Term 1 Quiz 1 - quiz PDF

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Question 1 Correct Mark 1.00 out of 1.00 Flag question

Question text Advantages of financial intermediation include: I. Asset Transformation resulting in the range of products to satisfy customers portfolio preferences II. Liability Management indicating the active management of uses of funds by banks III. Credit Risk Transformation IV. Liquidity Transformation measured by the ability of savers to convert financial instruments into cash V. Maturity Transformation leading to the ability of intermediaries to offer the range of products with different maturities VI. Economies of scale Select one: Only IV is correct IV and V are correct Only V is correct III and VI are correct I, III, IV, V, and VI are correct Correct answer I and II are correct None is correct All of the answers are correct

Feedback Your answer is correct. Refer to section 1.4 The correct answer is: I, III, IV, V, and VI are correct Question 2 Incorrect Mark 0.00 out of 1.00 Flag question

Question text With regard to the Australian economy, the following sectors tend to be deficit ones: I. Business corporations II. Financial Corporations III. Government sector IV. Household sector Select one: a. I, II and III are correct b. Only I and III are correct c. Only I and II are correct d. Only III is correct Incorrect

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Your answer is incorrect. Refer to section 1.5; Check the last Government budgets The correct answer is: I, II and III are correct Question 3 Correct Mark 1.00 out of 1.00 Flag question

Question text With regard to asset transformation, financial intermediaries are able to provide deficit units with diverse loan products and at the same time satisfy the varying preferences of investors offering them a range of deposit products. Select one: True False

Feedback Refer to section 1.4 The correct answer is 'True'. Question 4 Correct Mark 1.00 out of 1.00 Flag question

Question text A unit trust is a type of a financial institution that: I

mostly assists with off-balance sheet advisory services

II

obtains most of its funds by selling money market securities

III used to be more commonly known as a "merchent bank" but after deregulation extended the range of services and became a Financial Company IV receives periodic payments and then makes payments in return when a specified event occurs V obtains most of its funds from the public and generally specialises in certain investments specified in a seperate document Select one: II is correct. I is correct. IV is correct. V is correct. Correct answer. III is correct.

Feedback Your answer is correct. Refer to section 1.2 The correct answer is: V is correct. Question 5 Incorrect Mark 0.00 out of 1.00 Flag question

Question text

Which of the following are NOT usually an example of a short-term discount security? I

Term deposits

II

Commercial paper

III

Bank bills

IV

Term loans

V

Debentures

VI

Unsecured notes

VII Negotiable certificates of deposit Select one: only IV, V and VI only I, IV and VI. only II, IV and VI Incorrect answer. only IV, V, and VII only III, IV, V, VI and VII only I, IV, V, and VI only I, II and VI. only IV and VI.

Feedback Your answer is incorrect. Refer to section 1.3 and 1.4.5 The correct answer is: only I, IV, V, and VI Question 6 Correct Mark 1.00 out of 1.00 Flag question

Question text Financial markets: I

Facilitate the exchange of financial assets

II

Reveal information about the prices of financial assets

III Allow for the flow of funds between surplus entities and deficit entities Select one: I and II are correct II and III are correct Only I is correct I, II, III are correct Correct answer. Only II is correct

Feedback Your answer is correct. Refer to section 1.2 The correct answer is: I, II, III are correct Question 7 Correct Mark 1.00 out of 1.00 Flag question

Question text

The GFC stands for: Select one: Great Financial Crisis Great Financial Catastrophe Global Financial Collision Global Financial Crisis Correct answer

Feedback Your answer is correct. Refer to section 1.1 The correct answer is: Global Financial Crisis Question 8 Correct Mark 1.00 out of 1.00 Flag question

Question text Financial intermediaries are able to perform maturity transformation because: 1) it is highly unlikely that all surplus units will demand deposits at the same time; 2) and because financial intermediaries rely on active assets management. Select one: True False

Feedback Refer to section 1.4 The correct answer is 'False'. Question 9 Incorrect Mark 0.00 out of 1.00 Flag question

Question text Last year a firm's founder arranged for an investor buy some existing shares in the firm from one of the founder's family members. This year the firm listed new shares on the stock exchange through an initial public offering (IPO). The purchase of shares by the investor last year was a __________________ transaction because ______________________. Select one: “primary market”; “the transaction occurred prior to the firm's IPO” “primary market”; “the transaction involved the flow of funds to the firm” Incorrect answer. This issue is actually a secondary market transaction because it did not involve the creation of any new securities (...which would make it a primary market transaction). In addition, funds did not flow to the firm. Rather, the funds flowed from the investor to the founder's family who he/she bought the existing shares from. “secondary market”; “the transaction occurred prior to the firm's IPO, which is the only time that a firm ever undergoes a primary market transaction involving equity” “secondary market”; “the transaction did not involve the original issue of securities” “secondary market”; “the transaction was private and did not occur through a public stock exchange”

Feedback Your answer is incorrect. Refer to section 1.4

The correct answer is: “secondary market”; “the transaction did not involve the original issue of securities” Question 10 Correct Mark 1.00 out of 1.00 Flag question

Question text Which of the following are the most likely examples of a retail market transaction? I

HSBC (a bank) issues new ordinary shares in order to improve its capital base

II Intel Corporation sells long-term bonds so that it can acquire Advanced Micro Devices (AMD) III The Reserve Bank of Australia intervenes in the currency market to improve the value of the Australian dollar IV A convenience store borrows from Commonwealth Bank of Australia in order to buy new fridges Select one: Only IV is correct. Correct answer. A small-sized business borrows through a financial intermediary. I, II, and III are correct. Only II is correct. I and IV are correct. II and IV are correct.

Feedback Your answer is correct. Refer to section 1.4 The correct answer is: Only IV is correct....