2.01 Financial Markets
Which type of financial market sells new stock or bond issues to investors?
A. primary capital
B. soft commodities
C. secondary capital
D. hard commodities
A. primary capital
Patrick wants to keep a certain amount of his money in a safe place in which he can earn interest on his savings, and also be able to withdraw his funds without experiencing sizable financial penalties. In what type of financial institution should Patrick consider placing his money?
A. a retail bank
B. the stock market
C. a retirement fund
D. a holding company
A. a retail bank
The direction of a client's cash and securities by a financial services company, usually an investment bank, or an individual is known as:
A. a lockbox.
B. a vendor lease.
C. private placement.
D. asset management.
D. asset management.
Which is a disadvantage of investing in a savings account?
A. The account's potential for loss is high.
B. The rate of return fails to keep up with inflation.
C. One must pay a penalty for withdrawing money early.
D. A minimum balance is required to keep the account active.
B. The rate of return fails to keep up with inflation.
In the banking industry, which professionals advise borrowers on credit options and payment methods?
A. bank tellers
B. loan officers
C. bookkeepers
D. bank managers
B. loan officers
The term that refers to how easily an asset can be converted to cash is known as:
A. commodity.
B. currency.
C. Eurobond.
D. liquidity.
D. liquidity.
Individuals are most likely to require the services of a mortgage company when they want to:
A. purchase real estate.
B. earn interest on savings.
C. acquire liability insurance.
D. invest in the stock market.
A. purchase real estate.
What type of service might a bank provide a business that needs the flexibility to borrow different amounts of money at different times without having to reapply?
A. mortgage
B. line of credit
C. installment loan
D. certificate of deposit
B. line of credit
Which is an example of a lending investment?
A. bonds
B. stocks
C. antiques
D. real estate
A. bonds
In the banking industry, a compliance officer is responsible for:
A. keeping employee records in a secure manner.
B. checking the documentation on customer accounts.
C. ensuring that all ethical and regulatory standards are met.
D. making sure that all safety regulations are being enforced.
C. ensuring that all ethical and regulatory standards are met.
In which financial market do people make investments in cocoa beans and corn?
A. money
B. insurance
C. soft commodities
D. selective property
C. soft commodities
Marcus wants to invest a portion of his money in long-term securities to finance his son's college education and his own retirement. To help him make the best investment decisions, Marcus should obtain the services of a:
A. loan officer.
B. licensed tax accountant.
C. certified financial planner.
D. credit-union representative.
C. certified financial planner.
The electronic clearance and settlement system used for financial transactions by U.S. commercial banks and other institutions is called the:
A. Federal Reserve System (FRS).
B. automated clearing house (ACH).
C. automated teller machine (ATM).
D. Federal Deposit Insurance Corporation (FDIC).
B. automated clearing house (ACH).
Ownership investments are ideal for investors who are:
A. risk-averse.
B. risk-tolerant.
C. close to retirement.
D. just beginning to invest.
B. risk-tolerant.
Successful bank managers and supervisors typically began their employment as:
A. apprentices.
B. programmers.
C. tellers.
D. volunteers.
C. tellers.
A type of market in which each transaction takes place at predetermined time intervals is referred to as a:
A. call market.
B. bond market.
C. financial market.
D. continuous market.
A. call market.
Chris wants to open a small business, and he has a very good business plan that is likely to succeed. Where would Chris be most likely to go to apply for a loan?
A. local bank
B. national bank
C. insurance provider
D. mortgage company
A. local bank
What type of service does a bank provide to a business that needs to borrow funds for a short period of time?
A. mortgage
B. line of credit
C. installment loan
D. certificate of deposit
B. line of credit
Which is a factor that determines how much investment risk a person can handle?
A. goals
B. income
C. social status
D. banking institution
A. goals
The application of computers in financial institutions, the rapid diversification of customer financial services, and the expansion of facilities have brought enormous changes to the financial industry. These changes have resulted in a:
A. general decline in the number of employees who are willing to work in a bank today.
B. work environment that lacks the need for training and commitment to customer service.
C. general upgrading of banking jobs, calling for people with technical skills, broadened cultural backgrounds, and a customer-oriented philosophy.
D. wide variety of employees being trained to handle single responsibilities instead of being cross-trained to work throughout the entire financial institution.
C. general upgrading of banking jobs, calling for people with technical skills, broadened cultural backgrounds, and a customer-oriented philosophy.