Which of the following can be described as direct finance? 11 Multiple Choice 2.94 points O You take out a mortgage from your local bank. O You buy a newly issued Treasury Bond You buy shares of stock in the secondary market You buy shares in a mutual fund. From the point of view of economic efficiency, the prevalence of asymmetric information 12 Multiple Choice .94 oints O improves the flow of savings from less to more productive uses o impedes the flow of savings from less to more productive uses reduces the importance of the SEC increases the amount of mutually beneficial transactions that will take place Well-functioning financial markets promote 13 2.94 points Multiple Choice O O inflation O deflation unemployment growth By definition, an institution is a bank if it: 14 Multiple Choice 2.94 points O prints money. makes loans. O accepts deposits and issues bonds. O O accepts deposits and makes loans. The seller of a bond is considered to be the 15 Multiple Choice 2.94 points lender lender or the borrower, depending on how the funds are used borrower lender or the borrower, depending whether interest rates are rising or falling Debt instruments that have maturities less than one year are traded in: 16 Multiple Choice 34 ints o The primary market exclusively. O O The bond markets exclusively. O O The bond market if they are already in existence. the money market. Which of the following are securities? 17 Multiple Choice 94 pints O a Treasury bond O O a share of stock O a Treasury bill O each of the above Which of the following statements is correct? 18 Multiple Choice 2.94 points Government deficits are stock variables. O Government surpluses are flow variables O The national debt is a flow variable O a and c The fiscal agent responsible for borrowing on behalf of the government when the budget is in deficit is 19 34 nts Multiple Choice The Federal Reserve system The Treasury Department The Budget Office The Congress Which of the following statements about shares of stock is correct? 20 Multiple Choice 2.94 points O All profits must be distributed as dividends to shareholders O Stocks are money market securities At maturity shareholders receive the face value of the stock stocks are debt instruments None of the above are correct