
Financial Markets test
Authored by Tuyết linh Trần
English
12th Grade

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15 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Banks earn profits by selling ______ with attractive combinations of liquidity, risk, and return, and using the proceeds to buy _____ with a different set of characteristics.
A) loans; deposits.
B) securities; deposits.
C) liabilities; assets.
D) assets; liabilities
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In general, banks make profits by selling _____ liabilities and buying _____ assets.
A) long-term; shorter-term.
B) short-term; longer-term.
C) illiquid; liquid.
D) risky; risk-free.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is NOT a tool used by corporations to reduce PRINCIPAL-AGENT PROBLEMS
A) Stockholders engage in costly state verification by auditing an observing management.
B) Venture capital firms provide funds to new firms in exchange for equity and membership
on the board of directors.
C) Firms issue equity instead of debt because principal-agent problems are smaller with
equity.
D) Governments regulate firms by imposing standard accounting principles and punishing
fraud
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
PRINCIPAL-AGENT PROBLEMS are said to occur in financial markets when
A) ownership of assets is separated from the control of these assets.
B) people who do not pay for information take advantage of the information that other people have paid for by observing their behavior.
C) high-risk borrowers are successfully able to pass themselves off as low-risk borrowers when applying for loans.
D) the cost per dollar loaned declines as the size of the loan increases
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Duration analysis involves comparing the average duration of the bank's _____ to the average duration of its _____.
securities portfolio; non-deposit liabilities
loan portfolio; non-deposit liabilities
loan portfolio; deposit liabilities
assets; liabilities
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The most important category of assets on a bank's balance sheet is
discount loans
securities
loans
cash items in the process of collection
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
All else the same, if a bank has more rate-sensitive liabilities than assets, then a(n) _____ in interest rates will _____ bank profits.
increase; increase
increase; reduce
decline; reduce
decline; not affect
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