WorksheetsFinance Chapter 2
Total questions: 20
Worksheet time: 10mins
The functions of a financial system include
facilitating the flow of funds
providing means for the transfer and management of risks
providing the mechanism for the settlement of transactions
All of the above
Which of the following are NOT financial claims
commodities
Shares
Bonds
Loans
During 2017, Michael and Jenny Jones expect total income of $215,000 and are budgeting total expenditure of $195,000. For this budget period, the Jones family is most specifically a
deficit spending unit
a recipient of funds from the financial system
surplus spending unit
financial intermediary
Which of the following financial claims does NOT belong to the capital market?
Corporate Bond
Bank Bill
Government Bond
Shares
Corporate bonds
provide funding for capital expenditure
have a very active secondary market
have a maturity less than one year
are issued by governments
Which one of the following statements is NOT true?
Prices in the corporate bond market tend to be more volatile than the market for shares.
Corporate bonds are more marketable than the securities that have higher daily trading volumes.
The market for corporate bonds is thin.
Life insurance companies and superannuation funds are the largest investors in corporate bonds.
An economy with a large flow of funds requires
a tightly controlled central bank
an efficient financial system
a lot of gold reserves
all of the above
An important function of the financial system is
to direct money to the best investment opportunities in the economy
to allow the federal government to view all financial transactions
to help state governments to coordinate state tax levies
all of the above
A surplus budget position means that an entity's
income and expenditures are the same
income for the period exceeds expenses
expenditures for the period exceed revenues
None of the above
The major players in the direct financial markets are
regional banks
commercial banks
investment banks
Both B & C
Which of the following is not a role of financial markets
matching borrowers and lenders
facilitation of business and trade
to increase the poverty gap
facilitation of savings by individuals to allow for future consumption
A sale of an entire security issue to a small group of surplus spending units is
a dealer arrangement
a private placement
an underwriting
indirect finance
An over-the-counter market
is a primary market
is regulated by the RBA
has no central location
allows investors in financial claims to trade directly among themselves
Which of the following transactions occurs in the primary market?
A managed fund sells some Optus shares it owns
Mr Grey buys Commonwealth Bank shares listed on the ASX
The Federal government sells Treasury bonds to finance road infrastructure
Mrs Thompson sells government bonds to a dealer
A future market is
a dealer market in which securities that are not sold on one of the organised exchanges are traded.
an over-the-counter market in which people trade contracts for future delivery of securities, commodities or the value of securities sold in the spot market
an organised market in which people trade contracts for future delivery of securities, commodities or the value of securities sold in the spot market
a dealer market for contracts to buy (or sell) a particular type of security or commodity from (or to) the futures exchange during a predetermined future time period
Which of the following statements is NOT correct?
Owners of financial claims can sell them in the primary market
Deficit spending units raise funds by issuing financial claims in the primary market
Owners of financial claims can sell them in the secondary market before maturity date
A financial claim has one issuer but possibly successive owners through the secondary market
An organised security exchange
is a primary market
relies on dealers for trading
has no central location
is accessible by authorised traders only
Which of the following statements is NOT correct?
Money markets are operated by dealers
Money market securities have short-term maturities
Money market transactions are seldom below $1 million
Money markets securities are issued to finance long-term projects
Which of the following financial claims does NOT belong to the money market?
Bill Bank
Treasury Note
Corporate bond
Commercial paper
Which of the following is NOT a characteristic of money market instruments?
Low default risk
High marketability
Small denomination
Short term to maturity
