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Financial Management 1 Quiz CH2

1. The document is a quiz on financial management topics with 15 multiple choice questions and their answers. 2. The questions cover topics like primary and secondary markets, public offerings, the over-the-counter exchange, efficient markets, money markets, eurocurrency deposits, and securitization. 3. The quiz tests the reader's understanding of key financial concepts and terms.

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Trina Mae Garcia
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837 views1 page

Financial Management 1 Quiz CH2

1. The document is a quiz on financial management topics with 15 multiple choice questions and their answers. 2. The questions cover topics like primary and secondary markets, public offerings, the over-the-counter exchange, efficient markets, money markets, eurocurrency deposits, and securitization. 3. The quiz tests the reader's understanding of key financial concepts and terms.

Uploaded by

Trina Mae Garcia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PAMANTASAN NG LUNGSOD NG MAYNILA

Intramuros, Manila
Financial Management 1 QUIZ

1. A financial institution is an intermediary that channels the savings of individuals,


businesses, and governments into loans or investments.
Answer: TRUE
2. Primary and secondary markets are markets for short-term and long-term securities,
respectively.
Answer: FALSE
3. A public offering is the sale of a new security issue typically debt or preferred
stock directly to an investor or group of investors.
Answer: FALSE
4. A primary market is a financial market in which pre-owned securities are traded.
Answer: FALSE
5. The Over-the-Counter (OTC) exchange is not an organization but an intangible
market for trading securities which are not listed by the organized exchanges.
Answer: TRUE
6. Unlike the organized exchanges, the OTC makes a market in both outstanding
securities and new public issues, making it both a secondary and a primary market.
Answer: TRUE
7. In the OTC market, the ask price is the highest price offered by a dealer to purchase a
given security.
Answer: FALSE
8. In the OTC market, the prices at which securities are traded result from both
competitive bids and negotiation.
Answer: TRUE
9. An efficient market is a market that allocates funds to their most productive use as a
result of competition among wealth-maximizing investors.
Answer: TRUE
10. Money markets involve the trading of securities with maturities of one year or less
while capital market involve the buying and selling of securities with maturities of
more than one year.
Answer: TRUE
11. Eurocurrency deposits arise when a corporation or individual makes a deposit in a
bank in a currency other than the local currency of the country where the bank is
located.
Answer: TRUE
12. The eurocurrency market is a market for short-term bank deposits denominated in
U.S. dollars or other easily convertible currencies.
Answer: TRUE
13. The money market is a financial relationship created by a number of institutions and
arrangements that allows suppliers and demanders of long-term funds to make
transactions.
Answer: FALSE
14. Securitization is the process of pooling mortgages or other types of loans and selling
the claims or securities against that pool in the secondary market.
Answer: TRUE
15. Sub-prime mortgages are mortgage loans made to borrowers the high incomes and
better than average credit histories.
Answer: FALSE

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