11: Financial Markets – Flashcards
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In the late 1920s, which of the following methods allowed investors to purchase stock at a fraction of its price and borrow the rest from the brokerage firm?
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buying on margin
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Which of the following is the market in which money is lent for periods of less than a year?
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money market
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Which of the following is not one of the three advantages of dealing with a financial intermediary?
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A financial intermediary creates financial assets.
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What is a mutual fund?
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a device for pooling the savings of many investors and investing it in a variety of ways
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What is the Securities and Exchange Commission?
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a government agency that regulates financial markets and investment companies
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What is an individual portion of stock referred to as?
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a share
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What is a fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets called?
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a mutual fund
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What is a firm that specializes in buying and selling stocks for individual investors called?
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a brokerage firm
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What are bonds?
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loans
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Which of the following bonds are issued by the U.S. government?
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savings bonds
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Why would a person invest in junk bonds?
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Junk bonds can pay very high interest rates.
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What does the size of the dividend per share of stock depend on?
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the corporation's profits
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Which of the following is not one of the ways borrowers engage in the financial system?
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securing financial assets
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Which of the following is a true statement about the call option?
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It is a way for investors to avoid paying a future higher price of a stock.
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What is an institution that helps channel funds from savers to borrowers called?
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a financial intermediary
