Question 1   Multiple Choice (1.0000 points)
  Question: The most important economic benefit provided by well-developed financial markets is:
    Creating well-paying jobs in securities firms.
Channeling funds from net savers to net borrowers.
Providing tax revenue to fund many worthy programs.
Prestige - all advanced economies have a thriving stock market.
Insulating an economy from financial crises.

Question 2   Multiple Choice (1.0000 points)
  Question: Among the important services provided by financial markets are:
    Establishing fair prices for securities.
Providing liquidity.
Lowering transactions costs.
Fostering economic development.
All of the above.

Question 3   Multiple Choice (1.0000 points)
  Question: Standardized contracts for securities are desirable for all of the following reasons except:
    They make security offerings easier to advertise.
The costs of negotiating trades are lower than for customized contracts.
They simplify the process of establishing a fair price.
Legal expenses are lower.
Traders spend less time haggling over contractual terms.

Question 4   Multiple Choice (1.0000 points)
  Question: Over-the-Counter (OTC) markets are characterized by:
    Dealers rather than brokers.
Trading conducted in auctions.
Transactions in stocks that have high daily trading volumes.
Stock listings that have a national rather than a regional focus.
Specialists who make a market for securities.

Question 5   Multiple Choice (1.0000 points)
  Question: The federal funds rate:
    Is set by the U.S. Treasury.
Directly affects businesses and consumers.
Rapidly reflects adjustments to the money supply.
Is the interest rate paid by the U.S. Treasury on its short-term securities.
Is set high enough to discourage banks from borrowing from the Federal Reserve.

Question 6   Multiple Choice (1.0000 points)
  Question: Repurchase agreements:
    Are used by securities dealers to profit from anticipated changes in interest rates.
Are high-risk transactions.
Are typically unsecured.
Cover long periods of time.
Are used only by commercial banks.

Question 7   Multiple Choice (1.0000 points)
  Question: Interest rates on money market securities:
    Are stable over time.
Seldom move together with rates on longer-term securities.
Are relatively low because the securities are low risk investments.
Are low because all interest from money market securities is exempt from federal income taxes.
Fluctuate wildly because the markets are often thin and security prices are heavily influenced by large trades executed by money center banks.