1) Which of the following can be described as involving direct finance? Select one: A. People buy shares of common stock in the primary markets. B. A corporation buys a short-term corporate security in a secondary market. C. A corporation takes out loans from a bank. D. People buy shares in a mutual fund.

2)

Which of the following statements about financial markets and securities is TRUE?

Select one:

A. A debt instrument is intermediate term if its maturity is less than one year.

B. A debt instrument is intermediate term if its maturity is ten years or longer.

C. A bond is a long-term security that promises to make periodic payments called dividends to the firm's residual claimants.

D. The maturity of a debt instrument is the number of years (term) to that instrument's expiration date.

3)

Of the following assets, the least liquid is

Select one:

A. stocks.

B. traveler's checks.

C. checking deposits.

D. a house.

4)

If an individual moves money from a savings deposit account to a money market deposit account

Select one:

A. M1 decreases and M2 stays the same.

B. M1 stays the same and M2 stays the same.

C. M1 stays the same and M2 increases.

D. M1 increases and M2 decreases.