PART I MULTIPLE CHOICE QUESTIONS $(2$ points, $0\mathrm{.}2$ point$/$each correct answer$)($Choose the BEST answer$)$Question $1.$ Which of the following financial institutions can underwrites an IPO of a corporation?A$.$ Mutual Fund B$.$ Insurance companyC. Investment bankD. ThriftQuestion $2.$ Which of the following brings conflict of interest problem to the mutual funds:A$.$ Upfront loadB. Late tradingC. Back$-$end loadD. NAVQuestion $3.$ Financial intermediaries can reduce information asymmetry because:A$.$ They have developed expertise in collecting and producing informationB. They can diversify away their risk through many loansC. They have expertise in information analysis for screening and monitoringD. All of the aboveQuestion $4.$ Which of the following is correct about the capital market:A$.$ The idle capital is directly transfered from the lender to the borrowerB. The idle capital is indirectly transfered from the lender to the borrowerC. The idle capital is directly transfered from the borrower to the lenderD. The idle capital is indirectly transfered from the borrower to the lenderQuestion $5.$ What is the action of a central bank that increases$/$reduces the money supply by requiring the commercial bank to keep a certain proportion of their deposit with the central bank, thus control their lending capacity?A$.$ Discount window B$.$ Monetary policyC. Required reserves D$.$ Open Market OperationQuestion $6.$ The type of fund in which the investors contribute a portfolio instead of cash to the fund is called?A$.$ Hedge FundB. Mutual FundC. Index FundD. ETFQuestion $7.$A$.$ Money baseis related to the money creation power of commercial banksB. Money multiplier C$.$ Money demand D$.$ Money supplyQuestion $8.$ What does a bank panic situation refer to$?$A$.$ Bank owners are worried about their weak performanceB. The central bank may consistently pursue a tightening monetary policy for quite a long timeC. People keep coming to the banks to ask for depositing more money with the banksD. Bank clients' sudden withdrawals of deposits in large amounts make the banks exposured to a financial crisis