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In: Finance

1: Which of the following would be categorized as a primary market transaction? a. Jim buys...

1: Which of the following would be categorized as a primary market transaction?

a. Jim buys 100 shares of a new stock issue offered by Google.

b. Sam sells some of his Procter & Gamble stock online through E-Trade.

c. Jack buys some AT&T bonds from an institutional investor.

d. Alan sells a U.S. Treasury bond that he purchased two years ago.

2: Which of the following would be categorized as a money market instrument?

a. 15-year U.S. Treasury Bond

b. 91-day U.S. Treasury Bill

c. 10-year General Motors bond

d. shares of National City Bank's stock

3: Brown National Bank receives customer deposits averaging about $800 per

deposit. The bank makes loans, averaging about $30,000 per loan. This set of

information best illustrates the essence of:

a. forward market transactions.

b. money market transactions.

c. interest rate risk.

d. denomination intermediation.

4: We might call this a market for "used" securities; the securities

trading here were issued sometime earlier. This is the:

a. direct market.

b. secondary market.

c. indirect transfer market.

d. primary market.

5: One view of a bank is that it performs a sort of surveillance function on

behalf of depositors. In this view, the bank is playing the role of:

a. transmission mechanism.

b. transfer agent.

c. delegated monitor.

d. mediator.

Solutions

Expert Solution

1: Which of the following would be categorized as a primary market transaction?

a. Jim buys 100 shares of a new stock issue offered by Google.

Primary market transactions refer to first sale of a security.

2: Which of the following would be categorized as a money market instrument?

b. 91-day U.S. Treasury Bill

Money market instruments should have maturity of 1 year or less.

3: Brown National Bank receives customer deposits averaging about $800 per

deposit. The bank makes loans, averaging about $30,000 per loan. This set of

information best illustrates the essence of:

d. denomination intermediation.

4: We might call this a market for "used" securities; the securities

trading here were issued sometime earlier. This is the:

b. secondary market.

5: One view of a bank is that it performs a sort of surveillance function on

behalf of depositors. In this view, the bank is playing the role of:

c. delegated monitor.

jeff jeffy answered 1 year ago

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