Question 1

Retained earnings account for the majority of internally generated corporate funds.
On average, less than half of U.S. corporations' funding come from retained earnings, rather than the issuance of new securities.

Accepted Answer

A) True 
 B)False

Question 2

Middle- to small-sized companies that are centered in one city or state would most likely be found on the

Accepted Answer

A)  NASDAQ National Market.
B)  NASDAQ Small Cap Market.
C)  Supplemental list.
D)  New York Stock Exchange.E) A) and B)
F) All of the above

Question 3

The efficient market hypothesis has several forms. The weak form states that

Accepted Answer

A)  past price data is unrelated to future prices.
B)  prices reflect all public information.
C)  all information both public and private is immediately reflected in stock prices.
D)  None of these optionsE) B) and C)
F) None of the above

Question 4

The capital markets serve as a way of allocating available capital to the most efficient user.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is false regarding decimalization?

Accepted Answer

A)  Bid-ask spreads have decreased.
B)  Decimalization makes trading easier for the common investor.
C)  It's difficult for trading screens to adjust to decimals.
D)  Professional traders complain that trading profits have declined.E) A) and B)
F) A) and C)

Question 6

Markets are efficient when prices adjust rapidly to new information, continuous markets exist. and large dollar trades can be absorbed without large price movements.

Accepted Answer

A) True 
 B)False

Question 7

The European Central Bank that was created with the European Monetary Union has no control over monetary policy but is responsible for clearing transactions between the countries.

Accepted Answer

A) True 
 B)False

Question 8

Evidence of how global markets are linked was provided in 1997 and 1998 when international markets reacted to

Accepted Answer

A)  the collapse of Asian currencies in Thailand, Indonesia, Malaysia, and Korea.
B)  Russia's default on its sovereign debt.
C)  Japan's seven years of economic stagnation.
D)  the collapse of Asian currencies in Thailand, Indonesia, Malaysia, and Korea, and Russia's default on its sovereign debt.E) B) and C)
F) A) and D)

Question 9

When global capital markets collectively react to international events, like Russia's default on its sovereign debt, it is common to find

Accepted Answer

A)  that there is no impact on multinational companies' ability to raise capital.
B)  an impact on the ability to raise capital.
C)  that Wall Street firms are so diversified that they are not affected by this event.
D)  All of these options are true.E) A) and D)
F) None of the above

Question 10

The stock market far exceeds the bond market in terms of size of new capital raised.

Accepted Answer

A) True 
 B)False

Question 11

The European Union (EU) includes Britain, Germany, France, Italy, and seven other European countries.
As of 2013, the EU currently has 27 member nations.

Accepted Answer

A) True 
 B)False

Question 12

With respect to the United States and its relationship with the rest of the world, it can be said that

Accepted Answer

A)  the U.S.has invested more dollars in the rest of the world than foreign countries have invested in the U.S.
B)  the U.S.has actively helped foreign countries finance their government deficits.
C)  foreign investors hold large positions in U.S.government securities.
D)  All of these optionsE) A) and B)
F) A) and C)

Question 13

Financial intermediaries channel funds into the capital markets from the household sector.

Accepted Answer

A) True 
 B)False

Question 14

The Securities Act of 1933 is primarily concerned with

Accepted Answer

A)  original issues of securities.
B)  secondary trading of securities.
C)  the national securities markets.
D)  protecting customers of bankrupt securities firms.E) A) and B)
F) A) and D)

Question 15

Regional exchanges are primarily engaged in dual trading activities, although some local stocks are listed on regional exchanges only.

Accepted Answer

A) True 
 B)False

Question 16

The "strong form" of the efficient market hypothesis states that prices reflect all public information.
The strong form reflects PRIVATE as well as public information.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following are benefits of financial intermediaries?

Accepted Answer

A)  Increase market liquidity
B)  Provide a direct market for investors
C)  Act as agents of the government
D)  Increase market liquidity and provide a direct market for investorsE) All of the above
F) B) and C)

Question 18

Which of the following is not a money market instrument?

Accepted Answer

A)  Treasury bills
B)  Commercial paper
C)  Negotiable certificates of deposit
D)  Treasury bondsE) A) and B)
F) None of the above

Question 19

Financial intermediaries serve which of the following purposes?

Accepted Answer

A)  They allow for indirect investment in the capital markets by households.
B)  They aid in the flow of funds through the economy.
C)  They help provide allocation of funds to the best investments.
D)  All of these optionsE) C) and D)
F) A) and D)

Question 20

Which of the following is an internal source of funds?

Accepted Answer

A)  Cash flow from depreciation (tax shield) 
B)  Net loss
C)  Repurchase of debt securities
D)  Bank loanE) A) and C)
F) A) and B)

Exam 14: Capital Markets

Middle- to small-sized companies that are centered in one city or state would most likely be found on the

Correct AnswerverifiedShow Answer

Markets are efficient when prices adjust rapidly to new information, continuous markets exist. and large dollar trades can be absorbed without large price movements.

Correct AnswerverifiedShow Answer

Retained earnings account for the majority of internally generated corporate funds. On average, less than half of U.S. corporations' funding come from retained earnings, rather than the issuance of new securities.

Correct AnswerverifiedShow Answer

The Securities Act of 1933 is primarily concerned with

Correct AnswerverifiedShow Answer

With respect to the United States and its relationship with the rest of the world, it can be said that

Correct AnswerverifiedShow Answer

Financial intermediaries channel funds into the capital markets from the household sector.

Correct AnswerverifiedShow Answer

Which of the following is false regarding decimalization?

Correct AnswerverifiedShow Answer

Regional exchanges are primarily engaged in dual trading activities, although some local stocks are listed on regional exchanges only.

Correct AnswerverifiedShow Answer

The capital markets serve as a way of allocating available capital to the most efficient user.

Correct AnswerverifiedShow Answer

The European Union (EU) includes Britain, Germany, France, Italy, and seven other European countries. As of 2013, the EU currently has 27 member nations.

Correct AnswerverifiedShow Answer

Evidence of how global markets are linked was provided in 1997 and 1998 when international markets reacted to

Correct AnswerverifiedShow Answer

The stock market far exceeds the bond market in terms of size of new capital raised.

Correct AnswerverifiedShow Answer

The European Central Bank that was created with the European Monetary Union has no control over monetary policy but is responsible for clearing transactions between the countries.

Correct AnswerverifiedShow Answer

Financial intermediaries serve which of the following purposes?

Correct AnswerverifiedShow Answer

The "strong form" of the efficient market hypothesis states that prices reflect all public information. The strong form reflects PRIVATE as well as public information.

Correct AnswerverifiedShow Answer

The efficient market hypothesis has several forms. The weak form states that

Correct AnswerverifiedShow Answer

Which of the following are benefits of financial intermediaries?

Correct AnswerverifiedShow Answer

Which of the following is an internal source of funds?

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Which of the following is not a money market instrument?

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When global capital markets collectively react to international events, like Russia's default on its sovereign debt, it is common to find

Correct AnswerverifiedShow Answer

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