Financial markets have the basic function of

		bringing together people with funds to lend and people who wantto borrow funds.
		assuring that the swings in the business cycle are lesspronounced.
		assuring that governments need never resort to printing moneywhenever the economy contracts.
		both A and B of the above.
		both B and C of the above.

1 points

QUESTION 2

Which of the following can be described as involving directfinance?

		A corporation's stock is traded in an over-the-countermarket.
		A corporation buys a commercial paper issued by anothercorporation.
		A pension fund manager buys a commercial paper from the issuingcorporation.
		Both A and B of the above.
		Both B and C of the above.

1 points

QUESTION 3

Which of the following can be described as involving indirectfinance?

		A corporation takes out loans from a bank.
		People buy shares in a mutual fund.
		Company X buys a 1-month commercial paper issued by Company Y inthe secondary market.
		Only B and C.
		Only A and B

1 points

QUESTION 4

Which of the following statements about the characteristics ofdebt and equity securities are true? [I] A debt security can beshort-term or long-term [II] Equities can be short-term orlong-term [III] Equity securities can only be long-term [IV] Theyboth involve a claim on the issuer's income. [V] Dividends onequity capital are mandatory [VI] They both enable a corporation toraise funds.

		I, II, V, VI
		I, III, IV, VI
		IV, V, VI
		II, III, IV, V
		All are correct

1 points

QUESTION 5

The money market is the market in which ________ are traded.

		new issues of securities
		previously issued securities
		short-term debt instruments
		long-term debt and equity instruments

1 points

QUESTION 6

Long-term debt and equity instruments are traded in the ________market.

		primary
		secondary
		capital
		money

1 points

QUESTION 7

Which of the following are primary markets?

		New York Stock Exchange
		Frankfurt Stock Exchange
		Over-the-counter stock market
		Tokyo Stock Exchange
		None of the above