Review Quiz for Chapter 9

Company debt normally takes the form of ________.

• bonds

• equity

• stocks

• bank loans

A loan in which the borrower promises to repay the borrowed amount plus a predetermined rate of interest is called a(n) ________.

• equity

• exchange rate

• stock

• debt

Which of the following is a debt instrument that specifies the timing of principal and interest payments?

• stock

• bond

• share

• equity

________ refers to shares of ownership in a company's assets that give shareholders a claim on the company's future cash flows.

• Stock

• A bond

• Debt

• A draft

The ease with which bondholders and shareholders may convert their investments into cash is called ________.

• barter

• clearing

• countertrade

• liquidity

An expanded money supply ________.

• reduces the cost of borrowing

• increases interest rates

• makes it difficult for financial institutions to lend money

• diminishes entrepreneurial initiatives in a country

Which of the following is a major purpose of the international capital market?

• to reduce entrepreneurial initiatives

• to increase the cost of borrowing

• to reduce risk for lenders

• to reduce the money supply for borrowers

One of the major forces responsible for the rapid growth rate of the international capital market is ________.

• economic nationalism

• information technology

• currency control

• extensive regulation

The unbundling and repackaging of hard-to-trade financial assets into more liquid, negotiable, and marketable financial instruments is called ________.

• currency hedging

• commercialization

• currency arbitrage

• securitization

The international bond market consists of all bonds sold by issuing companies, governments, or other organizations ________.

• within their own countries

• outside their own countries

• within developing nations

• within developed nations