Financial Instruments and Markets Quiz

What is the maximum maturity for money market instruments?

• One year or less

• More than one year

Are GNMA and FNMA considered money market instruments?

• Yes

• No, they are long-term government agency bonds (often 30 years)

Which instrument is used to finance foreign trade?

• Banker's Acceptance (BA)

• ADR

• Eurodollars

What does an ADR allow U.S. investors to do?

• Trade foreign company stocks in U.S. markets

• Invest in U.S. government bonds

What are Eurodollars?

• U.S. dollars deposited in foreign (nondomestic) banks

• Foreign currency deposited in U.S. banks

What does a bond’s nominal yield represent?

• Its annual interest or coupon rate

• Its market value

What document discloses the terms and conditions of a bond?

• Indenture

• Prospectus

What is a Notice of Sale?

• An announcement of a new municipal bond offering to underwriters

• A document detailing the sale of a company

What is the purpose of a legal opinion on a municipal bond?

• To confirm its tax status and enforceability

• To provide investment advice

What is the primary market?

• Where issuers sell new securities to investors

• Where existing securities are traded between investors