Finance Essay

446 Words2 Pages
Chapter 1 1. All money market instruments are short-term debt. T 2. Businesses are never DSUs. | | False | | 3. Denomination intermediation is best exemplified by D. issuing five $3,000 CDs and making one $15,000 loan. 4. Dealers bring buyer and seller together; brokers make a market.Answer F | | 5. There must be an equal number of DSUs and SSUs in a period.Answer | Selected Answer: | False | | 6. A household is an SSU when income for the period exceeds spending. | Answer: | True | | 7. A dealer offers to buy shares of IBM at $116 and sell to investors at $118. The “bid” isAnswer ¥116 | | 8. Intermediation, or ____ financing, involves ___ financial claim(s) linking SSU and DSU. C. indirect; two 9. Which of the following does not take deposits? | Selected Answer: | C. finance companies. | | 10. The money market provides liquidity; the capital market finances economic growth. | Answer: | True | | 11. The only “deposit-type” institutions that do not operate for profit areAnswer B. credit unions | | 12. An SSU'sAnswer | Selected Answer: | C. income for the period exceeds expenditures | | 13. Surplus spending units (SSU) are also calledAnswer | Selected Answer: | B. lenders. | | 14. All money market instruments are short-term debt. T 15. A household is an SSU when income for the period exceeds spending. T 16. Households are the major source of funds to the financial system. T 17. An SSU must hold a claim until its scheduled maturity. F 18. Which sector has been most consistently in a surplus budget position? Household 19. Profitability of financial intermediaries derives from all of the following except government regulation of interest rates | | 20. A financial claim is an “IOU” from a deficit spending unit. T

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