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Which of the following would be categorized as a primary

market transaction?

A)

B)

C)

D)

E)

Jim buys 100 shares of a new stock issue offered by Google.

Sam sells some of his Procter & Gamble stock, online, through E-Trade.

Jack buys some AT&T bonds from an institutional investor.

Alan sells some U.S. Treasury bond that he purchased two years ago.

(b), (c), and (d)

Which of the following would be categorized as a money

market instrument?

A)

B)

C)

D)

15-year U.S. Treasury Bond

91-day U.S. Treasury Bill

10-year General Motors bond

shares of National City Bank's stock

E)

Brown National Bank receives customer deposits averaging about $800 per
deposit. The bank makes loans, averaging about $30,000 per loan. This set
of information best illustrates the essence of:

A)

B)

C)

D)

E)

(a) and (c)

forward market transactions

money market transactions

interest rate risk

denomination intermediation

secondary market transactions

We might call this a market for "used" securitiesthe securities trading

here were issued sometime earlier. This is the:

A)

B)

direct market

secondary market
indirect transfer market

C)

D)

E)

capital market

One view of a bank is that it performs a sort of surveillance function on

behalf of depositors. In this view, the bank is playing the role of:

A)

B)

C)

D)

E)

primary market

transmission mechanism

transfer agent

delegated monitor

mediator

IPO

The key distinguishing feature of the ________________ is that securities

of up to a year in maturity are traded there.

A)

money market

B)

C)

D)

E)

primary market

capital market

secondary market

credit market

Which of the following would not be an indirect transfer?

M&I Bank takes in deposits from Bill and Teresa. M&I uses most of the
A)money to make a loan to Josephine.
Northwestern Mutual Life Insurance sells a life insurance policy to
Sharon. The premium received by Northwestern is invested in
B)
corporate bonds.
Jerry buys mutual fund shares from Vanguard Mutual Funds. Vanguard
C)uses the money to purchase stocks.
Jennifer lends $11,000 to George. George is scheduled to pay off the
loan by making 60 equal monthly payments, covering principal and
D)
interest.

With a _____________________ transaction, no new funds are generated

for the original issuer of the security.

A)

capital market

B)

C)

D)

E)

secondary market

capital market

indirect

direct

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

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

A)

B)

C)

D)

E)

economies of scale

transmission mechanism

speculation

the exchange rate

derivatives

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A/an __________________ is a security whose payoffs are linked to other,

previously issued securities.

A)

B)

C)

D)

E)

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secondary security

primary security

over-the-counter security

derivative security

money market security

Money market securities are issued by various entities for the purpose of:

A)

B)

C)

D)

bringing in new ownership

raising long-term funding

paying taxes

supplying the economy with money

raising short-term funding

E)

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Among the various categories of money market instruments, which one

accounts for the smallest "slice" of the money market "pie"?

A)

B)

C)

D)

E)

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Banker's acceptance

U.S. Treasury bill

Federal funds and repurchase agreements

Commercial paper

Negotiable CD

Of the following institution types, which have been increasing their share of
total assets in all financial institutions, since the year 2000?

A)

B)

C)

commercial banks

pension funds

investment companies

D)

E)

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(b) and (c)

If an asset can be more readily converted into cash, we would say that this
asset is:

A)

B)

C)

D)

E)

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(a) and (b)

a capital asset

a secondary asset

more liquid

more diversified

a real asset

Suppose that a financial institution issues securities of one maturity, and

uses the proceeds to buy securities of a different maturity. This sort of
activity would be described as:

A)

transmission of monetary policy

maturity intermediation

B)

C)

D)

E)

asset diversification

a direct transfer of funds

denomination intermediation