1. Which of the following is not appropriate as the reason for the financial system being so complex?

a)Taking advantages of scale

b)Dealing with the problem of asymmetric information

c)Need for risk/maturity transformation

d) Difficulty of settling transactions in a timely manner

e) Finding opportunities

2. Financial markets can be broadly divided into organized exchanges and .......... markets.

3. If hedge funds are finding "anomalies" in the market and taking advantage of such investment opportunities, they contribute in principle to making markets more .........

4. If you are the CFO of a successful tech company, which is considering a sale of shares to the general public, who would you turn to for help?

a) Analysts

b) The buy-side

c) The sell-side

d) Media

5. Which of the following is an example of a good incentive? (multiple choice)

a) Investors want to make money so they invest in companies that are doing well.

b) Pension funds invest in high-quality companies because they want to take care of their retirees.

c) A CEO takes large risks, because if successful her stock options would greatly increase in value.

d) Sell-side analysts are afraid to say bad things about a company because that company may not do business with their employer in the future.

e) A director of a company's board avoid criticizing the CEO at board meetings because he is the friend of the CEO.