Chapter 1 page 23 Questions: 1.4.11.12,13,14 1. Explain the meaning of surplus units and deficit units. Provide an example of each. Which types of financial institutions do you deal with? Explain whether you are acting as a surplus unit or a deficit unit in your relationship with each financial institution ANSWER 2. Explain the primary use of funds for commercial banks versus savings institutions. ANSWER 3. With regard to the profit motive, how are credit unions different from other financial institutions? ANSWER 4. Compare the main sources and uses of funds for finance companies, insurance companies, and pension funds. ANSWER: 5. What is the function of a mutual fund? Why are mutual funds popular among investors? How does a money market mutual fund differ from a stock or bond mutual fund? ANSWER: Chapter 2 43-44 Questions: 4.12 6. Explain why interest rates tend to decrease during recessionary periods. Review historical Interest rates to determine how they react to recessionary periods. Explain this reaction ANSWER: 7. How might expectations of higher global oil prices affect the demand for loanable funds, the supply of loanable funds, and interest rates in the United States? We this affect the interest rates of other countries in the same way? Explain. ANSWER: Chapter 3_page 68-69 Questions: 1.13 8. Identify the relevant characteristics of any security that can affect the security's yield. ANSWER 9. What factors influence the shape of the yield curve? Describe how financial market participants use the yield curve