第二章金融体系预览英文习题及答案.docx

第二章金融体系预览英文习题及答案.docx

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第二章金融体系预览英文习题及答案

Chapter2OverviewoftheFinancialSystem

2.1SingleChoice

1）Everyfinancialmarketperformsthefollowingfunction:

A）Itdeterminesthelevelofinterestrates.

B）Itallowscommonstocktobetraded.

C）Itallowsloanstobemade.

D）Itchannelsfundsfromlenders-saverstoborrowers-spenders.

2）Financialmarketshavethebasicfunctionof

A）bringingtogetherpeoplewithfundstolendandpeoplewhowanttoborrowfunds.

B）assuringthattheswingsinthebusinesscyclearelesspronounced.

C）assuringthatgovernmentsneedneverresorttoprintingmoney.

D）bothAandBoftheabove.

E）bothBandCoftheabove.

3）Whichofthefollowingcanbedescribedasinvolvingdirectfinance?

A）Acorporation'sstockistradedinanover-the-countermarket.

B）Peoplebuysharesinamutualfund.

C）Apensionfundmanagerbuyscommercialpaperinthesecondarymarket.

D）Aninsurancecompanybuyssharesofcommonstockintheover-the-countermarkets.

E）Noneoftheabove.

4）Whichofthefollowingcanbedescribedasinvolvingdirectfinance?

A）Acorporation'sstockistradedinanover-the-countermarket.

B）Acorporationbuyscommercialpaperissuedbyanothercorporation.

C）Apensionfundmanagerbuyscommercialpaperfromtheissuingcorporation.

D）BothAandBoftheabove.

E）BothBandCoftheabove.

5）Whichofthefollowingcanbedescribedasinvolvingindirectfinance?

A）Acorporationtakesoutloansfromabank.

B）Peoplebuysharesinamutualfund.

C）Acorporationbuyscommercialpaperinasecondarymarket.

D）Alloftheabove.

E）OnlyAandBoftheabove.

6）Whichofthefollowingcanbedescribedasinvolvingindirectfinance?

A）AbankbuysaU.S.Treasurybillfromoneofitsdepositors.

B）Acorporationbuyscommercialpaperissuedbyanothercorporation.

C）Apensionfundmanagerbuyscommercialpaperintheprimarymarket.

D）BothAandCoftheabove.

7）Financialmarketsimproveeconomicwelfarebecause

A）theyallowfundstomovefromthosewithoutproductiveinvestmentopportunitiestothosewhohavesuchopportunities.

B）theyallowconsumerstotimetheirpurchasesbetter.

C）theyweedoutinefficientfirms.

D）theydoalloftheabove.

E）theydoAandBoftheabove.

8）Acountrywhosefinancialmarketsfunctionpoorlyislikelyto

A）efficientlyallocateitscapitalresources.

B）enjoyhighproductivity.

C）experienceeconomichardshipandfinancialcrises.

D）increaseitsstandardofliving.

9）Whichofthefollowingaresecurities?

A）Acertificateofdeposit

B）AshareofTexacocommonstock

C）ATreasurybill

D）Alloftheabove

E）OnlyAandBoftheabove

10）Whichofthefollowingstatementsaboutthecharacteristicsofdebtandequityaretrue?

A）Theybothcanbelong-termfinancialinstruments.

B）Theybothinvolveaclaimontheissuer'sincome.

C）Theybothenableacorporationtoraisefunds.

D）Alloftheabove.

E）OnlyAandBoftheabove.

11）Themoneymarketisthemarketinwhich_________aretraded.

A）newissuesofsecurities

B）previouslyissuedsecurities

C）short-termdebtinstruments

D）long-termdebtandequityinstruments

12）Long-termdebtandequityinstrumentsaretradedinthe_________market.

A）primary

B）secondary

C）capital

D）money

13）Whichofthefollowingareprimarymarkets?

A）TheNewYorkStockExchange

B）TheU.S.governmentbondmarket

C）Theover-the-counterstockmarket

D）Theoptionsmarkets

E）Noneoftheabove

14）Whichofthefollowingaresecondarymarkets?

A）TheNewYorkStockExchange

B）TheU.S.governmentbondmarket

C）Theover-the-counterstockmarket

D）Theoptionsmarkets

E）Alloftheabove

15）Acorporationacquiresnewfundsonlywhenitssecuritiesaresoldinthe

A）secondarymarketbyaninvestmentbank.

B）primarymarketbyaninvestmentbank.

C）secondarymarketbyastockexchangebroker.

D）secondarymarketbyacommercialbank.

16）Intermediarieswhoareagentsofinvestorsandmatchbuyerswithsellersofsecuritiesarecalled

A）investmentbankers.

B）traders.

C）brokers.

D）dealers.

E）noneoftheabove.

17）Intermediarieswholinkbuyersandsellersbybuyingandsellingsecuritiesatstatedpricesarecalled

A）investmentbankers.

B）traders.

C）brokers.

D）dealers.

E）noneoftheabove.

18）Animportantfinancialinstitutionthatassistsintheinitialsaleofsecuritiesintheprimarymarketisthe

A）investmentbank.

B）commercialbank.

C）stockexchange.

D）brokeragehouse.

19）Whichofthefollowingstatementsaboutfinancialmarketsandsecuritiesaretrue?

A）Mostcommonstocksaretradedover-the-counter,althoughthelargestcorporationshavetheirsharestradedatorganizedstockexchangessuchastheNewYorkStockExchange.

B）Acorporationacquiresnewfundsonlywhenitssecuritiesaresoldintheprimarymarket.

C）Moneymarketsecuritiesareusuallymorewidelytradedthanlonger-termsecuritiesandsotendtobemoreliquid.

D）Alloftheabovearetrue.

E）OnlyAandBoftheabovearetrue.

20）Whichofthefollowingstatementsaboutfinancialmarketsandsecuritiesaretrue?

A）Abondisalong-termsecuritythatpromisestomakeperiodicpaymentscalleddividendstothefirm'sresidualclaimants.

B）Adebtinstrumentisintermediatetermifitsmaturityislessthanoneyear.

C）Adebtinstrumentislongtermifitsmaturityistenyearsorlonger.

D）Thematurityofadebtinstrumentisthetime（term）thathaselapsedsinceitwasissued.

21）Whichofthefollowingstatementsaboutfinancialmarketsandsecuritiesaretrue?

A）Fewcommonstocksaretradedover-the-counter,althoughtheover-the-countermarketshavegrowninrecentyears.

B）Acorporationacquiresnewfundsonlywhenitssecuritiesaresoldintheprimarymarket.

C）Capitalmarketsecuritiesareusuallymorewidelytradedthanlongertermsecuritiesandsotendtobemoreliquid.

D）Alloftheabovearetrue.

E）OnlyAandBoftheabovearetrue.

22）Whichofthefollowingmarketsissometimesorganizedasanover-the-countermarket?

A）Thestockmarket

B）Thebondmarket

C）Theforeignexchangemarket

D）Thefederalfundsmarket

E）alloftheabove

23）Bondsthataresoldinaforeigncountryandaredenominatedinthatcountry'scurrencyareknownas

A）foreignbonds.

B）Eurobonds.

C）Eurocurrencies.

D）Eurodollars.

24）Bondsthataresoldinaforeigncountryandaredenominatedinacurrencyotherthanthatofthecountryinwhichtheyaresoldareknownas

A）foreignbonds.

B）Eurobonds.

C）Eurocurrencies.

D）Eurodollars.

25）Financialintermediaries

A）existbecausetherearesubstantialinformationandtransactioncostsintheeconomy.

B）improvethelotofthesmallsaver.

C）areinvolvedintheprocessofindirectfinance.

D）doalloftheabove.

E）doonlyAandBoftheabove.

26）Themainsourcesoffinancingforbusinesses,inorderofimportance,are

A）financialintermediaries,issuingbonds,issuingstocks.

B）issuingbonds,issuingstocks,financialintermediaries.

C）issuingstocks,issuingbonds,financialintermediaries.

D）issuingstocks,financialintermediaries,issuingbonds.

27）Thepresenceoftransactioncostsinfinancialmarketsexplains,inpart,why

A）financialintermediariesandindirectfinanceplaysuchanimportantroleinfinancialmarkets.

B）equityandbondfinancingplaysuchanimportantroleinfinancialmarkets.

C）corporationsgetmorefundsthroughequityfinancingthantheygetfromfinancialintermediaries.

D）directfinancingismoreimportantthanindirectfinancingasasourceoffunds.

28）Financialintermediariescansubstantiallyreducetransactioncostsperdollaroftransactionsbecausetheirlargesizeallowsthemtotakeadvantageof

A）poorlyinformedconsumers.

B）standardization.

C）economiesofscale.

D）theirmarketpower.

29）Thepurposeofdiversificationisto

A）reducethevolatilityofaportfolio'sreturn.

B）raisethevolatilityofaportfolio'sreturn.

C）reducetheaveragereturnonaportfolio.

D）raisetheaveragereturnonaportfolio.

30）Aninvestorwhoputsallherfundsintooneasset_________herportfolio's_________.

A）increases;diversification

B）decreases;diversification

C）increases;averagereturn

D）decreases;averagereturn

31）Throughrisk-sharingactivities,afinancialintermediary_________itsownriskand_________therisksofitscustomers.

A）reduces;increases

B）increases;reduces

C）reduces;reduces

D）increases;increases

32）Thepresenceof_________infinancialmarketsleadstoadverseselectionandmoralhazardproblemsthatinterferewiththeefficientfunctioningoffinancialmarkets.

A）noncollateralizedrisk

B）free-riding

C）asymmetricinformation

D）costlystateverification

33）Whenthelenderandtheborrowerhavedifferentamountsofinformationregardingatransaction,_________issaidtoexist.

A）asymmetricinformation

B）adverseselection

C）moralhazard

D）fraud

34）Whenthepotentialborrowerswhoarethemostlikelytodefaultaretheonesmostactivelyseekingaloan,_________issaidtoexist.

A）asymmetricinformation

B）adverseselection

C）moralhazard

D）fraud

35）Whentheborrowerengagesinactivitiesthatmakeitlesslikelythattheloanwillberepaid,_________issaidtoexist.

A）asymmetricinformation

B）adverseselection

C）moralhazard

D）fraud

36）Theconceptofadverseselectionhelpstoexplain

A）whichfirmsaremorelikelytoobtainfundsfrombanksandotherfinancialintermediaries,ratherthanfromthesecuritiesmarkets.

B）whyindirectfinance