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INSTRUCTIONS For the TRUE OR FALSE questions, circle your selected answer. If you select False then you must state why your false answer is correct
INSTRUCTIONS
For the TRUE OR FALSE questions, circle your selected answer. If you select False then you must state why your false answer is correct in not more than three short sentences.
- What is the primary reason why financial intermediaries exists?( One short sentence please.)
- What are the three mainstream financial intermediaries?
- What is the central doctrine of portfolio theory? (Maximum three short sentences please)
- If an individual purchases the securities of the ultimate lenders (such as making a loan to a company), liquidity is zero until the maturity of the loan. True or False?
- In the discussion about the efficient allocation of funds, it is argued that the presence of asymmetric information leads to adverse selection and moral hazard solutions for the banking sector. True or False.
- What is money?
- List only 5 of the 11 economic functions performed by financial intermediaries.
- What is the first step in money creation?
- What is meant by Financial Services?
- According to your textbook, some financial scholars make the argument that the first step in money creation is the bank first receiving a deposit. Some other financial scholars claim that this explanation is misleading. What is their argument? Please provide a very short answer as the answer to this question is very short and it is in the textbook.
- 10. In 2021, the United Bank for Africa had $30 million dollars in deposits. Assume that the reserve requirement set by the Central Bank is 3%. (A) What dollar amount of this deposit that will not be available for lending to the public
- What are short-term debt instruments? list three examples.
- Preferred stock is similar to common stock. When a company goes into liquidation, bond holders are paid before preferred stockholders. True or False?
- The intersection of the supply and demand curves in arriving at an equilibrium market price is an example of price discovery. True or False?
- List two examples of derivative instruments.
- Access Bank borrowed $2,000,000 from its reserved requirements held at the Central Bank of Liberia at the rate of 8%. To gain increased market share in the banking industry it will be very wise for Access Bank to lend the $2,000,000 to the public at 6%. Agree or Disagree. Defend your answer.
- Look at Figures 1 & 3 in your textbook. Direct investment requires a financial intermediary known as a broker or dealer. True or False. (B) Financial regulators protect borrowers. True or false.
- Why do financial markets exist?
- The Central Bank assesses an interest rate when it lends money to the commercial banks. This rate is called the Key Interest Rate (KIR). Why is it called the KIR? Explain. Not more than 4 short sentences.
- Venues where producers and consumers meet to exchange physical goods such as agricultural products (e.g., corn, livestock, soybeans), energy products (oil, gas, carbon credits), precious metals (gold, silver, platinum) are called Property Markets. True of False
- Which financial instrument draws or derives it value from an underlying asset?
- Subsequent trading of stocks that occurs in the secondary market is called IPO. True or False?
- How does the key interest rate (KIR) that is assessed by the central bank influences a major activity of commercial banks? (Maximum three short sentences please).
- What markets trade in products with highly liquid short-term maturities (of less than one year) and are characterized by a high degree of safety and a relatively low return in interest?
- What alternative currency that is created using encryption algorithms and is empowered by blockchain technology?
- List three common types of equity instruments.
- Look at Figure 1 in your textbook. When the surplus economic units give their funds to the intermediaries, they in turn give it to the borrowers. What do the borrowers do with that money according to Figure 1?
- Due to the sheer size & scale of financial intermediaries compared with individual participants, a number of economies of scales are achieved. What are they?
- What are non-marketble securities? give three examples.
- Bonus: What is the name of the Managing Director of the International monetary Fund?
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