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16) What do we call a market in which the

Question : 16) What do we call a market in which the : 1907267

16) What do we call a market in which the price of a security is an accurate estimate by the market of its true value?

A) Efficient Market

B) Law of One Price

C) Effective Market

D) Primary Market

E) Secondary Market

17) Which of the following is not a major participant in the money market?

A) Money market mutual funds

B) Commercial banks

C) Wall Street dealers

D) Federal Reserve

E) U.S. Treasury

18) Shares of ________ are units of ownership interest, or equity, in a corporation.

A) debt

B) common stock

C) bank loans

D) commercial paper

E) debentures

19) ________ are long-term debt instruments business and government use to raise large sums of money.

A) T-bills

B) Bonds

C) Common stocks

D) Preferred stocks

E) Commercial papers

20) Which of the following is a role of the secondary market?

A) Keep prices level

B) Give information for securities on sale in the primary market

C) Trade long term securities only

D) Offer securities for sale for the first time

E) Establishing security prices

21) Which of the following is not a financial intermediary?

A) Investment banks

B) The United States Treasury Department

C) Hedge Funds

D) Insurance companies

E) Thrift institutions

22) Which of the following statements best describes mutual funds?

A) They are illegal in the United States, but popular in Europe.

B) They enable investors to buy many shares of stock in a single firm at a lower cost than using a stockbroker.

C) They provide good investment returns, but insufficient diversification.

D) They enable many investors with limited funds to buy a diversified portfolio.

E) They appeal only to wealthy investors.

23) The primary role of a financial system is to

A) make savvy investors rich.

B) regulate the banking system.

C) enable financial managers to evaluate investment projects with a system that always selects the correct opportunity for their firm.

D) channel funds from savers to borrowers who need funds for investment projects.

E) provide employees in financial institutions with a code of ethics.

24) ________ are further divided into two groups: Auctions, and Dealer markets.

A) Secondary markets

B) Primary markets

C) Money markets

D) Capital markets

E) Investment markets

25) The ________ is a financial relationship created by a number of institutions with arrangements that allow the suppliers and demanders of long-term funds to make transactions.

A) money market

B) eurobond market

C) bond market

D) capital market

E) futures market

26) Which of the following are rights of stockholders?

A) To share in the firm's profits after all other creditors have been satisfied

B) To be guaranteed a dividend

C) To decide whether or not to pay taxes on capital gains

D) To vote for directors, but never on specific issues

E) To avoid losses when the firm's prospects decline

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