Question: 1 Which of the following is true about finance a

1. Which of the following is true about finance?
a. Finance is the study of how and under what terms savings (money) are allocated between lenders and borrowers.
b. Finance is different from economics because economics does not study how resources are allocated.
c. All parts of finance are not integrated.
d. Business finance is the only important part of finance.

2. According to Canada’s national balance sheet, which of the following items is not a real asset?
a. Land
b. Machinery and equipment
c. Stocks
d. Residential structures

3. You have hired someone to purchase 100 shares of a technology firm for your portfolio. The person you have hired is acting as a
A. Financial Intermediary.
B. Market Intermediary.
C. Financial Principal.
D. Market Principal.

4. Which of the following is a correct combination of primary fund lenders and fund borrowers in the financial system?
a. Households and government
b. Households and non-residents
c. Businesses and households
d. Government and non-residents

5. Which of the following financial intermediaries does not transform the nature of the underlying financial securities?
a. Banks
b. Insurance firms
c. Mutual funds
d. Pension funds

6. A small investor from New Brunswick has just purchased 100 common shares of a telecommunications firm on the Toronto Stock Exchange. This is the first time the investor has purchased this stock. This transaction is an example of
a. A primary market transaction because it is the first time the investor has bought the stock.
b. A primary market transaction because the money the investor has invested will go directly to the firm.
c. A secondary market transaction because the investor has bought the stock from other investors.
d. None of the above; this is a large block trade and will be done using the OTC market (the “third market”).

7. Which of the following “statements” is true about the global financial system?
a. Canadian debt and equity markets represent the majority of the global financial market.
b. Canada’s net international investment position is always negative in any year.
c. The globalization of the equity markets means that the linkages between the global markets are getting tighter.
d. Canada’s financial system is completely separated from the global financial market.

8. Which of the following “statements” is true about the financial crisis of 2008?
a. The crisis in the Canadian banking sector turned into the global financial crisis.
b. The Canadian stock market was not hit by the financial crisis.
c. The Canadian government bailed out one major Canadian bank.
d. The crisis in the U.S. banking sector turned into a global financial crisis.

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