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WorksheetsAC60 Financial Markets Diagnostic Quiz
Total questions: 20
Worksheet time: 26mins
_______ a network of savers, investors, financial assets, and financial institutions that work together to transfer savings to investment uses
secondary market
primary market
financial system
capital market
Institutions such as banks that collect funds from savers that can be loaned to borrowers are known as
financial intermediaries
financial assets
dividends
Credit Unions
What is the main difference between Treasury bonds, Treasury notes, and Treasury bills?
the amount of time for maturity
the interest rate
the minimum purchase requirement
the method of sale
Below are all types of return except:
Actual return
Expected return
Possible return
Required return
Plunging oil prices is an example of which of the following types of investment risk?
company risk
industry risk
political risk
inflation risk
Long-term bonds are ... than short-term bonds.
more liquid
less risky
less sensitive to interest rate changes
subject to more uncertainty
What is a bond?
an agreement or friendship
binding security
something that binds, fastens, confines, or holds together
a type of debt a company issues to investors
Which one of the following types of securities has no priority in a bankruptcy proceeding?
Convertible bond
Senior debt
Common stock
Preferred stock
Straight bond
Kate could not attend the last shareholders meeting and thus she granted the authority to vote on her behalf to the managers of the firm. Which one of the following terms is used to describe the method by which Kate's shares were voted?
Straight
Cumulative
Consent-form
Proxy
In absentia
A firm should use .............. when evaluating an investment
the least costly source of financing
the most costly source of financing
the weighted average cost of all financing sources
the current opportunity cost
Cost of capital can be divided into three item except;
Cost of debt
Cost of preferred share
Cost of investment
Cost of common share
What does this represent?
Cash flow
Business Activity
Working capital cycle
Liquidity cycle
The proportion of debt in the overall capital is also called __________
Capital Structure
Financial Leverage
Trading On equity
Cost of funds
Which of the following derivatives is classified as a contingent claim?
Futures contracts
Interest rate swaps
Credit default swaps
Which of the following derivatives provide payoffs that are non-linearly related to the payoffs of the underlying?
Options
Forwards
Interest-rate swaps
Equity financing involves the activities of
issuing share and payment of dividends to shareholder
purchasing of fixed assets
purchasing of current assets
borrowing money from any banks
When a corporation sells common stock to the general public for the first time is called?
Initial public offering
Secondary market
Common stock
Preferred stock
Two toy companies decide to merge because they believe they will be able to develop more ideas for new toys and produce and sell them faster, at lower costs.
Horizontal
Vertical
Conglomerate
Which of the following is not the reason for acquisition?
Increase market power
Overcoming entry barriers
Increase diversification
Building up brand image
