Money market securities generally have ______. Capital market securities are typically expected to have a ______.

If security prices fully reflect all available information, the markets for these securities are

If markets are ______, investors could use available information ignored by the market to earn abnormally high returns.

If financial markets are efficient, this implies that investors can ignore the various investment instruments available.

The Securities Act of 1933

The Securities Exchange Commission (SEC) was established by the

Common stock is an example of a(n)

If financial markets were ______, all information about any securities for sale in primary and secondary markets would be continuously and freely available to investors.

The typical role of a securities firm in a public offering of securities is to

Without the participation of financial intermediaries in financial market transactions,

Which of the following is most likely to be described as a depository institution?

In aggregate, ______ are the most dominant depository institution.

Which of the following is a nondepository financial institution?

Which of the following distinguishes credit unions from commercial banks and savings institutions?

When a securities firm acts as a broker, it

When a securities firm acts as a(n) ______, it maintains a position in securities.

______ obtain funds by issuing securities, then lend the funds to individuals and small businesses.

Households with ______ are served by ______.

______ concentrate on mortgage loans.

______ securities have a maturity of one year or less; ______ securities are generally more liquid.

Which of the following is not a major investor in stocks?

Which of the following financial intermediaries commonly invests in stocks and bonds?

Securities are certificates that represent a claim on the issuer.

Debt securities are certificates that represent debt (borrowed funds) by the issuer.

A five-year security was purchased two years ago by an investor who plans to resell it. The security will be sold by the investor in the so-called

When security prices fully reflect all available information, the markets for these securities are said to be efficient.

If markets are perfect, securities buyers and sellers do not have full access to information and cannot always break down securities to the precise size they desire.

A broker executes securities transactions between two parties and charges a fee reflected in the bid-ask spread.

The euro increased business between European countries and created a more competitive environment in Europe.

In recent years, financial institutions have consolidated to capitalize on economies of scale and on economies of scope.

Securities are certificates that represent a claim on the provider of funds.

Debt securities include commercial paper, Treasury bonds, and corporate bonds.

Common types of capital market securities include Treasury bills and commercial paper.

Common types of money market securities include negotiable certificates of deposit and Treasury bills.

Money market securities are commonly issued in order to finance the purchase of assets such as buildings, equipment, or machinery.

Commercial banks in aggregate have a lower value of assets than savings institutions.

Financial markets facilitating the flow of short-term funds with maturities of less than one year are known as

Which of the following transactions would not be considered a secondary market transaction?

If investors speculate in the underlying asset rather than derivative contracts on the underlying asset, they will probably achieve ________ returns, and they are exposed to relatively ________ risk.

________ maintain a larger amount of assets in aggregate than the other types of depository institutions.

A common use of funds for __________ is investment in stocks and businesses, while their main use of funds is providing loans to households and businesses.

Long-term debt securities tend to have a __________ expected return and _________ risk than money market securities.

Common types of capital market securities include Treasury bills and commercial paper.

Common types of money market securities include negotiable certificates of deposit and Treasury bills.

Capital market securities are commonly issued in order to finance the purchase of assets such as buildings, equipment, or machinery.

Commercial banks in aggregate have more assets than savings institutions.

Those participants who receive more money than they spend are referred to as

Equity securities

The term ________ involves decisions such as how much funding to obtain, and how to invest the proceeds to expand operations.

There is a ________ relationship between the risk of a security and the expected return from investing in the security.

If a security is undervalued, some investors would capitalize on this by purchasing that security. As a result, the security’s price will ________, resulting in a ________ return for those investors.

The credit crisis in the 2008-2009 period was caused by weak economies in Asia.

Currently, ______ hold the largest amount of assets of all financial institutions.

The main reason that depository institutions experienced financial problems during the credit crisis was their investment in:

Markets that facilitate the flow of short-term funds (maturities less than one year) are known as capital markets, while those facilitating long-term funds are known as money markets.

Treasury bonds have a maturity of one to three years.

Since markets are efficient, institutional and individual investors should ignore the various investment instruments available.

Speculating with derivative contracts on an underlying asset typically results in both higher risk and higher returns than speculating in the underlying asset itself.

When security prices fully reflect all available information, the markets for these securities are said to be perfect.

Securities that are not as safe and liquid as other securities are never considered for investment by anyone.

By requiring full disclosure of information, securities laws prevent investors from making poor investment decisions.

When a depository institution offers a loan, it is acting as a creditor.

Savings institutions are the most dominant financial institution.

Most mutual funds obtain funds by issuing securities, then lend the funds to individuals and small businesses.

Institutional investors not only provide financial support to companies but exercise some degree of corporate control over them.

Which of the following is not a reason why depository financial institutions are popular?

Which of the following is not considered a money market security?

__________ are not considered capital market securities.

__________ are long-term debt obligations issued by corporations and government agencies to support their operations.

Equity securities should normally have a __________ expected return and __________ risk than money market securities.

If investors speculate in derivative contracts rather than the underlying asset, they will probably achieve __________ returns, and they are exposed to relatively __________ risk.

When particular securities are perceived to be __________ by the market, their prices decrease when they are sold by investors.

Which of the following are not considered depository financial institutions?

The main source of funds for __________ is proceeds from selling securities to households and businesses, while their main use of funds is providing loans to households and businesses.

Which of the following statements is incorrect?

Which of the following is not a typical money market security?

The demand for funds resulting from business investment in short-term assets is ______ related to the number of projects implemented, and is therefore ______ related to the interest rate.

If economic conditions become less favorable

As a result of more favorable economic conditions, there is a(n) ______ demand for loanable funds, causing an ______ shift in the demand curve.

The federal government demand for loanable funds is ______. If the budget deficit was expected to increase, the federal government demand for loanable funds would ______.

Other things being equal, foreign governments and corporations would demand ______ U.S. funds if their local interest rates were lower than U.S. rates. Therefore, for a given set of foreign interest rates, foreign demand for U.S. funds is ______ related to U.S. interest rates.

For a given set of foreign interest rates, the quantity of U.S. loanable funds demanded by foreign governments or firms will be ______ U.S. interest rates.

The quantity of loanable funds supplied is normally

The ______ sector is the largest supplier of loanable funds.

The supply of loanable funds in the U.S. is partly determined by the monetary policy implemented by the Federal Reserve System.

If a strong economy allows for a large ______ in households income, the supply curve will shift ______.

The equilibrium interest rate

The equilibrium interest rate should

Which of the following is likely to cause a decrease in the equilibrium U.S. interest rate, other things being equal?

The Fisher effect states that the

If the real interest rate was negative for a period of time, then

If inflation is expected to decrease, then

If inflation turns out to be lower than expected

If the economy weakens, there is ______ pressure on interest rates. If the Federal Reserve increases the money supply there is ______ pressure on interest rates (assume that inflationary expectations are unchanged).

What is the basis of the relationship between the Fisher effect and the loanable funds theory?

Assume that foreign investors who have invested in U.S. securities decide to decrease their holdings of U.S. securities and to instead increase their holdings of securities in their own countries. This should cause the supply of loanable funds in the United States to ______ and should place ______ pressure on U.S. interest rates.

Assume that foreign investors who have invested in U.S. securities decide to increase their holdings of U.S. securities. This should cause the supply of loanable funds in the United States to ______ and should place ______ pressure on U.S. interest rates.

If the federal government needs to borrow additional funds, this borrowing reflects a(n) ________ in the supply of loanable funds, and a(n) _______ in the demand for loanable funds.

If the federal government reduces its budget deficit, this causes a(n) ____________________ in the supply of loanable funds, and a(n) ______________________ in the demand for loanable funds.

Due to expectations of higher inflation in the future, we would typically expect the supply of loanable funds to ____________ and the demand for loanable funds to ____________.

Due to expectations of lower inflation in the future, we would typically expect the supply of loanable funds to ____________ and the demand for loanable funds to _______________.

If the real interest rate is expected by a particular person to become negative, then the purchasing power of his or her savings would be ____________, as the inflation rate is expected to be ____________ the existing nominal interest rate.

If economic expansion is expected to increase, then demand for loanable funds should ______ and interest rates should ______.

If economic expansion is expected to decrease, the demand for loanable funds should ______ and interest rates should ______.

If the real interest rate was stable over time, this would suggest that there is ______ relationship between inflation and nominal interest rate movements.

If inflation and nominal interest rates move more closely together over time than they did in earlier periods, this would ______ the volatility of the real interest rate movements over time.

Canada and the U.S. are major trading partners. If Canada experiences a major increase in economic growth, it could place ____ pressure on Canadian interest rates and _____ pressure on U.S. interest rates.

If investors shift funds from stocks into bank deposits, this ______ the supply of loanable funds, and places ______ pressure on interest rates.

When Japanese interest rates rise, and if exchange rate expectations remain unchanged, the most likely effect is that the supply of loanable funds provided by Japanese investors to the United States will ____________, and the U.S. interest rates will ____________.

Which of the following will probably not result in an increase in the business demand for loanable funds?

If aggregate demand for loanable funds rises without a corresponding increase in aggregate supply, there will be a __________ of loanable funds.

A __________ federal government deficit increases the quantity of loanable funds demanded at any prevailing interest rate, causing an __________ shift in the demand schedule.

Which statement is not true regarding foreign interest rates?

Which is least likely to affect household demand for loanable funds?

Which statement is incorrect?

At any point in time, households and businesses demand a greater quantity of loanable funds at lower interest rates.

Business demand for funds from short‑term investments is inversely related to the number of projects and inversely to the interest rate.

Other things equal, a smaller quantity of U.S. funds would be demanded by foreign entities if their domestic rates were high relative to U.S. rates.

If foreign interest rates fall, foreign firms and governments would likely reduce their demand for U.S. funds.

Aggregate demand for loanable funds is positively related to interest rates at any point in time.

In general, suppliers of loanable funds are willing to supply more funds if the interest rate is higher.

If aggregate demand for loanable funds increases without a corresponding increase in aggregate supply, there will be a surplus of loanable funds.

The relationship between interest rates and expected inflation is often referred to as the loanable funds theory.

According to the Fisher effect, if the real interest rate is zero, the nominal rate must equal the expected inflation rate.

To forecast interest rates using the Fisher effect, the real interest rate for an upcoming period can be forecasted by subtracting expected inflation from the nominal rate quoted for that period.

According to the Fisher effect, when inflation is lower than anticipated, the real interest rate is relatively low.

Forecasters should consider future corporate expansion plans and the future state of the economy when forecasting business demand for loanable funds.

The __________ suggests that the market interest rate is determined by factors that control the supply of and demand for loanable funds.

Which factor would most likely increase business demand for loanable funds?

Foreign demand for U.S. funds rises when foreign domestic rates are ______ relative to U.S. rates, leading to a ______ quantity demanded.

Federal government demand for funds is often described as interest ______, meaning ______ to interest rates.

If aggregate demand for loanable funds increases without a matching rise in aggregate supply, the market will face a ______ of loanable funds.

An expansion by businesses generally causes an ______ shift in the demand schedule and ______ in the supply schedule.

Which expression correctly represents the Fisher effect relationship among nominal rate, expected inflation, and real rate?

The real interest rate can be forecast by subtracting the ______ from the ______ for a period.

Under the Fisher effect, expectations of higher inflation lead savers to require a ______ nominal interest rate on savings.

A larger federal deficit tends to increase the quantity of loanable funds demanded at any prevailing rate, causing an ______ shift in the demand schedule.

In general, securities with ______ characteristics will offer ______ yields.

Default risk is likely to be highest for which of the following?

Within loanable funds theory, an outward shift in supply most likely results from which policy action?

When business investment opportunities decline, the demand for loanable funds will most likely:

If expected inflation rises while real rates stay constant, what happens to nominal interest rates by the Fisher relation?

Some financial institutions such as commercial banks are required by law to invest only in

Credit ratings are most commonly used to indicate which financial institutions have available funds that they can lend to borrowers.

If a security can easily be converted to cash without a loss in value, it

Securities that offer _______ liquidity will offer a _________ yield to be preferred.

If all other characteristics are similar, ______ would have to offer ______.

Assume an investor’s tax rate is 25 percent. The before-tax yield on a security is 12 percent. What is the after-tax yield?

An investor’s tax rate is 30 percent. What must the before-tax yield on a security be to have an after-tax yield of 11 percent?