Retake Flashcards
It involves the sale and purchase (at a future date) of an asset or security.
Repo / Repurchase Agreements
Why U.S. Treasury Bills considered the safest of all money market instruments?
There is almost no possibility of default (?)
Which of the following statements is the most accurate on Negotiable Bank Certificate of Deposit?
- The minimum face value required is generally USD100,000
- The bank issuing it guarantees the security and is likely to arrange for its sale in a secondary market.
- Cannot be cashed until the security has reached full maturity
- All of the above
All of the above
Which is not a benefit to the investor owning a corporation’s equity?
Residual Claimant
Who is the lender in the Fed Funds market?
Banks
Secondary markets make securities more liquid and thus easier to sell in the __________.
Primary Market
The difference between direct finance and indirect finance:
ung option na may securities
These are sold in a foreign country and are denominated in that country’s currency.
Foreign Bonds
Corporate stocks and corporate bonds are capital market instruments.
Corporate Stocks - True
Corporate Bonds - True
U.S. Government Securities are long-term bonds issued by various government agencies such as Ginnie Mae; US Government Agency Securities are also called Municipal Bonds. The statements for both US Government Securities and US Government Agency Securities are:
False ; False
Which of the following statements on US Treasury Bills is the most accurate?
A Bank’s guarantee of payment in a banker’s acceptance means:
the bank’s guarantee means that it is obligated to make good on the draft
An Australian company that issued a Eurobond in Japan that is denominated in US dollars may __________________.
issue the bond on any country outside the US
A bond denominated in US dollars and sold in Dubai is an example of a _______________
Eurodollar Bond
ABC Bank’s loss, when the coffee shop owner it lent money to decided to invest the company’s money in risky stocks, was due to:
Moral Hazard
T or F. A Eurobond is issued in a currency other than the currency of the country or market in which it is issued.
TRUE
T or F. A Eurobond is issued by an international syndicate categorized according to the currency in which it is denominated.
True
T or F. A Eurodollar bond denominated in U.S. dollars and issued in Japan by an Australian company would be an example of a Eurobond.
True
Common stocks are usually traded in ______ while the US government bond market is set up as a/an _______ market.
Over-the-counter Market ; Exchange
Rank the following money market instruments in terms of their liquidity and their safety. 1) Commercial Paper, 2) Negotiable CD, 3) Repurchase Agreement, 4) US Treasury bill.
4231 (T-bills, NCDs, Repo, Commercial Paper)
All the financial intermediaries below are depository institutions, except:
Depository institutions are Commercial Banks, S&L, Mutual Savings Bank, & Credit Unions
A firm can obtain funds from the financial market in the following ways except
Withdraw
It is the risk that the borrower might engage in activities that are undesirable from the lender’s point of view because they make it less likely that the loan will be paid back
Moral Hazard
A Eurodollar Bond denominated in US Dollars and issued in Japan by an Australian company.
Eurobond
Money Market is a financial market wherein debt instruments (with original maturity of less than one year) are traded while Capital Market is the market where longer than one year debt instruments and equities are traded. The statements for both Money Market and Capital Market are:
- Money Market: True
- Capital Market: True
Repurchase Agreements are collateralized short-term loans and Federal Funds are overnight loans with Federal Reserve. The statements are:
- Repurchase Agreement: True
- Federal Funds: False
Banks to banks dapat hindi Federal Reserve
US Government Agency Securities are also called Municipal Bonds; US Government Securities are long-term bonds issued by state and local governments to finance large projects.
- US GOVERNMENT AGENCY SECURITIES: False
- US GOVERNMENT: False
Distinguishing Features ni External Bond Market
All of the above
Reasons for regulating financial markets
All of the above
Why would you lend to a fam member than a stranger?
- Less Asymmetrical information
- Less likely to have an adverse selection
Bank A owes Bank B some amount, what kind of market is this?
Money Market
Treasury as a collateral for what instrument?
Repo
Crucial Personalities that match buyers and sellers …..
Brokers
Sellers
Problem created by asymmetric information before the transaction occurs
Adverse Selection
