Day 1

The main function of the financial system is to

• manage government debt

• monitor the stock and bond markets

• match savers with investors

• print currency

The financial system does NOT influence

• long run economic growth

• the amount of capital in the economy

• savings and investmen

• the amount of natural resources in the economy.

Money market deals with _____ instruments.

• Long term

• Medium Term

• Short term

• All the above

If government spending exceeds tax collections,

• there is a budget deficit.

• there is a budget surplus

• public saving is positive.

• public saving is negative

is a market for new issues.

• Money market

• Primary Market

• Secondary Market

• Capital Market

Lucie is planning to invest $500 ithat offers a 6% discount rate. How much will her investment be worth 10 years

• $2,185.69

• $335.85

• $178.00

• $1780

Yuta is planning his retirement and is considering invest in an annuity. Can you help him understand what an annuity is?

• A series of unequal $ paym that he will receive for a specified no of years

• A series of equal $ paymts that he will receive for a specified no of years

• A single payment that Yuta will receive at the end of a period

• A single payment that Yuta will make at the beginning of a period

The present value of an asset's future cash flows minus its purchase price initial investment is

• Internal Rate of Return

• Payback

• Net Present Value

• Modified Internal Rate of Return

If a bond was issued with a 5% coupon rate and the market rate is now 8%, the coupon payment:

• Goes up

• Stays the same

• Goes down

What is the role of a credit rating agency during a financial crisis?

• To provide emergency loans to troubled financial institutions

• To assess the creditworthiness of debt issuers and securities

• To regulate interest rates to stabilize the economy

• To coordinate international efforts to prevent currency devaluation