Answer all of these questions with the right question number next to the correct choice (letter).

1-You buy shares from a financial institution that promises it will invest your money in aggressive growth stocks. This financial institution is most likely to be a:

A)Pension fund

B)Mutual fund

C)Commercial bank

D)Insurance company

2-In a strict sense, intermediation implies that an asset issued by a debtor never ends up in the hands of the targeted saver, but is transformed along the way by a financial institution. Which of the following transactions is an example of intermediation?

A)You buy a share of Dell stock from an on-line broker.

B)You buy a bond from a broker.

C)You open a checking account with a bank.

D)You borrow $5,000 from your uncle Louie.

3-The risk that a financial institution faces because of the inverse relationship between the value of its assets and interest rates is called:

A)interest rate risk

B)financial risk

C)credit risk

D)price risk

4-Your friend wants to buy an asset that has some but not too much risk, is long term, and earns a relatively moderate interest rate. Which of the assets below should you recommend to your friend?

A)Common stock

B)Bankers' acceptances

C)U.S. Treasury bill

D)High-grade corporate bond

5)Which of the following assets is potentially the riskiest?

A)Repo's

B)NCDs

C)T-bill

D)Federal funds