Introduction to Finance

Which of the following is not a financial institution?

• A pension fund

• A newspaper publisher

• A commercial bank

• An insurance company

A ____ is a type of financial intermediary that pools savings of individuals and makes them available to business and government users. Funds are obtained through sale of shares.

• mutual fund

• savings and loans

• savings bank

• credit union

A ___ is set up so that employees of corporations or governments can receive income after retirement.

• life insurance company

• pension fund

• savings bank

• credit union

Most businesses raise money by selling their securities in a

• direct placement.

• commercial bank.

• public offering.

• private placement.

Which of the following is not a service provided by financial institutions?

• Buying the business of customers

• Investing customers' savings in stock and bonds

• Paying savers' interest on deposited funds

• Lending money to customers

Government usually

• borrows funds directly from financial institutions.

• maintains permanent deposits with financial institutions.

• is a net supplier of funds.

• is a net demander of funds.

By definition, money market involves the buying and selling of

• funds that mature in more than one year.

• flows of funds.

• stocks and bonds.

• short-term funds

The ____ is created by a financial relationship between supplier and users of short-term funds.

• financial market

• money market

• stock market

• capital market

Firms that require funds from external sources can obtain them from

• financial markets.

• private placement.

• financial institutions.

• All of the above.

Long-term debt instruments used by both government and business are known as

• bonds

• equities

• stocks

• bills