7

Which of the following can be described as involving direct finance?

A corporation takes out a loan from a bank

People buy shares in a mutual fund

A corporation buys commercial paper issued by another corporation

An insurnce company buys shares of common stock in the over-the-counter market

8

The international money market is called

The Forex Market

The Capital Market

The Money Market

The Financial Market

9

Which of the following statements about financial markets and securities are true?

Most common stocks are traded over-the-counter, although the largest crporations usually ahe their shares traded at organizaed stock exchanges, such as the New York stock Exchange

As a corporation gets a share of the brokers commission, a corporation aquires new funds whenever the securities are solde

Because of their short terms to maturity, the prices of money market instruments tend not to flucuate wildly

Only (A) and (C) of the above are true

10

What is the distinction between the money market and the capital market?

Money markets are for short-term securities (with maturities up to one year). Capital markets are for long-term assetrs (with maturities over one year.)

Money markets are for long-term securities (with maturities over one year.) Capital markets are for short-term assets (with maturities up to one year).

There isnt a difference between capital and money markets

The terms capital and money markets are interchangable because they are both in the financial market

11

Which would you prefer to have: $10,000 todayin a lump-sum or $1,000 per year for 13 years beginning one year from now, if the interest rates are:

Give me the lump-sum today

4 percent

6 percent

12

There is a wholesales and retails foreign exchange market

True

False