid than the cash market.D) Some derivative markets can absorb a greater dollar transaction but with an adverse effect on the price of the derivative instrument; that is, the derivative market may be more liquid than the cash market.Answer: AComment: Derivative markets may have at least three advantages over the corresponding cash (spot) market for the same financial asset.First, depending on the derivative instrument, it may cost less to execute a transaction in the derivatives market in order to adjust the risk exposure of an investor’’s portfolio to new economic information than it would cost to make that adjustment in the cash market. Second, transactions typically can be accomplished faster in the derivatives market.Third, some derivative markets can absorb a greater dollar transaction without an adverse effect on the price of the derivative instrument; that is, the derivative market may be more liquid than the cash market.Diff: 3Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments5 The Role of the Government in Financial Markets1) Which of the following statements is FALSE?A) Because of the prominent role played by financial markets in economies, governments have long deemed it necessary to regulate certain aspects of these markets.B) In their regulatory capacities, governments have had little influence on the development and evolution of financial markets and institutions.C) It is important to realize that governments, markets, and institutions tend to behave interactively and to affect one another's actions in certain ways.D) A sense of how the government can affect a market and its participants is important to an understanding of the numerous markets and securities.Answer: BComment: In their regulatory capacities, governments have greatly influenced the development and evolution of financial markets and institutions.Diff: 2Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.15 the different ways that governments regulate markets, including disclosure regulation, financial activity regulation, financial institution regulation, regulation of foreign firm participation, and regulation of the monetary system2) Which of the below statements is TRUE?A) Because of differences in culture and history, different countries regulate financial markets and financial institutions in varying ways, emphasizing some forms of regulation more than others.B) The standard explanation or justification for governmental regulation of a market is that the market, left to itself, will produce its particular goods or services in an efficient manner and at the lowest possible cost.C) Governments in most developed economies have created elaborate systems of regulation for financial markets, in part because the markets themselves are simple and in part because financial markets are unimportant to the general economies in which they operate.D) Financial activity regulation are free of rules about traders of securities and trading on financial markets.Answer: AComment: The standard explanation or justification for governmental regulation of a market is that the market, left to itself, will not produce its particular goods or services in an efficient manner and at the lowest possible cost.Governments in most developed economies have created elaborate systems of regulation for financial markets, in part because the markets themselves are complex and in part because financial markets are so important to the general economies in which they operate.Financial activity regulation consists of rules about traders of securities and trading on financial markets.Diff: 3Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.14: the typical justification for governmental regulation of markets3) The regulatory structure in the United States is largely the result of ________.A) the first IPO bubble in the 20th century.B) the boom in the stock market experienced in the 1990s.C) bull markets that have occurred at various times.D) financial crises that have occurred at various times.Answer: DDiff: 1Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.16 the U.S. Department of the Treasury's proposed plan for regulatory reform4) The proposal by the U.S. Department of the Treasury, popularly referred to as the "Blueprint for Regulatory Reform" or simply Blueprint, would replace the prevailing complex array of regulators with a regulatory system based on functions. More specifically, there would be three regulators. Which of the below is NOT one of these?A) market stability regulatorB) prudential regulatorC) uninhibited regulatorD) business conduct regulatorAnswer: CDiff: 2Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.15 the different ways that governments regulate markets, including disclosure regulation, financial activity regulation, financial institution regulation, regulation of foreign firm participation, and regulation of the monetary system6 Financial Innovation1) ________ increase the liquidity of markets and the availability of funds by attracting new investors and offering new opportunities for borrowers.A) Market-broadening instrumentsB) Market-management instrumentsC) Risk-management instrumentsD) Arbitraging-broadening instrumentsAnswer: AComment: The Economic Council of Canada classifies financial innovations into the following three broad categories:(1) market-broadening instruments, which increase the liquidity of markets and the availability of funds by attracting new investors and offering new opportunities for borrowers (2) risk-management instruments, which reallocate financial risks to those who are less averse to them, or who offsetting exposure and thus are presumably better able to should them(3) arbitraging instruments and processes, which enable investors and borrowers to take advantage of differences in costs and returns between markets, and which reflect differences in the perception of risks, as well as in information, taxation, and regulationsDiff: 2Topic: 1.6 Financial InnovationObjective: 1.17 the primary reasons for financial innovation2) The Economic Council of Canada classifies financial innovations into three broad categories. Which of the below is NOT one of these?A) market-broadening instrumentsB) risk-management instrumentsC) risk-broadening instrumentsD) arbitraging instruments and processesAnswer: CComment: The Economic Council of Canada classifies financial innovations into the following three broad categories:(1) market-broadening instruments, which increase the liquidity of markets and the availability of funds by attracting new investors and offering new opportunities for borrowers (2) risk-management instruments, which reallocate financial risks to those who are less averse to them, or who offsetting exposure and thus are presumably better able to should them(3) arbitraging instruments and processes, which enable investors and borrowers to take advantage of differences in costs and returns between markets, and which reflect differences in the perception of risks, as well as in information, taxation, and regulationsDiff: 2Topic: 1.6 Financial InnovationObjective: 1.17 the primary reasons for financial innovation3) There are two extreme views of financial innovation. Which of the below is ONE of these?A) Some hold that the essence of innovation is the introduction of financial assets that are less efficient for redistributing risks among market participants.B) There are some who believe that the minor impetus for innovation has been the endeavor to circumvent regulations and find loopholes in tax rules.C) Some hold that the essence of innovation is the introduction of financial instruments that are more efficient for redistributing risks among market participants.D) None of theseAnswer: CComment: There are two extreme views of financial innovation.There are some who believe that the major impetus for innovation has been the endeavor to circumvent (or arbitrage) regulations and find loopholes in tax rules.At the other extreme, some hold that the essence of innovation is the introduction of financial instruments that are more efficient for redistributing risks among market participants.Diff: 2Topic: 1.6 Financial InnovationObjective: 1.17 the primary reasons for financial innovation4) An ultimate and important cause of financial innovation does not involve ________.A) incentives to follow existing regulation and and tax laws.B) increased volatility of interest rates, inflation, equity prices, and exchange rates.C) changing global patterns of financial wealth.D) financial intermediary competition.Answer: AComment: It would appear that many of the innovations that have passed the test of time and have not disappeared have been innovations that provided more efficient mechanisms for redistributing risk. Other innovations may just represent a more efficient way of doing things. Indeed, if we consider the ultimate causes of financial innovation,the following emerge as the most important:1. Increased volatility of interest rates, inflation, equity prices, and exchange rates.2. Advances in computer and telecommunication technologies.3. Greater sophistication and educational training among professional market participants.4. Financial intermediary competition.5. Incentives to get around existing regulation and and tax laws.6. Changing global patterns of financial wealth.Diff: 2Topic: 1.6 Financial InnovationObjective: 1.17 the primary reasons for financial innovationTrue/False Questions1 Financial Assets1) An equity instrument (also called a residual claim) obligates the issuer of the financial asset to pay the holder an amount based on earnings, if any, after holders of debt instruments have been paid.Answer: TRUEDiff: 1Topic: 1.1 Financial AssetsObjective: 1.4: the distinction between debt instruments and equity instruments2) A intangible asset is one whose value depends on particular physical properties such as buildings, land, or machinery. Tangible assets, by contrast, represent legal claims to some future benefit.Answer: FALSEComment: A tangible asset is one whose value depends on particular physical properties such as buildings, land, or machinery. Intangible assets, by contrast, represent legal claims to some future benefit.Diff: 1Topic: 1.1 Financial AssetsObjective: 1.2: the distinction between financial assets and tangible assets3) Financial assets have two principal economic functions. One function is to transfer funds from those who have surplus funds to invest to those who need funds to invest in tangible assets. Answer: TRUEDiff: 1Topic: 1.1 Financial AssetsObjective: 1.1: what a financial asset is and the principal economic functions of financial assets 2 Financial Markets1) The three economic functions of financial markets are: to improve the price discovery process; to lessen liquidity; and, to reduce the cost of transacting.Answer: FALSEComment: The three economic functions of financial markets are: to improve the price discovery process; to enhance liquidity; and to reduce the cost of transacting.Diff: 2Topic: 1.2 Financial MarketsObjective: 1.3: what a financial market is and the principal economic functions it performs2) The market participants include households, business entities, national governments, national government agencies, state and local governments, supranationals, and regulators.Answer: TRUEDiff: 1Topic: 1.2 Financial MarketsObjective: 1.3: what a financial market is and the principal economic functions it performs3) One economic function of a financial market is to reduce the cost of transacting. There are two costs associated with transacting: search costs and information costs.Answer: TRUEDiff: 1Topic: 1.2 Financial MarketsObjective: 1.3: what a financial market is and the principal economic functions it performs3 Globalization of Financial Markets1) Globalization means the integration of financial markets throughout the world into an international financial market.Answer: TRUEDiff: 1Topic: 1.3 Globalization of Financial MarketsObjective: 1.8: reasons for the globalization of financial markets2) The domestic market in any country is the market where the securities of issuers not domiciled in thecountry are sold and traded.Answer: FALSEComment: The foreign market in any country is the market where the securities of issuers not domiciled in the country are sold and traded.Diff: 1Topic: 1.3 Globalization of Financial MarketsObjective: 1.10: the distinction between a domestic market, a foreign market, and the Euromarket3) Global competition has forced governments to exercise control various aspects of their financial markets so that their financial enterprises can compete effectively around the world. Answer: FALSEComment: Global competition has forced governments to deregulate (or liberalize) various aspects of their financial markets so that their financial enterprises can compete effectively around the world.Diff: 1Topic: 1.3 Globalization of Financial MarketsObjective: 1.8: reasons for the globalization of financial markets4 Derivative Markets1) Derivative instruments play a critical role in global financial markets.Answer: TRUEDiff: 1Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments2) IBM pension fund owns a portfolio consisting of the common stock of a large number of companies. Suppose the pension fund knows that two months from now it must sell stock in its portfolio to pay beneficiaries $20 million. The risk that IBM pension fund faces is that two months from now when the stocks are sold, the price of most or all stocks may be higher than they are today.Answer: FALSEComment: IBM pension fund owns a portfolio consisting of the common stock of a large number of companies. Suppose the pension fund knows that two months from now it must sell stock in its portfolio to pay beneficiaries $20 million. The risk that IBM pension fund faces is that two months from now when the stocks are sold, the price of most or all stocks may be lower than they are today.Diff: 2Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments3) When the option grants the owner of the option the right to buy a financial asset from the other party, the option is called a put option.Answer: FALSEComment: When the option grants the owner of the option the right to buy a financial asset from the other party, the option is called a call option.Diff: 2Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments5 The Role of the Government in Financial Markets1) The market stability regulator would take on the traditional role of the Federal Reserve by giving it the responsibility and authority to ensure overall financial market stability.Answer: TRUEDiff: 1Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.15 the different ways that governments regulate markets, including disclosure regulation, financial activity regulation, financial institution regulation, regulation of foreign firm participation, and regulation of the monetary system2) Blueprint regulation is the form of regulation that requires issuers of securities to make publica large amount of financial information to actual and potential investors.Answer: FALSEComment: Disclosure regulation is the form of regulation that requires issuers of securities to make public a large amount of financial information to actual and potential investors.Diff: 1Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.16 the U.S. Department of the Treasury's proposed plan for regulatory reform3) Financial activity regulation is the form of regulation that requires issuers of securities to make public a large amount of financial information to actual and potential investors. Answer: FALSEComment: Disclosure regulation is the form of regulation that requires issuers of securities to make public a large amount of financial information to actual and potential investors.NOTE. Financial activity regulation consists of rules about traders of securities and trading on financial markets.Diff: 1Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.14: the typical justification for governmental regulation of markets。
金融市场与金融机构中文答案
金融市场与金融机构中文答案【篇一：fabozzi_金融市场与金融机构基础课后答案】the u.s. federal reserveand the creation of moneycentral banks and their purposethe primary role of a central bank is to maintain the stability of the currency and money supply for a country or a group of countries. the role of central banks can be categorized as: (1) risk assessment, (2) risk reduction, (3) oversight of payment systems, (4) crisis management.one of the major ways a central bank accomplishes its goals is through monetary policy. for this reason, central banks are sometimes called monetary authority. in implementing monetary policy, central banks, acting as a reserve bank, require private banks to maintain and deposit the required reserves with the central bank. in times of financial crisis, central banks perform the role of lender of last resort for the banking system. countries throughout the world may have central banks. additionally, the european central bank is responsible for implementing monetary policy for the member countries of the european union.in implementing monetary and economic policies, the united states is a member of an informal network of nations. this group started in 1976 as the group of 6, or g6: us, france, germany, uk, italy, and japan. thereafter, canada joined to for the g7. in 1998, russia joined to form the g8.the central bank of the united states: the federal reserve systemthe federal reserve system consists of 12 banking districts covering the entire country. created in 1913, the federal reserve is the government agency responsible for the management of the us monetary and banking systems. it is independent of the political branches of government. the fed is managed by a seven-member board of governors, who are appointed by the president and approved by congress.the fed’s tools for monetary management have been made more difficult by financial innovations. the public’s increasing acceptance of money market mutual funds has funneled alarge amount of money into what are essentially interest-bearing checking accounts. securitization permits commercial banks to change what once were illiquid consumer loans of several varieties into securities. selling these securities gives the banks a source of funding that is outside the fed’s influence.instrument of monetary policy: how the fed influences the supply of moneythe fed has three instruments at its disposal to affect the level of reserves.under our fractional reserve banking system have to maintain specified fractional amounts of reserves against their deposits. the fed can raise or lower these required reserve ratios, thereby permitting banks to decrease or increase their lending and investment portfolios. a bank’s total reserves equal its required reserves plus any excess reserves.the fed’s most powerful instrument is its authority to conduct open market operation. it buys and sells in open debt markets government securities for its own accounts. the fed prefers to use treasury bills because it can make its substantial transactions without seriously disrupting the prices or yields of bills.the federal open market committee, or fomc, is the unit that decides on the general issues of changing the rate of growth in the money supply, by open market sales or purchases of securities. the implementation of policy through open market operations is the responsibility of the trading desk of the federal reserve bank of new york.the fed often employs variants of simple open market purchases and sales, these are called the repurchase agreement (or repo) and the reverse repo. in a repo, the fed buys a particular amount of securities from a seller that agrees to repurchase the same number of securities for a higher price at some future time. in a reverse repo, the fed sells securities and makes a commitment to buy them back at a higher price later.a bank borrowing from the fed is said to use the discount window. the discount rate is the rate charged to banks borrowing directly from the fed. raising the rate is designed todiscourage such borrowing, while lowering should have the opposite effect.different kinds of moneymoney is that item which serves as a numeraire. in a basic sense money can be defined as anything that serves as a unit of account and medium of exchange. we measure prices in dollars and exchange dollars for goods. hence coins, currency, and any items readily exchanged into dollars (checking deposits or now accounts) constitute our money supply.money and monetary aggregatesmonetary aggregates measure the amount of money available to the economy at any time. the monetary base is defined as currency in circulation (coins and federal reserve notes) and reserves in the banking system. the instruments that serve as a medium of exchange can be narrowly defined as m1, which is currency and demand deposits. m2 is m1 plus time and savings accounts, and money market mutual funds. finally, m3 is m2 plus short-term treasury liabilities. while all three aggregates are watched and monitored, m1 is the most common form of the money supply, with its trait as being the most liquid. the ratio of the money supply to the economy’s income is known as the velocity of money.the money multipier: the expansion of the money supplythe money multiplier effect arises from the fact that a small change in reserves can produce a large change in the money supply. through our fractional reserve system, a small increase will allow an individual bank, to lend out the greater part of these additional funds. these loans subsequently become deposits in other banks allowing them to expand proportionately. so, while one bank can expand its loans (or deposits) by an amount 1% of reserves required, all banks in the system can do likewise. thus, in a simple format total change in deposits can be stated as change in reserves divided by the reserve requirement, which is also the formula for perpetuity. for example, if the change in the level of reserves is $100 and the reserve requirement is 20%, the change in total deposits will be $500 for a multiplier of 5. of course, major assumptions are that banks will fully loan out their excess reserves and that depositors will not withdraw any of these extra reserves.the impact of interest rates on the money supplyhigh rates of interest may make keeping excess reserves costly, since unused funds represent loans not made and interest not earned. high rates of interest will also affect the public’s demand for hol ding cash. if deposits pay competitive interest rates, customers will be more willing to hold such bank liabilities and less cash. therefore, a higher rate of interest can actually spur growth of the money supply. more likely, however, it will deter borrowing and slow monetary growth.the money supply process in an open economyin the modern era, almost every country has an open economy. foreign commercial and central banks hold dollar accounts in the united states. their purchases and sales of these deposits can affect exchange rates of the dollar against their own currency. the fed has responsibility for maintaining stability in exchange rates. a purchase of foreign exchange with dollars depreciates the dollar’s value, but it also adds dollars to the accounts of foreign banks in this country, thus adding to the u.s. monetary base. most central banks of large economies own or stand ready to own a large amount of each of the world’s major currencies, which are considered international reserves. sales of foreign exchange transactions have monetary base implication and hence consequences for the domestic money supply, emphasis is given to coordinating monetarypolicies among developed nations.answers to questions for chapter 4(questions are in bold print followed by answers.)1. what is the role of a central bank?the role of a central bank has several functions: risk assessment, risk reduction, oversight of payment systems, and crisis management. it can do this through monetary policies, and through the implementation of regulations.2. why is it argued that a central bank should be independent of the government?central banks should be independent of the short-term political interests and political influences generally in setting economic policies.3. identify each participant and its role in the process bywhich the money supply changes and monetary policy is implemented.the fed determines monetary policy and seeks to implement it through changes in reserves. it is up to the nation’s banking system to act on changes in reserves thereby affecting deposits, which constitute the greater part of the m1 definitionof the money supply.4. describe the structure of the board of governors of the federal reserve system.the board of governors of the federal reserve system consistsof 7 members who are appointed to staggered 14-year terms.the board reviews discount operations and sets legal reserve requirements. in addition, all 7 members of the board serve on the federal open market committee (fomc), which determinesthe direction and magnitude of open-market operations. such operations constitute the key instrument for implementing monetary policy.5.a. explain what is meant by the statement “the united stateshas a fractional reserve banking system.”b. how are these items related: total reserves, required reserves, and excess reserves?a. a fractional reserve system requires that a fraction orpercent of a bank’s reserve be placed either in currency invault or with the federal reserve system.b. total reserves are the amounts that banks hold in cash or at the fed. required reserves are amounts required by the fed to meet some specific or legal reserve ratio to deposits. excess reserves are bank reserves in currency and at the fed whichare in excess of legal requirements. since these amounts arenon-interest bearing, banks are often willing to lend these surplus funds to deficit banks at the fed funds rate.【篇二：金融市场与金融机构基础(第9章) 英文版答案】ter 9(questions are in bold print followed by answers.)1. your broker is recommending that you purchase u.s. government bonds. here is the explanation: listen, in thesetimes of uncertainty, with many companies going bankrupt, itmakes sense to play it safe and purchase long-term government bonds. they are issued by the u.s. government, so they are risk free. how would you respond to the broker?u.s. government bonds may be free of default risk, but they are not free from interest rate risk, which may cause the bond price to decline, resulting in a capital loss should the holder of bond sell it before maturity. even then there is the inflation premium risk, which means that the principal may have less purchasing power at maturity than it does today.2. you just inherited 30,000 shares of a company you have never heard of, abd corporation. you call your broker to find out if you have finally struck it rich. afterseveral minutes, she comes back on the telephone and says: “i don’t have a clue about these shares. it’s too bad they are not traded in a financial market. that would make life a lot easier for you. ”what does she mean by this?if the shares are traded on the market, and if the market is efficient, the current price would denote the value of the stock. without market price information, share value would have to be approximated through other time-consuming and less reliable methods.3. suppose you own a bond that pays $75 yearly in coupon interest and that is likely to be called in two years (because the firm has already announced that it will redeem the issue early). the call price will be $1,050.what is the price of your bond now, in the market, if the appropriate discount rate for this asset is 9%?po = $75 (pvifa) 2.09 + $1050 (pvif) 2.09= $75 x 1.7591 + $1050 x .8417 = $1015.724. your broker has advised you to buy shares of hungry boy fast foods, which has paid a dividend of $1.00 per year for 10 years and will (according to the broker) continue to do so for many years. the broker believes that the stock, which now has a price of $12, will be worth $25 per share in five years. you have good reason to think that the discount rate for this firm’s stock is 22% per year, because that rate compensates the buyer for all pertinent risks. is the stock’s present price a good approximation of its true financial value?po = $1 (pvifa) 5.22 + $25 x (pvif) 5.22 = .3715 = $12.15the price is right, in fact the stock is slightly undervalued.5. you have been considering a zero-coupon bond, which pays no interest but will pay a principal of $1,000 at the end of five years. the price of the bond is now $712.99, and its required rate of return is 7.0%. this morning’s news contained a surprising development. the government announced that the rate of inflation appears to be 5.5% instead of the 4% that most people had been expecting. (suppose most people had thought the real rate of interest was 3%.) what would be the price of the bond, once the market began to absorb this new information about inflation?the nominal required rate of return is (real rate plus inflation) ir + if or currently 3% plus 4% = 7%. if if becomes 5.5% then the new required rate of return becomes 8.5%. the price of the bond would then be $1000/(1.085)5 or $665.05.6. state the difference in basis points between each of the following:a. 5.5% and 6.5%b. 7% and 9%c. 6.4% and 7.8%d. 9.1% and 11.9%a. 100 basis pointsb. 200 basis pointsc. 140 basis pointsd. 280 basis points7.a. does a rise of 100 basis points in the discount rate change the price of a 20-year bond as much as it changes the price of a four-year bond, assuming that both bonds have the same coupon rate and offer the same yield?b. does a rise of 100 basis points in the discount rate change the price of a 4% coupon bond as much as it changes the price of a 10% coupon bond, assuming that both bonds have the same maturity and offer the same yield?c. does a rise of 100 basis points in the discount rate change the price of a 10-year bond to the same extent if the discount rate is 4% as it does if the discount rate is 12%?a. the price of the 20-year bond will fall more than that of the 4-year bond because there are more years for the new discount to apply to the cash flows of the 20-year bond.b. the price of the low coupon bond will change more due to the low amount of cash flows that can be reinvested at the higher rate.c. a change from the 4% base will lead to a larger change in price.8.during the early 1980s, interest rates for many long-term bonds were above 14%. in the early 1990s, rates on similar bonds were far lower. what do you think this dramatic decline in market interest rates means for the price volatility of bonds in response to a change in interest rates?since the direction of the interest rate change is downward, price volatility should increase.9.a. what is the cash flow of a 6% coupon bond that pays interest annually, matures in seven years, and has a principal of $1,000?b. assuming a discount rate of 8%, what is the price of this bond?c. assuming a discount rate of 8.5%, what is the price of this bond?d. assuming a discount rate of 7.5%, what is the price of this bond?e. what is the duration of this bond, assuming that the price is the one you calculated in part (b)?f. if the yield changes by 100 basis points, from 8% to 7%, by how much would you approximate the percentage price change to be using your estimate of duration in part (e)?g. what is the actual percentage price change if the yield changes by 100 basis points?a. $60 a year interest for 7 years plus $1000 principal in year 7 for a total of $1420 in cash flow.b. 5.2064 x $60 + .583 x $1000 = $895.38c. 5.119 x $60 + .565 x $1000 = $872.14d. 5.297 x $60 + .603 x $1000 = $920.82e. =$48.68/8.95=5.44$895.38 (0.85-.075)f. applying the formula-d (change in yield) = -5.44 (.01) or a price increase of 5.42%.g. price at 8% =$895.88, at 7% = $946.06, so actual percentage change is ($946.06 - $895.88)/$895.88=5.6%.10. why is it important to be able to estimate the duration of a bond or bond portfolio?to answer this question, we must understand that duration is related to percentage price change.a simple formula can be used to calculate the approximate duration of a bond or bond portfolio. all we are interested in is the percent price change of a bond when interest rates change by a small amount. to control interest rate risk, it is thus necessary to be able to measure it. duration provides that measure.11. explain why you agree or disagree with the following statement: “determining the duration of a financial asset is a simple process.”disagree. determining the duration of a financial asset is not simple process. because for most assets, the cash flow can change when interest rates change. therefore, if a change in the cash flow is not considered, duration calculations can be misleading.12. explain why the effective duration is a more appropriate measure of a complexfinancial instrument’s price sensitiv ity to interest rate changes than is modified duration.modified duration is derived with the assumption that cash flows do not change as interest rates change. effective duration is calculated with the assumption of changing cash flows. for complex finan cial instruments’ price sensitivity to interest rate changes could be very large. hence, the importance of effective duration becomes significant.【篇三：米什金《金融市场与金融机构》课后习题及其答案】class=txt>345。
金融市场与金融机构Chapter1
big killing 大赚一笔 big loss 巨大损失 Dow Jones industrial average 道琼斯工业平均指数
14
Stock Market
15
1.1.3 The Foreign Exchange Market
foreign exchange market: The market in which exchange rates are determined. The market is where the conversion (the currency in the country of origin into the currency of the country they are going to) take place, and so it is instrumental in moving funds between countries. foreign exchange rate: ( exchange rate). The price of one currency in terms of 订购现钞的平均 结算价，每1000张新钞从69.66美元增加 到86.36美元
20
21
22
1.2.1 Structure of the Financial System
financial intermediaries: Institutions such as commercial banks, savings and loan associations, mutual savings bank, credit unions, insurance companies, mutual funds, pension funds, and finance companies that borrow funds from people who have saved and in turn make loans to others.
fabozzi_金融市场与金融机构基础课后答案.doc
CHAPTER 4THE U.S. FEDERAL RESERVEAND THE CREATION OF MONEYCENTRAL BANKS AND THEIR PURPOSEThe primary role of a central bank is to maintain the stability of the currency and money supply for a country or a group of countries. The role of central banks can be categorized as: (1) risk assessment, (2) risk reduction, (3) oversight of payment systems, (4) crisis management.One of the major ways a central bank accomplishes its goals is through monetary policy. For this reason, central banks are sometimes called monetary authority. In implementing monetary policy, central banks, acting as a reserve bank, require private banks to maintain and deposit the required reserves with the central bank. In times of financial crisis, central banks perform the role of lender of last resort for the banking system. Countries throughout the world may have central banks. Additionally, the European Central Bank is responsible for implementing monetary policy for the member countries of the European Union.There is widespread agreement that central banks should be independent of the government so that decisions of the central bank will not be influenced for short-term political purposes such as pursuing a monetary policy to expand the economy but at the expense of inflation.In implementing monetary and economic policies, the United States is a member of an informal network of nations. This group started in 1976 as the Group of 6, or G6: US, France, Germany, UK, Italy, and Japan. Thereafter, Canada joined to for the G7. In 1998, Russia joined to form the G8.THE CENTRAL BANK OF THE UNITED STATES: THE FEDERAL RESERVE SYSTEMThe Federal Reserve System consists of 12 banking districts covering the entire country. Created in 1913, the Federal Reserve is the government agency responsible for the management of the US monetary and banking systems. It is independent of the political branches of government. The Fed is managed by a seven-member Board of Governors, who are appointed by the President and approved by Congress.The Fed's tools for monetary management have been made more difficult by financial innovations. The public's increasing acceptance of money market mutual funds has funneled a large amount of money into what are essentially interest-bearing checking accounts. Securitization permits commercial banks to change what once were illiquid consumer loans of several varieties into securities. Selling these securities gives the banks a source of funding that is outside the Fed's influence.INSTRUMENT OF MONETARY POLICY: HOW THE FED INFLUENCES THE SUPPLY OF MONEYThe Fed has three instruments at its disposal to affect the level of reserves.Reserve RequirementsUnder our fractional reserve banking system have to maintain specified fractional amounts of reserves against their deposits. The Fed can raise or lower these required reserve ratios, thereby permitting banks to decrease or increase their lending and investment portfolios. A bank's total reserves equal its required reserves plus any excess reserves.Open Market OperationsThe Fed's most powerful instrument is its authority to conduct open market operation. It buys and sells in open debt markets government securities for its own accounts. The Fed prefers to use Treasury bills because it can make its substantial transactions without seriously disrupting the prices or yields of bills.The Federal Open Market Committee, or FOMC, is the unit that decides on the general issues of changing the rate of growth in the money supply, by open market sales or purchases of securities. The implementation of policy through open market operations is the responsibility of the trading desk of the Federal Reserve Bank of New York.Open Market Repurchase AgreementsThe Fed often employs variants of simple open market purchases and sales, these are called the repurchase agreement (or repo) and the reverse repo. In a repo, the Fed buys a particular amount of securities from a seller that agrees to repurchase the same number of securities for a higher price at some future time. In a reverse repo, the Fed sells securities and makes a commitment to buy them back at a higher price later.Discount RateA bank borrowing from the Fed is said to use the discount window. The discount rate is the rate charged to banks borrowing directly from the Fed. Raising the rate is designed to discourage such borrowing, while lowering should have the opposite effect.DIFFERENT KINDS OF MONEYMoney is that item which serves as a numeraire. In a basic sense money can be defined as anything that serves as a unit of account and medium of exchange. We measure prices in dollars and exchange dollars for goods. Hence coins, currency, and any items readily exchanged into dollars (checking deposits or NOW accounts) constitute our money supply.MONEY AND MONETARY AGGREGATESMonetary aggregates measure the amount of money available to the economy at any time. The monetary base is defined as currency in circulation (coins and federal reserve notes) and reserves in the banking system. The instruments that serve as a medium of exchange can be narrowly defined as Mi, which is currency and demand deposits. M2 is Mi plus time and savings accounts, and money market mutual funds. Finally, M3 is M? plus short-term Treasury liabilities. While all three aggregates are watched and monitored, Mi is the most common form of the money supply, with its trait as being the most liquid. The ratio of the money supply to the economy's income is known as the velocity of money.THE MONEY MULTIPIER: THE EXPANSION OF THE MONEY SUPPLYThe money multiplier effect arises from the fact that a small change in reserves can produce a large change in the money supply. Through our fractional reserve system, a small increase will allow an individual bank, to lend out the greater part of these additional funds. These loans subsequently become deposits in other banks allowing them to expand proportionately. So, while one bank can expand its loans (or deposits) by an amount 1% of reserves required, all banks in the system can do likewise. Thus, in a simple format total change in deposits can be stated as change in reserves divided by the reserve requirement, which is also the formula for perpetuity. For example, if the change in the level of reserves is $100 and the reserve requirement is 20%, the change in total deposits will be $500 for a multiplier of 5. Of course, major assumptions are that banks will fully loan out their excess reserves and that depositors will not withdraw any of these extra reserves. THE IMPACT OF INTEREST RATES ON THE MONEY SUPPLYHigh rates of interest may make keeping excess reserves costly, since unused funds represent loans not made and interest not earned. High rates of interest will also affect the public's demand for holding cash. If deposits pay competitive interest rates, customers will be more willing to hold such bank liabilities and less cash. Therefore, a higher rate of interest can actually spur growth of the money supply. More likely, however, it will deter borrowing and slow monetary growth.THE MONEY SUPPLY PROCESS IN AN OPEN ECONOMYIn the modern era, almost every country has an open economy. Foreign commercial and central banks hold dollar accounts in the United States. Their purchases and sales of these deposits can affect exchange rates of the dollar against their own currency. The Fed has responsibility for maintaining stability in exchange rates. A purchase of foreign exchange with dollars depreciates the dollar's value, but it also adds dollars to the accounts of foreign banks in this country, thus adding to the U.S. monetary base. Most central banks of large economies own or stand ready to own a large amount of each of the world's major currencies, which are considered international reserves. Sales of foreign exchange transactions have monetary base implication and hence consequences for the domestic money supply, emphasis is given to coordinating monetarypolicies among developed nations.ANSWERS TO QUESTIONS FOR CHAPTER 4(Questions are in bold print followed by answers.)1.What is the role of a central bank?The role of a central bank has several functions: risk assessment, risk reduction, oversight of payment systems, and crisis management. It can do this through monetary policies, and through the implementation of regulations.2.Why is it argued that a central bank should be independent of the government?Central banks should be independent of the short-term political interests and political influences generally in setting economic policies.3.Identify each participant and its role in the process by which the money supply changes and monetary policy is implemented.The Fed determines monetary policy and seeks to implement it through changes in reserves. It is up to the nation's banking system to act on changes in reserves thereby affecting deposits, which constitute the greater part of the M| definition of the money supply.4.Describe the structure of the board of governors of the Federal Reserve System.The Board of Governors of the Federal Reserve System consists of 7 members who are appointed to staggered 14-year terms. The Board reviews discount operations and sets legal reserve requirements. In addition, all 7 members of the Board serve on the Federal Open Market Committee (FOMC), which determines the direction and magnitude of open-market operations. Such operations constitute the key instrument for implementing monetary policy.5.a・ Explain what is meant by the statement "the United States has a fractional reserve banking system."b. How are these items related: total reserves, required reserves, and excess reserves?a. A fractional reserve system requires that a fraction or percent of a bank's reserve be placedeither in currency in vault or with the Federal Reserve System.b.Total reserves are the amounts that banks hold in cash or at the Fed. Required reserves areamounts required by the Fed to meet some specific or legal reserve ratio to deposits. Excess reserves are bank reserves in currency and at the Fed which are in excess of legal requirements.Since these amounts are non-interest bearing, banks are often willing to lend these surplus funds to deficit banks at the Fed funds rate.5.What is the required reserve ratio, and how has the 1980 Depository Institutions Deregulation and Monetary Control Act constrained the Fed's control over the ratio?The required reserve ratio is the fraction of deposits a bank must hold as reserves. The DIDMCA constrained the Fed's control over the ratio by letting Congress set ranges of reserves for demand and time deposits.6.In what two forms can a bank hold its required reserves?A bank can hold its reserves in the form of currency in vault or in deposit at the Fed.8.a.What is an open market purchase by the Fed?b.Which unit of the Fed decides on open market policy, and what unit implements thatpolicy?c.What is the immediate consequence of an open market purchase?a.An open market purchase by the Fed consists of the purchase of U.S. Treasury securities.b.The FOMC decides on open market policy and directs the Federal Reserve Bank of New Yorkto implement it through sales and purchases of these securities.c.The immediate consequence of an open market purchase is to supply the seller of the securitywith a check on the Federal Reserve System that he can deposit in his bank, therebyimmediately increasing the excess reserves and thus nation's money supply.7.Distinguish between an open market sale and a matched sale (which is the same as a matched sale-purchase transaction or a reverse repurchase agreement).A matched sale or reverse repo involves the sale of a Treasury security with an agreement to buy it back at a later date and at a higher price as the cost for borrowing the funds. This contrasts with an outright sale at some discounted or premium price.8.What is the discount rate, and to what type of action by a bank does it apply?The discount rate is the rate a bank pays to borrow a t the "discount window” of the Fed. Such borrowings are often undertaken to meet temporary liquidity needs. Bank needs are monitored and the Fed likes to state that borrowing from it is a "privilege and not a right.”IL Define the monetary base and M2The monetary base includes total bank reserves plus currency in the hands of the public. M2 = Mi (currency and demand deposits) + savings and time deposits.12.Describe the basic features of the money multiplier.The money multiplier is crucial to the concept of money creation and is analogous to the idea of the autonomous spending multiplier and formula for a perpetuity. It is the inverse of the required reserve ratio (1/rr). If the reserve ratio is .2 then the money supply will expand five times any increase in new deposits. The multiplier will be less if banks hold excess reserves or experience cash drains.13.Suppose the Fed were to inject $100 million of reserves into the banking system by an open market purchase of Treasury bills. If the required reserve ratio were 10%, what is the maximum increase in Mi that the new reserves would generate? Assume that banks make all the loans their reserves allow, that firms and individuals keep all their liquid assets in depository accounts, and no money is in the form of currency.The maximum increase in Mi will be $1 billion assuming no cash drains in the system, and banks are fully loaned up.14.Assume the situation from question 13, except now assume that banks hold a ratio of0.5% of excess reserves to deposits and the public keeps 20% of its liquid assets in the form of cash. Under these conditions, what is the money multiplier? Explain why this value of the multiplier is so much lower than the multiplier from question 13.Substitute the given values of currency ratio, required reserves ratio, and excess reserves ratio of 20%, 10% and 0.5% respectively into the formula given on page 94 of the textbook. Now we have a lower multiplier value of 3.9=1.20A 305. This is because public and banks do not deposit or lend, all they can.。
金融市场与金融机构基础FabozziChapter02
Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones)Chapter 2 Financial Institutions, Financial Intermediaries, and Asset Management Firms Multiple Choice Questions1 Financial Institutions1) Financial enterprises, more popularly referred to as financial institutions, provide a variety of services. Which of the below is NOT one of these?A) Transform financial assets acquired through the market and constituting them into a different, and more widely preferable, type of asset–which becomes their liability.B) Exchange financial assets on behalf of customers but not for their own accounts.C) Manage the portfolios of other market participants.D) Assist in the creation of financial assets for their customers, and then sell those financial assets to other market participants.Answer: BComment: Financial enterprises exchange financial assets both on behalf of customers and for their own accounts.Diff: 2Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions2) Financial intermediaries include ________that acquire the bulk of their funds by offering their liabilities to the public mostly in the form of deposits; insurance companies, pension funds, and finance companies.A) depository institutionsB) utilitiesC) initial public offeringsD) preferred equity instrument.Answer: ADiff: 1Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions3) Some nonfinancial enterprises have subsidiaries that provide financial services. These financial institutions are called ________.A) free finance companies.B) captive finance companies.C) captive investment companies.D) captive finance shares.Answer: BComment: Some nonfinancial enterprises have subsidiaries that provide financial services. For example, many large manufacturing firms have subsidiaries that provide financing for the parent company’s customer. These financial institutions are called captive finance companie s. Examples include General Motors Acceptance Corporation (a subsidiary of General Motors) and General Electric Credit Corporation (a subsidiary of General Electric).Diff: 2Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions4) Depository institutions include ________.A) commercial banks.B) savings and loan associations.C) savings banks and credit unions.D) All of theseAnswer: DDiff: 1Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions2 Role of Financial Intermediaries1) Financial intermediaries get funds by issuing financial claims against themselves to market participants, and then investing those funds. The investments made by financial intermediaries can be in ________.A) loans but not in securities.B) securities but not in loans.C) loans and/or securities.D) only equity.Answer: CDiff: 1Topic: 2.2 Role of Financial IntermediariesObjective: 2.2 the role of financial intermediaries2) Financial intermediaries play the basic role of transforming financial assets that are less desirable for a large part of the public into other financial assets (their own liabilities) which are more widely preferred by the public. This transformation involves at least one of four economic functions. Which of the below is NOT one of these functions?A) providing maturity intermediationB) enhancing risk via diversificationC) reducing the costs of contracting and information processingD) providing a payments mechanismAnswer: BComment: Financial intermediaries play the basic role of transforming financial assets that are less desirable for a large part of the public into other financial assets (their own liabilities) which are more widely preferred by the public. This transformation involves at least one of four economic functions: (1) providing maturity intermediation, (2) reducing risk via diversification, (3) reducing the costs of contracting and information processing, and (4) providing a payments mechanism.Diff: 2Topic: 2.2 Role of Financial IntermediariesObjective: 2.2 the role of financial intermediaries3) The commercial bank by issuing its own financial claims transforms a longer-term asset into a shorter-term one by giving the borrower a loan for the length of time sought and theinvestor/depositor a financial asset for the desired investment horizon. This function of a financial intermediary is called ________.A) diversification.B) maturity intermediation.C) information processing costs.D) providing payment mechanisms.Answer: BDiff: 2Topic: 2.2 Role of Financial IntermediariesObjective: 2.4 how financial intermediaries transform the maturity of liabilities and give both short-term depositors and longer-term, final borrowers what they want4) The economic function of financial intermediaries that transforms more risky assets into less risky ones is called ________.A) diversification.B) maturity intermediation.C) information processing costs.D) providing payment mechanisms.Answer: ADiff: 1Topic: 2.2 Role of Financial IntermediariesObjective: 2.5 how financial intermediaries offer investors diversification and so reduce the risks of their investments5) The costs of writing loan contracts are referred to as ________.A) asset costs.B) loan costs.C) information processing costs.D) contracting costs.Answer: DComment: The costs of writing loan contracts are referred to as contracting costs. There is also another dimension to contracting costs, the cost of enforcing the terms of the loan agreement.Diff: 2Topic: 2.2 Role of Financial IntermediariesObjective: 2.6 the way financial intermediaries reduce the costs of acquiring information and entering into contracts with final borrowers of funds6) Which of the below statements is FALSE?A) Investors purchasing financial assets should take the time to develop skills necessary to understand how to evaluate an investment and then apply these skills to the analysis of specific financial assets that are candidates for purchase (or subsequent sale).B) Investors who want to make a loan to a consumer or business will need to write the loan contract (or hire an attorney to do so). Although there are some people who enjoy devoting leisure time to this task, most prefer to use that time for just that–leisure.C) In addition to the opportunity cost of the time to process the information about the financial asset and its issuer, there is the cost of acquiring that information. All these costs are called contracting costs.D) One dimension to contracting costs involves the cost of enforcing the terms of the loan agreement.Answer: CComment: In addition to the opportunity cost of the time to process the information about the financial asset and its issuer, there is the cost of acquiring that information. All these costs are called information processing costs.Diff: 3Topic: 2.2 Role of Financial IntermediariesObjective: 2.6 the way financial intermediaries reduce the costs of acquiring information and entering into contracts with final borrowers of funds3 Overview of Asset/Liability Management for Financial Institutions1) To understand the reasons managers of financial institutions invest in particular types of financial assets and the types of investment strategies they use, it is necessary to have a general understanding of the ________ that they face.A) investment/employee problemB) risk management /dividend problemC) shot-term/long-term asset problemD) asset/liability problemAnswer: DDiff: 3Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.8 the nature of the management of assets and liabilities by financial intermediaries 2) The objective of a ________ is to earn a positive spread between the assets it invests in (what it has sold the money for) and the costs of its funds (what it has purchased the money for).A) limited partnershipB) corporationC) life insurance companyD) depository institutionAnswer: DDiff: 2Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.8 the nature of the management of assets and liabilities by financial intermediaries3) Which of the below statements is FALSE?A) The nature of the liabilities dictates the investment strategy a financial institution will pursue.B) The objective of a depository institution is to earn a positive spread between the assets it invests in (what it has sold the money for) and the costs of its funds (what it has purchased the money for).C) Life insurance companies and, to a certain extent, property and casualty insurance companies are in the spread business.D) Pension funds are in the spread business in that they do not raise funds themselves in the market.Answer: DComment: Pension funds are not in the spread business in that they do not raise funds themselves in the market.Diff: 1Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.8 the nature of the management of assets and liabilities by financial intermediaries4) Which of the below statements is TRUE?A) For Type-II Liabilities, both the amount and the timing of the liabilities are known with certaintyB) By the liabilities of a financial institution, we mean the amount and timing of the cash outlays that must be made to satisfy the contractual terms of the obligations issued.C) When we refer to a cash outlay as being uncertain, we mean that it cannot be predicted.D) Type-I Liabilities, the amount of cash outlay is known, but the timing of the cash outlay is uncertain.Answer: BComment: For Type-I Liabilities, both the amount and the timing of the liabilities are known with certainty. Type-II Liabilities, the amount of cash outlay is known, but the timing of the cash outlay is uncertain. When we refer to a cash outlay as being uncertain, we do not mean that it cannot be predicted.Diff: 3Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.9 how different financial institutions have differing degrees of knowledge and certainty about the amount and timing of the cash outlay of their liabilities5) With this type of liability, the timing of the cash outlay is known, but the amount is uncertain.A) Type-I LiabilitiesB) Type-II LiabilitiesC) Type-III LiabilitiesD) Type-IV LiabilitiesAnswer: CDiff: 2Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.9 how different financial institutions have differing degrees of knowledge and certainty about the amount and timing of the cash outlay of their liabilities4 Concerns of Regulators1) ________ is a broadly used term to describe several types of risk.A) Credit riskB) Settlement riskC) Counterparty riskD) Market riskAnswer: ADiff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.11 concerns regulators have with financial institutions2) ________ is the risk that a counterparty in a trade fails to satisfy its obligation.A) Liquidity riskB) Settlement riskC) Counterparty riskD) Market riskAnswer: CDiff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.11 concerns regulators have with financial institutions3) Because of uncertainty about the timing and/or the amount of the cash outlays, a financial institution must be prepared ________.A) to have sufficient cash to satisfy its obligations.B) to have sufficient projects to satisfy its capital budget constraints.C) to have sufficient risk to satisfy its obligations.D) to have sufficient risk to satisfy its conservative investors.Answer: ADiff: 1Topic: 2.4 Concerns of RegulatorsObjective: 2.10 why financial institutions have liquidity concerns4) ________ is the risk to a financial institution's economic well-being that results from an adverse movement in the market price of assets it owns.A) Credit riskB) Settlement riskC) Funding liquidity riskD) Market riskAnswer: DDiff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.5 how financial intermediaries offer investors diversification and so reduce the risks of their investments5) ________ is the risk that the financial institution will be unable to obtain funding to obtain cash flow necessary to satisfy its obligations.A) Funding liquidity riskB) Credit riskC) Settlement riskD) Market riskAnswer: ADiff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.10 why financial institutions have liquidity concerns5 Asset Management Firms1) Which of the following statements is FALSE?A) Asset management firms manage the funds of individuals, businesses, endowments and foundations, and state and local governments.B) Asset management firms are ranked semi-annually by Pension & Investments with the ranking based on the number of liabilities under management.C) Asset management firms are either affiliated with some financial institution (such as a commercial bank, insurance company, or investment bank) or are independent companies.D) Larger institutional clients seeking the services of an asset management firm typically do not allocate all of their assets to one asset management firm.Answer: BComment: Asset management firms are ranked annually by Pension & Investments with the ranking based on the number of assets under management.Diff: 2Topic: 2.5 Asset Management FirmsObjective: 2.12 the general characteristics of asset management firms2) ________ seeking the services of an asset management firm typically do not allocate all of their assets to one asset management firm firm.A) Smaller institutional clientsB) Larger institutional clientsC) Depository institutionsD) GIC institutionsAnswer: BDiff: 1Topic: 2.5 Asset Management FirmsObjective: 2.12 the general characteristics of asset management firms3) Asset management firms receive their compensation ________ from management fees charged based on the market value of the assets managed for clients.A) primarilyB) secondarilyC) totallyD) to a minor extentAnswer: ADiff: 2Topic: 2.5 Asset Management FirmsObjective: 2.12 the general characteristics of asset management firms4) Which of the below is NOT one of the types of funds managed by asset management firms?A) Deregulated investment companiesB) Insurance company fundsC) Separately managed accounts for individuals and institutional investorsD) Pension and hedge funds.Answer: AComment: Types of funds managed by asset management firms include: regulated investment companies; insurance company funds; separately managed accounts for individuals and institutional investors; pension funds; and hedge funds.Diff: 2Topic: 2.5 Asset Management FirmsObjective: 2.13 the types of funds that asset management firms manage5) There is no universally accepted definition to describe the 9,000 privately pooled investment entities in the United States called ________ that invest more than $1.3 trillion in assets.A) derivative fundsB) option fundsC) hedge fundsD) asset/liability fundsAnswer: CDiff: 2Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge funds6) The term hedge fund is associated with common characteristics. Which of the below is NOT one of these common characteristics?A) organized as private investment partnerships or offshore investment corporationsB) use a wide variety of trading strategies involving position-taking in a range of marketsC) employ an assortment of trading techniques and instruments, often including short-selling, derivatives and leverageD) pay performance fees to their managers; and have an investor base comprisingmodest-income individualsAnswer: DComment: Usually, hedge funds: are associated with the following characteristics: organized as private investment partnerships or offshore investment corporations; use a wide variety of trading strategies involving position-taking in a range of markets; employ an assortment of trading techniques and instruments, often including short-selling, derivatives and leverage; pay performance fees to their managers; and have an investor base comprising wealthy individuals and institutions and a relatively high minimum investment limit (set at U.S. $100,000 or higher for most funds).Diff: 2Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge funds7) There are various ways to categorize the different types of hedge funds. Mark Anson uses the four broad categories. Which of the below is NOT one of these?A) divergence buyingB) market directionalC) corporate restructuringD) opportunisticAnswer: AComment: There are various ways to categorize the different types of hedge funds. Mark Anson uses the following four broad categories: market directional, corporate restructuring, convergence trading, and opportunistic.Diff: 2Topic: 2.5 Asset Management FirmsObjective: 2.13 the types of funds that asset management firms manageTrue/False Questions1 Financial Institutions1) Business entities include nonfinancial and financial enterprises. Nonfinancial enterprises manufacture products (e.g., cars, steel, computers) and/or provide nonfinancial services (e.g., transportation, utilities, computer programming).Answer: TRUEDiff: 1Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions2) A financial institution that provides an underwriting service will only on occasion also providea brokerage and/or dealer service.Answer: FALSEComment: A financial institution that provides an underwriting service will also typically provide a brokerage and/or dealer service.Diff: 1Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions3) Many large manufacturing firms have subsidiaries that provide financing for the parent company's customer. These financial institutions are called captive finance companies. Answer: TRUEDiff: 1Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions2 Role of Financial Intermediaries1) People who work for financial intermediaries (such as a commercial bank and an investment company) include investment professionals who are trained to analyze financial assets and manage them.Answer: TRUEDiff: 2Topic: 2.2 Role of Financial IntermediariesObjective: 2.2 the role of financial intermediaries2) Most transactions made today are done with cash more so than payments mechanisms that use checks, credit cards, debit cards, and electronic transfers of funds.Answer: FALSEComment: Most transactions made today are not done with cash. Instead, payments are made using checks, credit cards, debit cards, and electronic transfers of funds. These methods for making payments, called payment mechanisms, are provided by certain financial intermediaries.Diff: 1Topic: 2.2 Role of Financial IntermediariesObjective: 2.2 the role of financial intermediaries3) Many large manufacturing firms have subsidiaries that provide financing for the parent company's customer. These financial institutions are called free investment companies. Answer: FALSEComment: Many large manufacturing firms have subsidiaries that provide financing for the parent company’’s customer. These financial institutions are called captive finance companies. Diff: 1Topic: 2.2 Role of Financial IntermediariesObjective: 2.1 the business of financial institutions3 Overview of Asset/Liability Management for Financial Institutions1) In addition to uncertainty about the timing and amount of the cash outlays, and the potential for the depositor or policyholder to withdraw cash early or borrow against a policy, a financial institution has to be concerned with possible reduction in cash inflows.Answer: TRUEDiff: 1Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.9 how different financial institutions have differing degrees of knowledge and certainty about the amount and timing of the cash outlay of their liabilities2) Very few regulations and tax considerations influence the investment policies that financial institutions pursue.Answer: FALSEComment: Numerous regulations and tax considerations influence the investment policies that financial institutions pursue.Diff: 1Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.1 the business of financial institutions3) For Type-IV Liabilities, both the amount and the timing of the liabilities are known with certainty.Answer: FALSEComment: For Type-I Liabilities, both the amount and the timing of the liabilities are known with certainty.Diff: 1Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.8 the nature of the management of assets and liabilities by financial intermediaries 4) In regards to Type-IV Liabilities, there are numerous insurance products and pension obligations that present uncertainty as to both the amount and the timing of the cash outlay. Answer: TRUEDiff: 1Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.8 the nature of the management of assets and liabilities by financial intermediaries 4 Concerns of Regulators1) Funding liquidity risk is the risk that the financial institution will be unable to obtain funding to obtain cash flow necessary to satisfy its obligations.Answer: TRUEDiff: 1Topic: 2.4 Concerns of RegulatorsObjective: 2.11 concerns regulators have with financial institutions2) Liquidity risk is the risk that a counterparty in a trade fails to satisfy its obligation. Answer: FALSEComment: Counterparty risk is the risk that a counterparty in a trade fails to satisfy its obligation.Diff: 1Topic: 2.4 Concerns of RegulatorsObjective: 2.11 concerns regulators have with financial institutions3) An important risk that is often overlooked but has been the cause of the demise of some major financial institutions is value-at risk.Answer: FALSEComment: An important risk that is often overlooked but has been the cause of the demise of some major financial institutions is operational risk.NOTE. Market risk is the risk to a financial institution’s economic well-being that results from an adverse movement in the market price of assets (debt obligations, equities, commodities, currencies) it owns or the level or the volatility of market prices. There are measuresthat can be used to gauge this risk. One such measure endorsed by bank regulators is value-at- risk, a measure of the potential loss in a financial institution’s financial position associatedwith an adverse price movement of a given probability over a specified time horizon.Diff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.11 concerns regulators have with financial institutions4) Liquidity risk in the context of settlement risk means that the counterparty can eventually meet its obligation, but not at the due date.Answer: TRUEDiff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.10 why financial institutions have liquidity concerns5 Asset Management Firms1) A market directional hedge fund is one in which the asset manager retains some exposure to "systematic risk."Answer: TRUEDiff: 1Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge funds2) A convergence trading hedge fund is one in which the asset manager positions the portfolio to capitalize on the anticipated impact of a significant corporate event.Answer: FALSEComment: A corporate restructuring hedge fund is one in which the asset manager positions the portfolio to capitalize on the anticipated impact of a significant corporate event.Diff: 1Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge funds3) Risk-arbitrage hedge funds have the broadest mandate of all of the four hedge fund categories. Answer: FALSEComment: Opportunistic hedge funds have the broadest mandate of all of the four hedge fund categories.Diff: 1Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge funds4) Hedge funds use a wide range of trading strategies and techniques in an attempt to earn superior returns.Answer: TRUEDiff: 1Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge fundsEssay Questions1 Financial Institutions1) Describe three of the services that can be provided by financial enterprises.Answer: Financial enterprises, more popularly referred to as financial institutions, provide services related to one or more of the following: 1. Transforming financial assets acquired through the market and constituting them into a different, and more widely preferable, type of asset–which becomes their liability. This is the function performed by financial intermediaries, the most important type of financial institution. 2. Exchanging of financial assets on behalf of customers. 3. Exchanging of financial assets for their own accounts. 4. Assisting in the creation of financial assets for their customers, and then selling those financial assets to other market participants. 5. Providing investment advice to other market participants. 6. Managing the portfolios of other market participants.Diff: 3Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions2 Role of Financial Intermediaries1) Describe the difference between direct and indirect investments. Cite an example of how an investor in a financial intermediaries makes an indirect investment in an actual entity or company.Answer: Financial intermediaries obtain funds by issuing financial claims against themselves to market participants, and then investing those funds. The investments made by financial intermediaries–their assets–can be in loans and/or securities. These investments are referred to as direct investments. Market participants who hold the financial claims issued by financial intermediaries are said to have made indirect investments.As a first example, consider commercial banks that accept deposits and may use the proceeds to lend funds to consumers and businesses. The deposits represent the IOU of the commercial bank and a financial asset owned by the depositor. The loan represents an IOU of the borrowing entity and a financial asset of the commercial bank. The commercial bank has made a direct investment in the borrowing entity; the depositor (or investor) effectively has made an indirect investment in that borrowing entity.As a second example, consider an investment company, which is a financial intermediary that pools the funds of market participants and uses those funds to buy a portfolio of securities such as stocks and bonds. Investment companies are more commonly referred to as "mutual funds." Investors providing funds to the investment company receive an equity claim that entitles the investor to a pro rata share of the outcome of the portfolio. The equity claim is issued by the investment company. The portfolio of financial assets acquired by the investment company represents a direct investment that it has made. By owning an equity claim against the investment company, those who invest in the investment company have made an indirect investment in stocks and bonds of actual companies.Diff: 3Topic: 2.2 Role of Financial IntermediariesObjective: 2.3 the difference between direct and indirect investments。
金融市场与金融机构基础28页PPT
▪
26、要使整个人生都过得舒适、愉快，这是不可能的，因为人类必须具备一种能应付逆境的态度。——卢梭
▪
27、只有把抱怨环境的心情，化为上进的力量，才是成功的保证。——罗曼·罗兰
▪
28、知之者不如好之者，好之者不如乐之者。——孔子
▪
29、勇猛、大胆和坚定的决心能够抵得上武器的精良。——达·芬奇
▪
30、意志是一个强壮的盲人，倚靠机构基础
16、自己选择的路、跪着也要把它走 完。 17、一般情况下)不想三年以后的事， 只想现 在的事 。现在 有成就 ，以后 才能更 辉煌。
18、敢于向黑暗宣战的人，心里必须 充满光 明。 19、学习的关键--重复。
20、懦弱的人只会裹足不前，莽撞的 人只能 引为烧 身，只 有真正 勇敢的 人才能 所向披 靡。
【金融基础知识】讲义：金融市场与金融机构
货币市场是指以短期金融工具为媒介，交易期限在 1 年以内的进行资 金融通与借贷的交易市场，主要包括同业拆借市场、票据市场、回购协议 市场、银行承兑汇票市场、短期政府债券市场、企业短期融资券市场、和 大额可转让定期存单市场等。货币市场中交易的金融工具一般都具有期限 短、流动性高、对利率敏感等特点，具有“准货币”特性。
第2页
金融市场与金融机构
(二)金融市场的分类
第3页
金融市场与金融机构
(三)金融市场的构成要素 四个基本要素：金融市场主体、金融市场客体、金融市场中介和金融 市场价格 1.金融市场的主体 市场上的参与者。资金供求双方。主体具有决定性的意义。决定着金 融工具的数量和种类，决定市场的规模和发展程度，市场的深度广度和弹 性。 金融是被人们的念头生生想出来的。人们创造了人们需要的金融工具 (客体)以及价格和金融市场(同时产生的)，产生而后因为利益而被迅速推 广。 (1)家庭 家庭是金融市场上主要的资金供应者。也需要资金， 但需求数额一般 较小 (2)企业 企业是金融市场运行的基础，是重要的资金需求者和供给者。对资金 有需要也有供给。除此之外，企业还是金融衍生品市场上重要的套期保值 主体。 (3)政府 在金融市场上，各国的中央政府和地方政府通常是资金的需求者。政 府也会出现短期资金盈余，此时，政府部门也会成为暂时的资金供应者。 (4)金融机构 金融机构是金融市场上最活跃的交易者，分为存款性金融机构和非存 款性金融机构。存款性金融机构：商业银行、储蓄机构和信用合作社。非 存款性金融机构：保险公司、养老金、投资银行、投资基金等。其在金融 市场上扮演着资金需求者和资金供给者的双重身份。金融机构既是资金的 供给者又是资金的需求者。
答案：B
解析：证券回购市场主要是国债回购市场
金融市场与金融机构基础 Fabozzi Chapter02-推荐下载
Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones)Chapter 2 Financial Institutions, Financial Intermediaries, and Asset Management Firms Multiple Choice Questions1 Financial Institutions1) Financial enterprises, more popularly referred to as financial institutions, provide a variety of services. Which of the below is NOT one of these?A) Transform financial assets acquired through the market and constituting them into a different, and more widely preferable, type of asset–which becomes their liability.B) Exchange financial assets on behalf of customers but not for their own accounts.C) Manage the portfolios of other market participants.D) Assist in the creation of financial assets for their customers, and then sell those financial assets to other market participants.Answer: BComment: Financial enterprises exchange financial assets both on behalf of customers and for their own accounts.Diff: 2Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions2) Financial intermediaries include ________that acquire the bulk of their funds by offering their liabilities to the public mostly in the form of deposits; insurance companies, pension funds, and finance companies.A) depository institutionsB) utilitiesC) initial public offeringsD) preferred equity instrument.Answer: ADiff: 1Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions3) Some nonfinancial enterprises have subsidiaries that provide financial services. These financial institutions are called ________.A) free finance companies.B) captive finance companies.C) captive investment companies.D) captive finance shares.Answer: BComment: Some nonfinancial enterprises have subsidiaries that provide financial services. For example, many large manufacturing firms have subsidiaries that provide financing for the parent company’s customer. These financial institutions are called captive finance companie s. Examples include General Motors Acceptance Corporation (a subsidiary of General Motors) and General Electric Credit Corporation (a subsidiary of General Electric).Diff: 2Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions4) Depository institutions include ________.A) commercial banks.B) savings and loan associations.C) savings banks and credit unions.D) All of theseAnswer: DDiff: 1Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions2 Role of Financial Intermediaries1) Financial intermediaries get funds by issuing financial claims against themselves to market participants, and then investing those funds. The investments made by financial intermediaries can be in ________.A) loans but not in securities.B) securities but not in loans.C) loans and/or securities.D) only equity.Answer: CDiff: 1Topic: 2.2 Role of Financial IntermediariesObjective: 2.2 the role of financial intermediaries2) Financial intermediaries play the basic role of transforming financial assets that are less desirable for a large part of the public into other financial assets (their own liabilities) which are more widely preferred by the public. This transformation involves at least one of four economic functions. Which of the below is NOT one of these functions?A) providing maturity intermediationB) enhancing risk via diversificationC) reducing the costs of contracting and information processingD) providing a payments mechanismAnswer: BComment: Financial intermediaries play the basic role of transforming financial assets that are less desirable for a large part of the public into other financial assets (their own liabilities) which are more widely preferred by the public. This transformation involves at least one of four economic functions: (1) providing maturity intermediation, (2) reducing risk via diversification, (3) reducing the costs of contracting and information processing, and (4) providing a payments mechanism.Diff: 2Topic: 2.2 Role of Financial IntermediariesObjective: 2.2 the role of financial intermediaries3) The commercial bank by issuing its own financial claims transforms a longer-term asset into a shorter-term one by giving the borrower a loan for the length of time sought and theinvestor/depositor a financial asset for the desired investment horizon. This function of a financial intermediary is called ________.A) diversification.B) maturity intermediation.C) information processing costs.D) providing payment mechanisms.Answer: BDiff: 2Topic: 2.2 Role of Financial IntermediariesObjective: 2.4 how financial intermediaries transform the maturity of liabilities and give both short-term depositors and longer-term, final borrowers what they want4) The economic function of financial intermediaries that transforms more risky assets into less risky ones is called ________.A) diversification.B) maturity intermediation.C) information processing costs.D) providing payment mechanisms.Answer: ADiff: 1Topic: 2.2 Role of Financial IntermediariesObjective: 2.5 how financial intermediaries offer investors diversification and so reduce the risks of their investments5) The costs of writing loan contracts are referred to as ________.A) asset costs.B) loan costs.C) information processing costs.D) contracting costs.Answer: DComment: The costs of writing loan contracts are referred to as contracting costs. There is also another dimension to contracting costs, the cost of enforcing the terms of the loan agreement. Diff: 2Topic: 2.2 Role of Financial IntermediariesObjective: 2.6 the way financial intermediaries reduce the costs of acquiring information and entering into contracts with final borrowers of funds6) Which of the below statements is FALSE?A) Investors purchasing financial assets should take the time to develop skills necessary to understand how to evaluate an investment and then apply these skills to the analysis of specific financial assets that are candidates for purchase (or subsequent sale).B) Investors who want to make a loan to a consumer or business will need to write the loan contract (or hire an attorney to do so). Although there are some people who enjoy devoting leisure time to this task, most prefer to use that time for just that–leisure.C) In addition to the opportunity cost of the time to process the information about the financial asset and its issuer, there is the cost of acquiring that information. All these costs are called contracting costs.D) One dimension to contracting costs involves the cost of enforcing the terms of the loan agreement.Answer: CComment: In addition to the opportunity cost of the time to process the information about the financial asset and its issuer, there is the cost of acquiring that information. All these costs are called information processing costs.Diff: 3Topic: 2.2 Role of Financial IntermediariesObjective: 2.6 the way financial intermediaries reduce the costs of acquiring information and entering into contracts with final borrowers of funds3 Overview of Asset/Liability Management for Financial Institutions1) To understand the reasons managers of financial institutions invest in particular types of financial assets and the types of investment strategies they use, it is necessary to have a general understanding of the ________ that they face.A) investment/employee problemB) risk management /dividend problemC) shot-term/long-term asset problemD) asset/liability problemAnswer: DDiff: 3Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.8 the nature of the management of assets and liabilities by financial intermediaries 2) The objective of a ________ is to earn a positive spread between the assets it invests in (what it has sold the money for) and the costs of its funds (what it has purchased the money for).A) limited partnershipB) corporationC) life insurance companyD) depository institutionAnswer: DDiff: 2Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.8 the nature of the management of assets and liabilities by financial intermediaries3) Which of the below statements is FALSE?A) The nature of the liabilities dictates the investment strategy a financial institution will pursue.B) The objective of a depository institution is to earn a positive spread between the assets it invests in (what it has sold the money for) and the costs of its funds (what it has purchased the money for).C) Life insurance companies and, to a certain extent, property and casualty insurance companies are in the spread business.D) Pension funds are in the spread business in that they do not raise funds themselves in the market.Answer: DComment: Pension funds are not in the spread business in that they do not raise funds themselves in the market.Diff: 1Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.8 the nature of the management of assets and liabilities by financial intermediaries4) Which of the below statements is TRUE?A) For Type-II Liabilities, both the amount and the timing of the liabilities are known with certaintyB) By the liabilities of a financial institution, we mean the amount and timing of the cash outlays that must be made to satisfy the contractual terms of the obligations issued.C) When we refer to a cash outlay as being uncertain, we mean that it cannot be predicted.D) Type-I Liabilities, the amount of cash outlay is known, but the timing of the cash outlay is uncertain.Answer: BComment: For Type-I Liabilities, both the amount and the timing of the liabilities are known with certainty. Type-II Liabilities, the amount of cash outlay is known, but the timing of the cash outlay is uncertain. When we refer to a cash outlay as being uncertain, we do not mean that it cannot be predicted.Diff: 3Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.9 how different financial institutions have differing degrees of knowledge and certainty about the amount and timing of the cash outlay of their liabilities5) With this type of liability, the timing of the cash outlay is known, but the amount is uncertain.A) Type-I LiabilitiesB) Type-II LiabilitiesC) Type-III LiabilitiesD) Type-IV LiabilitiesAnswer: CDiff: 2Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.9 how different financial institutions have differing degrees of knowledge and certainty about the amount and timing of the cash outlay of their liabilities4 Concerns of Regulators1) ________ is a broadly used term to describe several types of risk.A) Credit riskB) Settlement riskC) Counterparty riskD) Market riskAnswer: ADiff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.11 concerns regulators have with financial institutions2) ________ is the risk that a counterparty in a trade fails to satisfy its obligation.A) Liquidity riskB) Settlement riskC) Counterparty riskD) Market riskAnswer: CDiff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.11 concerns regulators have with financial institutions3) Because of uncertainty about the timing and/or the amount of the cash outlays, a financial institution must be prepared ________.A) to have sufficient cash to satisfy its obligations.B) to have sufficient projects to satisfy its capital budget constraints.C) to have sufficient risk to satisfy its obligations.D) to have sufficient risk to satisfy its conservative investors.Answer: ADiff: 1Topic: 2.4 Concerns of RegulatorsObjective: 2.10 why financial institutions have liquidity concerns4) ________ is the risk to a financial institution's economic well-being that results from an adverse movement in the market price of assets it owns.A) Credit riskB) Settlement riskC) Funding liquidity riskD) Market riskAnswer: DDiff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.5 how financial intermediaries offer investors diversification and so reduce the risks of their investments5) ________ is the risk that the financial institution will be unable to obtain funding to obtain cash flow necessary to satisfy its obligations.A) Funding liquidity riskB) Credit riskC) Settlement riskD) Market riskAnswer: ADiff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.10 why financial institutions have liquidity concerns5 Asset Management Firms1) Which of the following statements is FALSE?A) Asset management firms manage the funds of individuals, businesses, endowments and foundations, and state and local governments.B) Asset management firms are ranked semi-annually by Pension & Investments with the ranking based on the number of liabilities under management.C) Asset management firms are either affiliated with some financial institution (such as a commercial bank, insurance company, or investment bank) or are independent companies.D) Larger institutional clients seeking the services of an asset management firm typically do not allocate all of their assets to one asset management firm.Answer: BComment: Asset management firms are ranked annually by Pension & Investments with the ranking based on the number of assets under management.Diff: 2Topic: 2.5 Asset Management FirmsObjective: 2.12 the general characteristics of asset management firms2) ________ seeking the services of an asset management firm typically do not allocate all of their assets to one asset management firm firm.A) Smaller institutional clientsB) Larger institutional clientsC) Depository institutionsD) GIC institutionsAnswer: BDiff: 1Topic: 2.5 Asset Management FirmsObjective: 2.12 the general characteristics of asset management firms3) Asset management firms receive their compensation ________ from management fees charged based on the market value of the assets managed for clients.A) primarilyB) secondarilyC) totallyD) to a minor extentAnswer: ADiff: 2Topic: 2.5 Asset Management FirmsObjective: 2.12 the general characteristics of asset management firms4) Which of the below is NOT one of the types of funds managed by asset management firms?A) Deregulated investment companiesB) Insurance company fundsC) Separately managed accounts for individuals and institutional investorsD) Pension and hedge funds.Answer: AComment: Types of funds managed by asset management firms include: regulated investment companies; insurance company funds; separately managed accounts for individuals and institutional investors; pension funds; and hedge funds.Diff: 2Topic: 2.5 Asset Management FirmsObjective: 2.13 the types of funds that asset management firms manage5) There is no universally accepted definition to describe the 9,000 privately pooled investment entities in the United States called ________ that invest more than $1.3 trillion in assets.A) derivative fundsB) option fundsC) hedge fundsD) asset/liability fundsAnswer: CDiff: 2Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge funds6) The term hedge fund is associated with common characteristics. Which of the below is NOT one of these common characteristics?A) organized as private investment partnerships or offshore investment corporationsB) use a wide variety of trading strategies involving position-taking in a range of marketsC) employ an assortment of trading techniques and instruments, often including short-selling, derivatives and leverageD) pay performance fees to their managers; and have an investor base comprising modest-income individualsAnswer: DComment: Usually, hedge funds: are associated with the following characteristics: organized as private investment partnerships or offshore investment corporations; use a wide variety of trading strategies involving position-taking in a range of markets; employ an assortment of trading techniques and instruments, often including short-selling, derivatives and leverage; pay performance fees to their managers; and have an investor base comprising wealthy individuals and institutions and a relatively high minimum investment limit (set at U.S. $100,000 or higher for most funds).Diff: 2Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge funds7) There are various ways to categorize the different types of hedge funds. Mark Anson uses the four broad categories. Which of the below is NOT one of these?A) divergence buyingB) market directionalC) corporate restructuringD) opportunisticAnswer: AComment: There are various ways to categorize the different types of hedge funds. Mark Anson uses the following four broad categories: market directional, corporate restructuring, convergence trading, and opportunistic.Diff: 2Topic: 2.5 Asset Management FirmsObjective: 2.13 the types of funds that asset management firms manageTrue/False Questions1 Financial Institutions1) Business entities include nonfinancial and financial enterprises. Nonfinancial enterprises manufacture products (e.g., cars, steel, computers) and/or provide nonfinancial services (e.g., transportation, utilities, computer programming).Answer: TRUEDiff: 1Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions2) A financial institution that provides an underwriting service will only on occasion also providea brokerage and/or dealer service.Answer: FALSEComment: A financial institution that provides an underwriting service will also typically provide a brokerage and/or dealer service.Diff: 1Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions3) Many large manufacturing firms have subsidiaries that provide financing for the parent company's customer. These financial institutions are called captive finance companies. Answer: TRUEDiff: 1Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions2 Role of Financial Intermediaries1) People who work for financial intermediaries (such as a commercial bank and an investment company) include investment professionals who are trained to analyze financial assets and manage them.Answer: TRUEDiff: 2Topic: 2.2 Role of Financial IntermediariesObjective: 2.2 the role of financial intermediaries2) Most transactions made today are done with cash more so than payments mechanisms that use checks, credit cards, debit cards, and electronic transfers of funds.Answer: FALSEComment: Most transactions made today are not done with cash. Instead, payments are made using checks, credit cards, debit cards, and electronic transfers of funds. These methods for making payments, called payment mechanisms, are provided by certain financial intermediaries.Diff: 1Topic: 2.2 Role of Financial IntermediariesObjective: 2.2 the role of financial intermediaries3) Many large manufacturing firms have subsidiaries that provide financing for the parent company's customer. These financial institutions are called free investment companies. Answer: FALSEComment: Many large manufacturing firms have subsidiaries that provide financing for the parent company’’s customer. These financial institutions are called captive finance companies. Diff: 1Topic: 2.2 Role of Financial IntermediariesObjective: 2.1 the business of financial institutions3 Overview of Asset/Liability Management for Financial Institutions1) In addition to uncertainty about the timing and amount of the cash outlays, and the potential for the depositor or policyholder to withdraw cash early or borrow against a policy, a financial institution has to be concerned with possible reduction in cash inflows.Answer: TRUEDiff: 1Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.9 how different financial institutions have differing degrees of knowledge and certainty about the amount and timing of the cash outlay of their liabilities2) Very few regulations and tax considerations influence the investment policies that financial institutions pursue.Answer: FALSEComment: Numerous regulations and tax considerations influence the investment policies that financial institutions pursue.Diff: 1Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.1 the business of financial institutions3) For Type-IV Liabilities, both the amount and the timing of the liabilities are known with certainty.Answer: FALSEComment: For Type-I Liabilities, both the amount and the timing of the liabilities are known with certainty.Diff: 1Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.8 the nature of the management of assets and liabilities by financial intermediaries 4) In regards to Type-IV Liabilities, there are numerous insurance products and pension obligations that present uncertainty as to both the amount and the timing of the cash outlay. Answer: TRUEDiff: 1Topic: 2.3 Overview of Asset/Liability Management for Financial InstitutionsObjective: 2.8 the nature of the management of assets and liabilities by financial intermediaries 4 Concerns of Regulators1) Funding liquidity risk is the risk that the financial institution will be unable to obtain funding to obtain cash flow necessary to satisfy its obligations.Answer: TRUEDiff: 1Topic: 2.4 Concerns of RegulatorsObjective: 2.11 concerns regulators have with financial institutions2) Liquidity risk is the risk that a counterparty in a trade fails to satisfy its obligation. Answer: FALSEComment: Counterparty risk is the risk that a counterparty in a trade fails to satisfy its obligation.Diff: 1Topic: 2.4 Concerns of RegulatorsObjective: 2.11 concerns regulators have with financial institutions3) An important risk that is often overlooked but has been the cause of the demise of some major financial institutions is value-at risk.Answer: FALSEComment: An important risk that is often overlooked but has been the cause of the demise of some major financial institutions is operational risk.NOTE. Market risk is the risk to a financial institution’s economic well-being that results from an adverse movement in the market price of assets (debt obligations, equities, commodities, currencies) it owns or the level or the volatility of market prices. There are measuresthat can be used to gauge this risk. One such measure endorsed by bank regulators is value-at-risk, a measure of the potential loss in a financial institution’s financial position associatedwith an adverse price movement of a given probability over a specified time horizon.Diff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.11 concerns regulators have with financial institutions4) Liquidity risk in the context of settlement risk means that the counterparty can eventually meet its obligation, but not at the due date.Answer: TRUEDiff: 2Topic: 2.4 Concerns of RegulatorsObjective: 2.10 why financial institutions have liquidity concerns5 Asset Management Firms1) A market directional hedge fund is one in which the asset manager retains some exposure to "systematic risk."Answer: TRUEDiff: 1Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge funds2) A convergence trading hedge fund is one in which the asset manager positions the portfolio to capitalize on the anticipated impact of a significant corporate event.Answer: FALSEComment: A corporate restructuring hedge fund is one in which the asset manager positions the portfolio to capitalize on the anticipated impact of a significant corporate event.Diff: 1Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge funds3) Risk-arbitrage hedge funds have the broadest mandate of all of the four hedge fund categories. Answer: FALSEComment: Opportunistic hedge funds have the broadest mandate of all of the four hedge fund categories.Diff: 1Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge funds4) Hedge funds use a wide range of trading strategies and techniques in an attempt to earn superior returns.Answer: TRUEDiff: 1Topic: 2.5 Asset Management FirmsObjective: 2.14 what a hedge fund is and the different types of hedge fundsEssay Questions1 Financial Institutions1) Describe three of the services that can be provided by financial enterprises.Answer: Financial enterprises, more popularly referred to as financial institutions, provide services related to one or more of the following: 1. Transforming financial assets acquired through the market and constituting them into a different, and more widely preferable, type of asset–which becomes their liability. This is the function performed by financial intermediaries, the most important type of financial institution. 2. Exchanging of financial assets on behalf of customers. 3. Exchanging of financial assets for their own accounts. 4. Assisting in the creation of financial assets for their customers, and then selling those financial assets to other market participants. 5. Providing investment advice to other market participants. 6. Managing the portfolios of other market participants.Diff: 3Topic: 2.1 Financial InstitutionsObjective: 2.1 the business of financial institutions2 Role of Financial Intermediaries1) Describe the difference between direct and indirect investments. Cite an example of how an investor in a financial intermediaries makes an indirect investment in an actual entity or company.Answer: Financial intermediaries obtain funds by issuing financial claims against themselves to market participants, and then investing those funds. The investments made by financial intermediaries–their assets–can be in loans and/or securities. These investments are referred to as direct investments. Market participants who hold the financial claims issued by financial intermediaries are said to have made indirect investments.As a first example, consider commercial banks that accept deposits and may use the proceeds to lend funds to consumers and businesses. The deposits represent the IOU of the commercial bank and a financial asset owned by the depositor. The loan represents an IOU of the borrowing entity and a financial asset of the commercial bank. The commercial bank has made a direct investment in the borrowing entity; the depositor (or investor) effectively has made an indirect investment in that borrowing entity.As a second example, consider an investment company, which is a financial intermediary that pools the funds of market participants and uses those funds to buy a portfolio of securities such as stocks and bonds. Investment companies are more commonly referred to as "mutual funds." Investors providing funds to the investment company receive an equity claim that entitles the investor to a pro rata share of the outcome of the portfolio. The equity claim is issued by the investment company. The portfolio of financial assets acquired by the investment company represents a direct investment that it has made. By owning an equity claim against the investment company, those who invest in the investment company have made an indirect investment in stocks and bonds of actual companies.Diff: 3Topic: 2.2 Role of Financial IntermediariesObjective: 2.3 the difference between direct and indirect investments。
金融市场与金融机构基础 Fabozzi Chapter10(精品WORD文档)
Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones)Chapter 10 The Level and Structure of Interest RatesMultiple Choice Questions1 The Theory of Interest Rates1) An interest rate is the price paid by a ________ to a ________ for the use of resources during some interval.A) borrower; debtorB) lender; creditorC) borrower; lenderD) lender; borrowerAnswer: CComment: An interest rate is the price paid by a borrower (or debtor) to a lender (or creditor) for the use of resources during some interval.Diff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.1 Fisher's classical approach to explaining the level of the interest rate2) By the ________, we mean the rate on a loan whose borrower will not default on any obligation.A) risk-free rateB) short termC) real rateD) long termAnswer: AComment: The interest rate that provides the anchor for other rates is the short-term rate:risk-free plus real rate. By short term, we mean the rate on a loan that has one year to maturity. (All other interest rates differ from this rate according to particular aspects of the loan, such as its maturity or risk of default, or because of the presence of inflation.) By the risk-free rate, we mean the rate on a loan whose borrower will not default on any obligation. By the real rate, we mean the rate that would prevail in the economy if the average prices for goods and services were expected to remain constant during the loan’s life.Diff: 1Topic: 10.1 The Theory of Interest RatesObjective: 10.4 the structure of Fisher's Law, which states that the nominal and observable interest rate is composed of two unobservable variables; the real rate of interest and the premium for expected inflation3) By the ________, we mean the rate that would prevail in the economy if the average prices for goods and services were expected to remain constant during the loan's life.A) risk-free rateB) short termC) real rateD) long termAnswer: CComment: The interest rate that provides the anchor for other rates is the short-term rate:risk-free plus real rate. By short term, we mean the rate on a loan that has one year to maturity. (All other interest rates differ from this rate according to particular aspects of the loan, such as its maturity or risk of default, or because of the presence of inflation.) By the risk-free rate, we mean the rate on a loan whose borrower will not default on any obligation. By the real rate, we mean the rate that would prevail in the economy if the average prices for goods and services were expected to remain constant during the loan’s life.Diff: 1Topic: 10.1 The Theory of Interest RatesObjective: 10.4 the structure of Fisher's Law, which states that the nominal and observable interest rate is composed of two unobservable variables; the real rate of interest and the premium for expected inflation4) By the ________, we mean the rate on a loan that has one year to maturity.A) risk-free rateB) short termC) real rateD) long termAnswer: BComment: The interest rate that provides the anchor for other rates is the short-term rate:risk-free plus real rate. By short term, we mean the rate on a loan that has one year to maturity. (All other interest rates differ from this rate according to particular aspects of the loan, such as its maturity or risk of default, or because of the presence of inflation.) By the risk-free rate, we mean the rate on a loan whose borrower will not default on any obligation. By the real rate, we mean the rate that would prevail in the economy if the average prices for goods and services were expected to remain constant during the loan’s life.Diff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.1 Fisher's classical approach to explaining the level of the interest rate5) Which of the below statements about consumptions and savings is FALSE?A) A chief influence on the saving decision is the individual's marginal rate of time preference, which is the willingness to trade some consumption now for more future consumption.B) Generally, higher current income means the person will save more, although people with the same income may have different time preferences.C) A variable affecting savings is the reward for saving, or the rate of interest on loans that savers make with their unconsumed income.D) The total savings (or the total supply of loans) available at any time is the sum of everybody's savings and a negative function of the interest rate.Answer: DComment: The total savings (or the total supply of loans) available at any time is the sum of everybody’s savings and a positive function of the interest rate.Diff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.2 the role in Fisher's theory of the saver's time preference and the borrowing firm's productivity of capital6) Which of the below statements about the rate of interest and cost of capital is FALSE?A) The maximum that a firm will invest depends on the rate of interest, which is the cost of loans; the firm will invest only as long as the marginal productivity of capital exceeds or equals the rate of interest.B) Firms will reject only projects whose gain is not less than their cost of financing.C) The firm's demand for borrowing is negatively related to the interest rate; if the rate is high, only limited borrowing and investment make sense.D) At a low rate of interest, more projects offer a profit, and the firm wants to borrow more; his negative relationship exists for each and all firms in the economy.Answer: BComment: The maximum that a firm will invest depends on the rate of interest, which is the cost of loans. The firm will invest only as long as the marginal productivity of capital exceeds or equals the rate of interest. In other words, firms will accept only projects whose gain is not less than their cost of financing. Thus, the firm’s demand for borrowing is negatively related to the interest rate. If the rate is high, only limited borrowing and investment make sense. At a low rate, more projects offer a profit, and the firm wants to borrow more. This negative relationship exists for each and all firms in the economy.Diff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.2 the role in Fisher's theory of the saver's time preference and the borrowing firm's productivity of capital7) The ________ rate of interest is determined by interaction of the supply and demand functions. As a cost of borrowing and a reward for lending, the rate must reach the point where total supply of savings ________ total demand for borrowing and investment.A) equilibrium; is greaterB) minimum; equalsC) equilibrium; equalsD) minimum; is greaterAnswer: CDiff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.3 the meaning of equilibrium and how changes in the demand and supply function affect the equilibrium level of the interest rate8) In the absence of inflation, the nominal rate ________ the real rate.A) equalsB) is greater thanC) is less thanD) greater than or equal toAnswer: ADiff: 1Topic: 10.1 The Theory of Interest RatesObjective: 10.3 the meaning of equilibrium and how changes in the demand and supply function affect the equilibrium level of the interest rate9) The relationship between inflation and interest rates is the well-known Fisher's Law, which can be expressed this way: (1 + i) = (1 + r) × (1 + i) where ________.A) r is the nominal rate.B) i is the real rate.C) p is the expected percentage change in the price level of goods and services over the loan's life.D) the nominal rate, p, reflects both the real rate and expected inflation.Answer: CComment: The relationship between inflation and interest rates is the well-known Fisher’s Law, which can be expressed this way: (1 + i) = (1 + r) × (1 + i) where i is the nominal rate, r is the real rate, and p is the expected percentage change in the price level of goods and services over the loan’s life. This equation shows that the nominal rate, i, reflects both the real rate and expected inflation.Diff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.4 the structure of Fisher's Law, which states that the nominal and observable interest rate is composed of two unobservable variables; the real rate of interest and the premium for expected inflation10) Which of the below IS considered by Fisher's theory.A) Fisher's theory takes into account the power of the government (in concert with depository institutions) to create money.B) Fisher's theory considers the government's often large demand for borrowed funds, which is frequently immune to the level of the interest rateC) Fisher's theory takes into account the possibility that individuals and firms might invest in cash balances.D) Fisher's theory considers an interest rate on loans that embodies no premium for default risk because borrowing firms are assumed to meet all obligations.Answer: DComment: Fisher’s theory is a general one and obviously neglects certain practical matters, such as the power of the government (in concert with depository institutions) to create money and the government’s often la rge demand for borrowed funds, which is frequently immune to the level of the interest rate. Also, Fisher’s theory does not consider the possibility that individuals and firms might invest in cash balances. Expanding Fisher’s theory to encompass these situations produces the loanable funds theory of interest rates.Diff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.4 the structure of Fisher's Law, which states that the nominal and observable interest rate is composed of two unobservable variables; the real rate of interest and the premium for expected inflation11) The loanable funds theory of interest rates proposes that the general level of interest rates is determined by the complex interaction of two forces. Which of the below is ONE of these forces?A) One force is that the total demand for funds by firms, governments, and households (or individuals) is negatively related to the interest rate including the government's demand.B) One force affecting the level of the interest rate is the total supply of funds by firms, governments, banks, and individuals with rising rates causing banks to be less eager to extend more loans.C) One force is that the total demand for funds by firms, governments, and households (or individuals) is positively related to the interest rate except the government's demand.D) One force affecting the level of the interest rate is the total supply of funds by firms, governments, banks, and individuals with rising rates causing firms and individuals to save and lend more.Answer: DComment: The loanable funds theory of interest rates proposes that the general level of interest rates is determined by the complex interaction of two forces. The first is the total demand for funds by firms, governments, and households (or individuals), which carry out a variety of economic activities with those funds. This demand is negatively related to the interest rate (except for the government’s demand, which may frequently not depend on the level of the interest rate). The second force affecting the level of the interest rate is the total supply of funds by firms, governments, banks, and individuals. Supply is positively related to the level of interest rates, if all other economic factors remain the same. With rising rates, firms and individuals save and lend more, and banks are more eager to extend more loans. (A rising interest rate probably does not significantly affect the government’s supply of savings.)Diff: 3Topic: 10.1 The Theory of Interest RatesObjective: 10.5 the loanable funds theory, which is an expansion of Fisher's theory12) The ________, originally developed by John Maynard Keynes,analyzes the equilibrium level of the interest rate through the interaction of the supply of money and the public's aggregate demand for holding money.A) loanable funds theory of interest ratesB) expectation theory of interest ratesC) liquidity preference theoryD) Fisher theoryAnswer: CDiff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.6 the meaning of liquidity preference in Keynes's theory of the determination of interest rates13) The public (consisting of individuals and firms) holds money for several reasons. Which of the below is three of these?A) Difficulty of translations, precaution against expected events, and speculation about possible rises in the interest rate.B) Ease of transactions, precaution against unexpected events, and speculation about possible rises in the interest rate.C) Ease of unexpected events, precaution against transactions, and speculation about possible rises in the interest rate.D) Speculation about transactions, fear against unexpected events, and precaution about possible rises in the interest rate.Answer: BDiff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.6 the meaning of liquidity preference in Keynes's theory of the determination of interest rates14) The ________ represents the initial reaction of the interest rate to a change in the money supply.A) Income effectB) Price expectation effectC) Liquidity effectD) Interest rate effectAnswer: CDiff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.7 how an increase in the money supply can affect the level of the interest rate through an impact on liquidity, income, and price expectations15) Which of the below statements is FALSE?A) Although an increase in the money supply is an economically expansionary policy, the resultant increase in income depends substantially on the amount of slack in the economy at the time of the Fed's action.B) In Fisher's terms, the interest rate reflects the interaction of the savers' marginal rate of time preference and borrowers' marginal productivity of capital.C) Changes in the money supply can affect the level of interest rates through the liquidity effect, the income effect, and the price expectations effect; their relative magnitudes depend upon the level of economic activity at the time of the change in the money supply.D) Because the price level (and expectations regarding its changes) affects the money demand function, the liquidity effect is an increase in the interest rate.Answer: DComment: Because the price level (and expectations regarding its changes) affects the money demand function, the price expectations effect is an increase in the interest rate.Diff: 2Topic: 10.1 The Theory of Interest RatesObjective: 10.7 how an increase in the money supply can affect the level of the interest rate through an impact on liquidity, income, and price expectations2 The Determinants of the Structure of Interest Rates1) A ________ is an instrument in which the issuer (debtor/borrower) promises to repay to the lender/investor the amount borrowed plus interest over some specified period of time.A) bondB) common stockC) preferred stockD) T-billAnswer: ADiff: 1Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.8 the features of a bond issue2) The ________ should reflect the coupon interest that will be earned plus either (1) any capital gain that will be realized from holding the bond to maturity, or (2) any capital loss that will be realized from holding the bond to maturity.A) yield on a bond investmentB) dividend yield on a bond investmentC) bid-ask spreadD) yield on a stock investmentAnswer: ADiff: 1Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.8 the features of a bond issue3) The ________ the market price, the higher the yield to maturity.A) higherB) less riskyC) more safeD) lowerAnswer: DDiff: 1Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.8 the features of a bond issue4) The ________ of a bond is the amount that the issuer agrees to repay the bondholder at the maturity date.A) principal value (or simply principal)B) face valueC) redemption valueD) All of theseAnswer: DComment: The principal value (or simply principal) of a bond is the amount that the issuer agrees to repay the bondholder at the maturity date. This amount is also referred to as the par value, maturity value, redemption value, or face value.Diff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.8 the features of a bond issue5) The yield to maturity is determined by a trial-and-error process. The first step in this trial and error process is ________.A) Compute the present value of each cash flow using the best guess interest rate.B) Total the present value of the cash flows using the best guess interest rate.C) Select an interest rate.D) Compare the total present value using the best guess interest rate with the market price of the bond.Answer: CComment: The yield to maturity is determined by a trial-and-error process. Even the algorithm in a calculator or computer program, which computes the yield to maturity (or internal rate of return) in an apparently direct way, uses a trial-and-error process. The steps in that process are as follows:Step 1: Select an interest rate.Step 2: Compute the present value of each cash flow using the interest rate selected in Step 1. Step 3: Total the present value of the cash flows found in Step 2.Step 4: Compare the total present value found in Step 3 with the market price of the bond and, if the total present value of the cash flows found in Step 3 is• equal to the market price, then the interest rate used in Step 1 is the yield to maturity;• greater than the market price, then the interest rate is not the yield to maturity. Therefore, go back to Step 1 and use a higher interest rate;• less than the market price, then the interest rate is not the yield to maturity. Therefore, go back to Step 1 and use a lower interest rate.Diff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.9 how the yield to maturity of a bond is calculated6) There are several interesting points about the relationship among the coupon rate, market price, and yield to maturity. Which of the below is NOT one of these.A) If the market price is equal to the par value, then the yield to maturity is equal to the coupon rate.B) If the market price is less than the par value, then the yield to maturity is greater than the coupon rate.C) If the market price is greater than the par value, then the yield to maturity is greater than the coupon rate.D) If the market price is greater than the par value, then the yield to maturity is less than the coupon rate.Answer: CComment: There are several interesting points about the relationship among the coupon rate, market price, and yield to maturity as summarized below.1. If the market price is equal to the par value, then the yield to maturity is equal to the coupon rate;2. If the market price is less than the par value, then the yield to maturity is greater than the coupon rate, and;3. If the market price is greater than the par value, then the yield to maturity is less than the coupon rate.Diff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.9 how the yield to maturity of a bond is calculated7) Consider an 20-year bond with a coupon rate of 8% and a par value of $1,000. The cash flow for this bond is ________ every six months for the first 39 semi-annual periods and then________ for the last (or 40th) six-month period.A) $1,040; $40B) $40; $1,040C) $80; $1,080D) $80; $1,000Answer: BComment: Consider an 20-year bond with a coupon rate of 8% and a par value of $1,000. The cash flow for this bond is $40 every six months for the first 39 semi-annual periods and then $1,040 for the last (or 40th) six-month period.Diff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.8 the features of a bond issue8) The difference between the yield on any two bond issues is called a ________.A) yield differenceB) difference spreadC) coupon rate spreadD) yield spreadAnswer: DDiff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.13 what factors affect the yield spread between two bonds9) Treasury securities are used to develop the benchmark interest rates. There are two categories of U.S. Treasury securities: ________.A) discount and coupon securities.B) discount and coupon stocks.C) interest rate and coupon securities.D) discount and compound securities.Answer: ADiff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.1 Fisher's classical approach to explaining the level of the interest rate10) The most recently auctioned Treasury issues for each maturity are referred to as ________.A) off-the-run issues or current coupon issues.B) minimum interest rate or base interest rateC) on-the- run or current coupon issues.D) benchmark interest rate or minimum interest rate.Answer: CComment: The most recently auctioned Treasury issues for each maturity are referred to as on-the- run or current coupon issues. Issues auctioned prior to the current coupon issues are typically referred to as off-the- run issues; they are not as liquid as on-the-run issues, and, therefore, offer a higher yield than the corresponding on-the-run Treasury issue. The minimum interest rate or base interest rate that investors will demand for investing in a non-Treasury security is the yield offered on a comparable maturity on-the-run Treasury security. The base interest rate is also referred to as the benchmark interest rate.Diff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.10 why historically the yields on securities issued by the U.S. Department of the Treasury have been used as the benchmark interest rates throughout the world11) Market participants talk of interest rates on non-Treasury securities as ________ to a particular on-the-run Treasury security (or a spread to any particular benchmark interest rate selected). This spread reflects the additional risks the investor faces by acquiring a security thatis not issued by the U.S. government and, therefore, can be called a ________.A) "trading at a premium"; risk premiumB) "trading at a spread"; risk premiumC) "trading at a premium"; risk spreadD) "trading at a discount"; discount premiumAnswer: BComment: Market participants talk of interest rates on non-Treasury securities as “trading at a spread” to a particular on-the-run Treasury security (or a spread to any particular benchmark interest rate selected). For example, if the yield on a 10-year non-Treasury security on May 20, 2008, is 4.78%, then the spread is 100 basis points over the 3.78% Treasury yield. This spread reflects the additional risks the investor faces by acquiring a security that is not issued by the U.S. government and, therefore, can be called a risk premium.Diff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.13 what factors affect the yield spread between two bonds12) The factors that affect the spread include ________.A) the type of issuer and the expected liquidity of the issueB) the provisions that grant either the issuer or the investor the obligation to do something and the taxability of the interest received by the issuerC) the investor's perceived creditworthiness and the term or maturity of the investor's horizon.D) All of theseAnswer: AComment: The factors that affect the spread are (1) the type of issuer, (2) the issuer’s perceived creditworthiness, (3) the term or maturity of the instrument, (4) provisions that grant either the issuer or the investor the option to do something, (5) the taxability of the interest received by investors, and (6) the expected liquidity of the issue.Diff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.13 what factors affect the yield spread between two bonds13) Within the corporate market sector, issuers are classified as ________.A) (1) utilities, (2) industrials, (3) finance, and (4) banks.B) (1) high-risk, (2) medium-risk, (3) low-risk, and (4) no-risk.C) (1) foreign, (2) domestic, (3) European, and (4) Asian.D) (1) intramarket, (2) extramarket, (3) ultramarket, and (4) intermarket.Answer: AComment: Within the corporate market sector, issuers are classified as follows: (1) utilities, (2) industrials, (3) finance, and (4) banks.Diff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.12 the different types of bonds14) The highest-grade bonds are designated by Moody's by the symbol ________.A) BaB) AC) AaD) AaaAnswer: DComment: In all systems, the term high grade means low credit risk, or conversely, high probability of future payments. The highest-grade bonds are designated by Moody’s by the symbol Aaa, and by S&P and Fitch by the symbol AAA. The next highest grade is denoted by the symbol Aa (Moody’s) or AA (S&P and Fitch); for the third grade, all rating systems use A. The next three grades are Baa or BBB, Ba or BB, and B, respectively. There are also C grades. Moody’s uses 1, 2, or 3 to provi de a narrower credit quality breakdown within each class, andS&P and Fitch use plus and minus signs for the same purpose.Diff: 1Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.12 the different types of bonds15) Which of the below statements is FALSE?A) The spread between Treasury securities and non-Treasury securities that are identical in all respects except for credit quality is referred to as a credit spread.B) The spread between any two maturity sectors of the market is called a maturity spread or yield curve spread.C) An option that is included in a bond issue is referred to as a prepayment option.D) The most common type of option in a bond issue is a call provision.Answer: CComment: It is not uncommon for a bond issue to include a provision that gives either the bondholder and/or the issuer an option to take some action against the other party. An option that is included in a bond issue is referred to as an embedded option.Diff: 2Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.12 the different types of bondsTrue/False Questions1 The Theory of Interest Rates1) The liquidity preference theory is Keynes's view that the rate of interest is set in the market for money balances.Answer: TRUEDiff: 1Topic: 10.1 The Theory of Interest RatesObjective: 10.6 the meaning of liquidity preference in Keynes's theory of the determination of interest rates2) Interest is the price paid for the permanent use of resources, and the amount of a loan is its principal.Answer: FALSEComment: Interest is the price paid for the temporary use of resources, and the amount of a loan is its principal.Diff: 1Topic: 10.1 The Theory of Interest RatesObjective: 10.7 how an increase in the money supply can affect the level of the interest rate through an impact on liquidity, income, and price expectations3) In Fisher's terms, the interest rate reflects the interaction of the savers' marginal productivity of capital and borrowers' marginal rate of time preference.Answer: FALSEComment: In Fisher’s terms, the interest rate reflects the interaction of the savers’ marginal rate of time preference and borrowers’ marginal productivity of capital.Diff: 1Topic: 10.1 The Theory of Interest RatesObjective: 10.2 the role in Fisher's theory of the saver's time preference and the borrowing firm's productivity of capital4) The loanable funds theory is an extension of Fisher's theory and proposes that the equilibrium rate of interest reflects the demand and supply of funds, which depend on savers' willingness to save, borrowers' expectations regarding the profitability of investing, and the government's action regarding money supply.Answer: TRUEDiff: 1Topic: 10.1 The Theory of Interest RatesObjective: 10.5 the loanable funds theory, which is an expansion of Fisher's theory2 The Determinants of the Structure of Interest Rates1) Convertible bonds are securities issued by state and local governments and by their creations, such as "authorities" and special districts.Answer: FALSEComment: Municipal bonds are securities issued by state and local governments and by their creations, such as “authorities” and special districts.Diff: 1Topic: 10.2 The Determinants of the Structure of Interest RatesObjective: 10.11 the reason why the yields on U.S. Treasury securities are no longer as popular as benchmark interest rates and what alternative benchmarks are being considered by market participants。
第一章-金融市场与机构PPT课件
.
9
一板市场和二板市场
一板市场也称“主板市场”，主要是指股票 交易所市场。
二板市场有时也称为“创业板市场”，主要 是指场外交易市场。
.
10
纽约证券交易所是世界上第二大证券交易 所。它曾是最大的交易所，直到1996年它 的交易量被纳斯达克超过。
纽约证券交易所 New York Stock Exchange
.
19
货币市场工具
定义 特点 分类
国库券 ·商业票据 ·大额可转让定期存单 ·回购协议 ·联邦基金 ·银行承兑汇票
.
20
资本市场工具
定义 特点 分类
债券 抵押贷款 股票
.
21
衍生工具
衍生工具是一种金融交易合约，这种合约 的价值从基础证券的价值中派生出来，或 以股票指数、利率、汇率水平为水准基点。
近来，随着各国金融机构管制的放松，储蓄机构在资金的 流向上拥有更大的灵活性，使它们在功能上越来越接近商 业银行。
尽管储蓄机构可以是股东所有，但大多数还是由互助性的 会员共同拥有（存款者所有）。
.
27
信用社
信用社是由某些工会、教会、大学甚至某些居 民区作为成员组成受共同约束的非盈利性组织， 与商业银行以及储蓄机构相比有以下不同点：
2005年4月末，纽约证交所收购全电子证券
交易所（Archipelago），成为一个盈利性机
构。纽约证交所的总部位于美国纽约州纽
约市百老汇大街18号，在华尔街的转弯处
南侧。2006年6月1日，纽约证券交易所宣
布与泛欧股票交易所（Euronext）合并组成
NYSE Euronext”。
纽约证券交易所有大约2,800间公司在此上
.
- 1、下载文档前请自行甄别文档内容的完整性，平台不提供额外的编辑、内容补充、找答案等附加服务。
- 2、"仅部分预览"的文档,不可在线预览部分如存在完整性等问题,可反馈申请退款(可完整预览的文档不适用该条件!)。
- 3、如文档侵犯您的权益，请联系客服反馈,我们会尽快为您处理(人工客服工作时间：9:00-18:30)。
Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones)Chapter 1 IntroductionMultiple Choice Questions1 Financial Assets1) An asset is a possession that has value in an exchange and can be classified as ________.A) financial or intangible.B) financial or variable.C) tangible or intangible.D) fixed or variable.Answer: CDiff: 2Topic: 1.1 Financial AssetsObjective: 1.5: the various ways to classify financial markets2) The financial asset is referred to as a ________ if the claim is a fixed dollar.A) debt instrument.B) common equity instrument.C) derivative instrument.D) preferred equity instrument.Answer: ADiff: 2Topic: 1.1 Financial AssetsObjective: 1.4: the distinction between debt instruments and equity instruments3) A basic economic principle is that the price of any financial asset ________ the present value of its expected cash flow, even if the cash flow is not known with certainty.A) is greater thanB) is equal toC) is less thanD) is equal to or greater thanAnswer: BDiff: 2Topic: 1.1 Financial AssetsObjective: 1.1: what a financial asset is and the principal economic functions of financial assets4) A(n) ________ such as plant or equipment purchased by a business entity shares at least one characteristic with a financial asset: Both are expected to generate future cash flow for their owner.A) tangible assetB) intangible assetC) balance sheet assetD) cash assetAnswer: ADiff: 1Topic: 1.1 Financial AssetsObjective: 1.2: the distinction between financial assets and tangible assets5) Financial assets have two principal economic functions. Which of the below is ONE of these?A) A principal economic function is to transfer funds from those who have surplus funds to borrow to those who need funds to invest in intangible assets.B) A principal economic function is to transfer funds in such a way as to redistribute the avoidable risk associated with the cash flow generated by intangible assets among those seeking and those providing the funds.C) A principal economic function is to transfer funds in such a way as to redistribute the unavoidable risk associated with the cash flow generated by tangible assets among those seeking and those providing the funds.D) A principal economic function is to transfer funds from those who have surplus funds to invest to those who need funds to invest in intangible assets.Answer: CComment: Financial assets have two principal economic functions.(1) The first is to transfer funds from those who have surplus funds to invest to those who need funds to invest in tangible assets.(2) The second economic function is to transfer funds in such a way as to redistribute the unavoidable risk associated with the cash flow generated by tangible assets among those seeking and those providing the funds.Diff: 3Topic: 1.1 Financial AssetsObjective: 1.1: what a financial asset is and the principal economic functions of financial assets6) A principal economic function to transfer funds from those who have ________ to invest to those who need funds to invest in ________.A) deficit funds; tangible assets.B) surplus funds; intangible assets.C) deficit funds; intangible assets.D) surplus funds; tangible assets.Answer: DComment: Financial assets have two principal economic functions.(1) The first is to transfer funds from those who have surplus f unds to invest to those who need funds to invest in tangible assets.(2) The second economic function is to transfer funds in such a way as to redistribute the unavoidable risk associated with the cash flow generated by tangible assets among those seeking and those providing the funds.Diff: 2Topic: 1.1 Financial AssetsObjective: 1.1: what a financial asset is and the principal economic functions of financial assets 2 Financial Markets1) Financial markets provide three economic functions. Which of the below is NOT one of these?A) The interactions of buyers and sellers in a financial market determine the price of the traded asset.B) Financial markets provide a mechanism for an investor to sell a financial asset.C) Financial markets increases the cost of transacting.D) The interactions of buyers and sellers in a financial market determine the required return on a financial asset.Answer: CComment: Financial markets provide three economic functions.First, the interactions of buyers and sellers in a financial market determine the price of the traded asset. Or, equivalently, they determine the required return on a financial asset. As the nducement for firms to acquire funds depends on the required return that investors demand, it is this feature of financial markets that signals how the funds in the economy should be allocated among financial assets. This is called the price discovery process.Second, financial markets provide a mechanism for an investor to sell a financial asset. Because of this feature, it is said that a financial market offers liquidity, an attractive feature when circumstances either force or motivate an investor to sell. If there were not liquidity, the owner would be forced to hold a debt instrument until it matures and an equity instrument until the company is either voluntarily or involuntarily liquidated.While all financial markets provide some form of liquidity, the degree of liquidity is one of the factors that characterize different markets. The third economic function of a financial market is that it reduces the cost of transacting. There are two costs associated with transacting: search costs and information costs.Diff: 3Topic: 1.2 Financial MarketsObjective: 1.3: what a financial market is and the principal economic functions it performs2) The shifting of the financial markets from dominance by retail investors to institutional investors is referred to as the ________ of financial markets.A) globalizationB) institutionalizationC) securitizationD) diversificationAnswer: BDiff: 2Topic: 1.2 Financial MarketsObjective: 1.5: the various ways to classify financial markets3) Financial markets can be categorized as those dealing with newly issued financial claims that are called the ________, and those for exchanging financial claims previously issued that are called the ________.A) secondary market; primary market.B) financial market; secondary market.C) OTC market; NYSE/AMEX market.D) primary market; secondary market.Answer: DDiff: 2Topic: 1.2 Financial MarketsObjective: 1.6: the differences between the primary and secondary markets4) Business entities include nonfinancial and financial enterprises. ________ manufacture products such as cars and computers and/or provide nonfinancial services such as transportation and utilities.A) Financial enterprisesB) Nonfinancial enterprisesC) Both financial and nonfinancial enterprisesD) None of theseAnswer: BDiff: 1Topic: 1.2 Financial MarketsObjective: 1.7: the participants in financial markets3 Globalization of Financial Markets1) Which of the below is NOT a factor that has led to the integration of financial markets?A) A factor is liberalization of markets and the activities of market participants in key financial centers of the world.B) A factor is deregulation of markets and the activities of market participants in key financial centers of the world.C) A factor is technological advances for monitoring world markets, executing orders, and analyzing financial opportunities.D) A factor is decreased institutionalization of financial markets.Answer: DComment: The factors that have led to the integration of financial markets are (1) deregulation or liberalization of markets and the activities of market participants in key financial centers of the world; (2) technological advances for monitoring world markets, executing orders, and analyzing financial opportunities; and (3) increased institutionalization of financial markets.Diff: 3Topic: 1.3 Globalization of Financial MarketsObjective: 1.8: reasons for the globalization of financial markets2) A factor leading to the integration of financial markets is ________.A) decreased institutionalization of financial markets.B) increased monitoring of markets.C) technological advances for monitoring domestic markets, executing orders, and analyzing financial opportunities.D) technological advances for monitoring world markets, executing orders, and disregarding financial opportunities.Answer: DComment: The factors that have led to the integration of financial markets are (1) deregulation or liberalization of markets and the activities of market participants in key financial centers of the world; (2) technological advances for monitoring world markets, executing orders, and analyzing financial opportunities; and (3) increased institutionalization of financial markets.Diff: 2Topic: 1.3 Globalization of Financial MarketsObjective: 1.8: reasons for the globalization of financial markets3) From the perspective of a given country, financial markets can be classified as either internal or external. The internal market is composed of two parts: the domestic market and the foreign market. The domestic market is ________.A) where the securities of issuers not domiciled in the country are sold and traded.B) where issuers domiciled in a country issue securities and where those securities are subsequently traded.C) where securities are offered simultaneously to investors in a number of countries.D) where issuers domiciled in a country issue securities and where those securities are NOT subsequently traded.Answer: BDiff: 2Topic: 1.3 Globalization of Financial MarketsObjective: 1.10: the distinction between a domestic market, a foreign market, and the Euromarket 4) A reason for a corporation using ________ is a desire by issuers to diversify their source of funding so as to reduce reliance on domestic investors.A) EuromarketsB) domestic equity marketsC) domestic government marketsD) None of theseAnswer: ADiff: 1Topic: 1.3 Globalization of Financial MarketsObjective: 1.11: the reasons why entities use foreign markets and Euromarkets4 Derivative Markets1) The two basic types of derivative instruments are ________ and ________.A) insurance contracts; options contractsB) futures/forward contracts; indenturesC) futures/forward contracts; legal contractsD) futures/forward contracts; options contractsAnswer: DDiff: 2Topic: 1.4 Derivative MarketsObjective: 1.12: what a derivative instrument is and the two basic types of derivative instruments2) Derivative instruments derive their value from ________.A) market conditions at time of delivery.B) market conditions at time of issue.C) the underlying instruments to which they relate.D) variations in the future claims conveyed from spot markets.Answer: CDiff: 2Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments3) Derivative contracts provide ________.A) issuers and investors an expensive but efficient way of controlling some major risks.B) issuers and investors an inexpensive way of controlling some major risks.C) issuers and investors an inexpensive but inefficient way of controlling all major risks.D) issuers and investors an expensive way of controlling some minor risks.Answer: BDiff: 1Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments4) Derivative markets may have at least three advantages over the corresponding cash (spot) market for the same financial asset. Which of the below is ONE of these advantages?A) Transactions typically can be accomplished faster in the derivatives market.B) It will always cost more to execute a transaction in the derivatives market in order to adjust the risk exposure of an investor's portfolio to new economic information than it would cost to make that adjustment in the cash market.C) All derivative markets can absorb a greater dollar transaction without an adverse effect on the price of the derivative instrument; that is, the derivative market may be more liquid than the cash market.D) Some derivative markets can absorb a greater dollar transaction but with an adverse effect on the price of the derivative instrument; that is, the derivative market may be more liquid than the cash market.Answer: AComment: Derivative markets may have at least three advantages over the corresponding cash (spot) market for the same financial asset.First, depending on the derivative instrument, it may cost less to execute a transaction in the derivatives market in order to adjust the risk exposure of an investor’’s portfolio to new economic information than it would cost to make that adjustment in the cash market.Second, transactions typically can be accomplished faster in the derivatives market.Third, some derivative markets can absorb a greater dollar transaction without an adverse effect on the price of the derivative instrument; that is, the derivative market may be more liquid than the cash market.Diff: 3Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments5 The Role of the Government in Financial Markets1) Which of the following statements is FALSE?A) Because of the prominent role played by financial markets in economies, governments have long deemed it necessary to regulate certain aspects of these markets.B) In their regulatory capacities, governments have had little influence on the development and evolution of financial markets and institutions.C) It is important to realize that governments, markets, and institutions tend to behave interactively and to affect one another's actions in certain ways.D) A sense of how the government can affect a market and its participants is important to an understanding of the numerous markets and securities.Answer: BComment: In their regulatory capacities, governments have greatly influenced the development and evolution of financial markets and institutions.Diff: 2Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.15 the different ways that governments regulate markets, including disclosure regulation, financial activity regulation, financial institution regulation, regulation of foreign firm participation, and regulation of the monetary system2) Which of the below statements is TRUE?A) Because of differences in culture and history, different countries regulate financial markets and financial institutions in varying ways, emphasizing some forms of regulation more than others.B) The standard explanation or justification for governmental regulation of a market is that the market, left to itself, will produce its particular goods or services in an efficient manner and at the lowest possible cost.C) Governments in most developed economies have created elaborate systems of regulation for financial markets, in part because the markets themselves are simple and in part because financial markets are unimportant to the general economies in which they operate.D) Financial activity regulation are free of rules about traders of securities and trading on financial markets.Answer: AComment: The standard explanation or justification for governmental regulation of a market is that the market, left to itself, will not produce its particular goods or services in an efficient manner and at the lowest possible cost.Governments in most developed economies have created elaborate systems of regulation for financial markets, in part because the markets themselves are complex and in part because financial markets are so important to the general economies in which they operate.Financial activity regulation consists of rules about traders of securities and trading on financial markets.Diff: 3Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.14: the typical justification for governmental regulation of markets3) The regulatory structure in the United States is largely the result of ________.A) the first IPO bubble in the 20th century.B) the boom in the stock market experienced in the 1990s.C) bull markets that have occurred at various times.D) financial crises that have occurred at various times.Answer: DDiff: 1Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.16 the U.S. Department of the Treasury's proposed plan for regulatory reform4) The proposal by the U.S. Department of the Treasury, popularly referred to as the "Blueprint for Regulatory Reform" or simply Blueprint, would replace the prevailing complex array of regulators with a regulatory system based on functions. More specifically, there would be three regulators. Which of the below is NOT one of these?A) market stability regulatorB) prudential regulatorC) uninhibited regulatorD) business conduct regulatorAnswer: CDiff: 2Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.15 the different ways that governments regulate markets, including disclosure regulation, financial activity regulation, financial institution regulation, regulation of foreign firm participation, and regulation of the monetary system6 Financial Innovation1) ________ increase the liquidity of markets and the availability of funds by attracting new investors and offering new opportunities for borrowers.A) Market-broadening instrumentsB) Market-management instrumentsC) Risk-management instrumentsD) Arbitraging-broadening instrumentsAnswer: AComment: The Economic Council of Canada classifies financial innovations into the following three broad categories:(1) market-broadening instruments, which increase the liquidity of markets and the availability of funds by attracting new investors and offering new opportunities for borrowers(2) risk-management instruments, which reallocate financial risks to those who are less averse to them, or who offsetting exposure and thus are presumably better able to should them(3) arbitraging instruments and processes, which enable investors and borrowers to take advantage of differences in costs and returns between markets, and which reflect differences in the perception of risks, as well as in information, taxation, and regulationsDiff: 2Topic: 1.6 Financial InnovationObjective: 1.17 the primary reasons for financial innovation2) The Economic Council of Canada classifies financial innovations into three broad categories. Which of the below is NOT one of these?A) market-broadening instrumentsB) risk-management instrumentsC) risk-broadening instrumentsD) arbitraging instruments and processesAnswer: CComment: The Economic Council of Canada classifies financial innovations into the following three broad categories:(1) market-broadening instruments, which increase the liquidity of markets and the availability of funds by attracting new investors and offering new opportunities for borrowers(2) risk-management instruments, which reallocate financial risks to those who are less averse to them, or who offsetting exposure and thus are presumably better able to should them(3) arbitraging instruments and processes, which enable investors and borrowers to take advantage of differences in costs and returns between markets, and which reflect differences in the perception of risks, as well as in information, taxation, and regulationsDiff: 2Topic: 1.6 Financial InnovationObjective: 1.17 the primary reasons for financial innovation3) There are two extreme views of financial innovation. Which of the below is ONE of these?A) Some hold that the essence of innovation is the introduction of financial assets that are less efficient for redistributing risks among market participants.B) There are some who believe that the minor impetus for innovation has been the endeavor to circumvent regulations and find loopholes in tax rules.C) Some hold that the essence of innovation is the introduction of financial instruments that are more efficient for redistributing risks among market participants.D) None of theseAnswer: CComment: There are two extreme views of financial innovation.There are some who believe that the major impetus for innovation has been the endeavor to circumvent (or arbitrage) regulations and find loopholes in tax rules.At the other extreme, some hold that the essence of innovation is the introduction of financial instruments that are more efficient for redistributing risks among market participants.Diff: 2Topic: 1.6 Financial InnovationObjective: 1.17 the primary reasons for financial innovation4) An ultimate and important cause of financial innovation does not involve ________.A) incentives to follow existing regulation and and tax laws.B) increased volatility of interest rates, inflation, equity prices, and exchange rates.C) changing global patterns of financial wealth.D) financial intermediary competition.Answer: AComment: It would appear that many of the innovations that have passed the test of time and have not disappeared have been innovations that provided more efficient mechanisms for redistributing risk. Other innovations may just represent a more efficient way of doing things. Indeed, if we consider the ultimate causes of financial innovation,the following emerge as the most important:1. Increased volatility of interest rates, inflation, equity prices, and exchange rates.2. Advances in computer and telecommunication technologies.3. Greater sophistication and educational training among professional market participants.4. Financial intermediary competition.5. Incentives to get around existing regulation and and tax laws.6. Changing global patterns of financial wealth.Diff: 2Topic: 1.6 Financial InnovationObjective: 1.17 the primary reasons for financial innovationTrue/False Questions1 Financial Assets1) An equity instrument (also called a residual claim) obligates the issuer of the financial asset to pay the holder an amount based on earnings, if any, after holders of debt instruments have been paid.Answer: TRUEDiff: 1Topic: 1.1 Financial AssetsObjective: 1.4: the distinction between debt instruments and equity instruments2) A intangible asset is one whose value depends on particular physical properties such as buildings, land, or machinery. Tangible assets, by contrast, represent legal claims to some future benefit.Answer: FALSEComment: A tangible asset is one whose value depends on particular physical properties such as buildings, land, or machinery. Intangible assets, by contrast, represent legal claims to some future benefit.Diff: 1Topic: 1.1 Financial AssetsObjective: 1.2: the distinction between financial assets and tangible assets3) Financial assets have two principal economic functions. One function is to transfer funds from those who have surplus funds to invest to those who need funds to invest in tangible assets. Answer: TRUEDiff: 1Topic: 1.1 Financial AssetsObjective: 1.1: what a financial asset is and the principal economic functions of financial assets 2 Financial Markets1) The three economic functions of financial markets are: to improve the price discovery process; to lessen liquidity; and, to reduce the cost of transacting.Answer: FALSEComment: The three economic functions of financial markets are: to improve the price discovery process; to enhance liquidity; and to reduce the cost of transacting.Diff: 2Topic: 1.2 Financial MarketsObjective: 1.3: what a financial market is and the principal economic functions it performs2) The market participants include households, business entities, national governments, national government agencies, state and local governments, supranationals, and regulators.Answer: TRUEDiff: 1Topic: 1.2 Financial MarketsObjective: 1.3: what a financial market is and the principal economic functions it performs3) One economic function of a financial market is to reduce the cost of transacting. There are two costs associated with transacting: search costs and information costs.Answer: TRUEDiff: 1Topic: 1.2 Financial MarketsObjective: 1.3: what a financial market is and the principal economic functions it performs3 Globalization of Financial Markets1) Globalization means the integration of financial markets throughout the world into an international financial market.Answer: TRUEDiff: 1Topic: 1.3 Globalization of Financial MarketsObjective: 1.8: reasons for the globalization of financial markets2) The domestic market in any country is the market where the securities of issuers not domiciled in thecountry are sold and traded.Answer: FALSEComment: The foreign market in any country is the market where the securities of issuers not domiciled in the country are sold and traded.Diff: 1Topic: 1.3 Globalization of Financial MarketsObjective: 1.10: the distinction between a domestic market, a foreign market, and the Euromarket 3) Global competition has forced governments to exercise control various aspects of their financial markets so that their financial enterprises can compete effectively around the world.Answer: FALSEComment: Global competition has forced governments to deregulate (or liberalize) various aspects of their financial markets so that their financial enterprises can compete effectively around the world.Diff: 1Topic: 1.3 Globalization of Financial MarketsObjective: 1.8: reasons for the globalization of financial markets4 Derivative Markets1) Derivative instruments play a critical role in global financial markets.Answer: TRUEDiff: 1Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments2) IBM pension fund owns a portfolio consisting of the common stock of a large number of companies. Suppose the pension fund knows that two months from now it must sell stock in its portfolio to pay beneficiaries $20 million. The risk that IBM pension fund faces is that two months from now when the stocks are sold, the price of most or all stocks may be higher than they are today.Answer: FALSEComment: IBM pension fund owns a portfolio consisting of the common stock of a large number of companies. Suppose the pension fund knows that two months from now it must sell stock in its portfolio to pay beneficiaries $20 million. The risk that IBM pension fund faces is that two months from now when the stocks are sold, the price of most or all stocks may be lower than they are today.Diff: 2Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments3) When the option grants the owner of the option the right to buy a financial asset from the other party, the option is called a put option.Answer: FALSEComment: When the option grants the owner of the option the right to buy a financial asset from the other party, the option is called a call option.Diff: 2Topic: 1.4 Derivative MarketsObjective: 1.13: the role of derivative instruments5 The Role of the Government in Financial Markets1) The market stability regulator would take on the traditional role of the Federal Reserve by giving it the responsibility and authority to ensure overall financial market stability.Answer: TRUEDiff: 1Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.15 the different ways that governments regulate markets, including disclosure regulation, financial activity regulation, financial institution regulation, regulation of foreign firm participation, and regulation of the monetary system2) Blueprint regulation is the form of regulation that requires issuers of securities to make public a large amount of financial information to actual and potential investors.Answer: FALSEComment: Disclosure regulation is the form of regulation that requires issuers of securities to make public a large amount of financial information to actual and potential investors.Diff: 1Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.16 the U.S. Department of the Treasury's proposed plan for regulatory reform3) Financial activity regulation is the form of regulation that requires issuers of securities to make public a large amount of financial information to actual and potential investors.Answer: FALSEComment: Disclosure regulation is the form of regulation that requires issuers of securities to make public a large amount of financial information to actual and potential investors.NOTE. Financial activity regulation consists of rules about traders of securities and trading on financial markets.Diff: 1Topic: 1.5 The Role of the Government in Financial MarketsObjective: 1.14: the typical justification for governmental regulation of markets。