FIN 3100 Intro to Financial Markets Summer V 2019 MW 9 am. Professor Swisher Quiz 1: Chapters 1-2 Name True-False (2 points each) 1. When George buys 100 shares of itM stock, which has been trading since 1911, the transaction takes place in the primary market 2. A credit union is considered a depository institution. 3 Businesses borrow more when interest rates are lower, other things constant The default risk premium varies over time. 4. T Multiple Choice: Select the BEST answer. (3 points each) Which of the following is NOT a capital market security? A Stryker bond with 15 years to maturity 5 A B. A 9-month US Treasury bill A 10-year US Treasury note A municipal bond E. C D. 1BM stock Which of the following is NOT a way in which financial institutions provide a benefit? Reduce transaction costs for suppliers of funds Provide maturity intermediation for suppliers of funds Reduce liquidity and raise price risk for the suppliers of funds Conduit through which the Federal Reserve conducts monetary policy for the overall 6. A. B C D economy Provide payment services for the overall economy E. The unbiased expectations theory implies a flat yield curve if short term interest rates in the future are expected to remain constant. Default risk premiums vary over time. The market segmentation theory proposes that investors have specific maturity preferences. The liquidity premium theory says that investors demand higher returns to convince them to invest their money for longer time periods. Over time, yield curves are most often downward sloping Which of the following is FALSE? 7. A. B C D F