Question

In: Finance

6: The key distinguishing feature of the ________________ is that securities of up to a year...

6: The key distinguishing feature of the ________________ is that securities of up to a year in maturity are traded there.

a. money market

b. primary market

c. capital market

d. secondary market

7: Which of the following would not be an indirect transfer?

a. M&I Bank takes in deposits from Bill and Teresa. M&I uses most of the

money to make a loan to Josephine.

b. Northwestern Mutual Life Insurance sells a life insurance policy to

Sharon. The premium received by Northwestern is invested in corporate bonds.

c. Jerry buys mutual fund shares from Vanguard Mutual Funds. Vanguard uses

the money to purchase stocks.

d. Jennifer lends $11,000 to George. George is scheduled to pay off the

loan by making 60 equal monthly payments, covering principal and interest.

8: With a(n) _____________________ transaction, no new funds are generated for

the original issuer of the security.

a. capital market

b. secondary market

c. capital market

d. indirect

9: The actual amount of U.S. dollars received on a foreign investment depends on

__________________ between the U.S. dollar and the foreign currency.

a. economies of scale

b. transmission mechanism

c. speculation

d. the exchange rate

10: A(n) __________________ is a security whose payoffs are linked to other,

previously issued securities.

a. secondary security

b. primary security

c. over-the-counter security

d. derivative security

Solutions

Expert Solution

6) The key distinguishing feature of the money market is that securities of up to a year in maturity are traded there.
Explaination for wrong answers:
Primary market deals with newly issued securities
Capital market will contain both primary, seconday and money market
Secondry market will have retraded securities

7) d is correct because this is a direct transfer between two individuals

8) b is correct

Explaination for wrong answers:

Capital market will contain both primary, seconday and money market anc can generate new funds because primary market is also present
Indirect market will be between two individuals or institutions in which transfer takes place via proxy

9) d is the correct option
a is wrong because economies of scale would lead to low cost production.
b is wrong because transmission mechanism is the process by which asset prices and general economic conditions are affected as a result of monetary policy decisions
c is wrong because speculation is taking risk just for profit

10)d is correct option

jeff jeffy answered 1 year ago

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