Econ 210 Midterm Review

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Midterm #1 PART 1: MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. (1/3 mark each) 1) The bond markets are important because they are ____A____. A) where corporations and governments borrow to finance their activities B) the markets where all borrowers get their funds C) the markets where foreign exchange rates are determined D) easily the most widely followed financial markets in Canada 2) The interest rate on long-term corporate bonds is __B______, on average, than other interest rates. The spread between it and other rates ________ over time. A) lower; fluctuates B) higher; fluctuates C) lower; remains constant D) higher; remains constant 3) Everything else held constant, a weaker Canadian dollar will likely hurt ___D_____. A) textile exporters in Quebec B) automobile manufacturers in Ontario that use domestically produced inputs C) wheat farmers in Saskatchewan that sell domestically D) furniture importers in British Columbia 4) Securities are ___A_____ for the person who buys them, but are ________ for the individual or firm that issues them. A) assets; liabilities B) negotiable; nonnegotiable C) liabilities; assets D) nonnegotiable; negotiable 5) Which of the following can be described as involving direct finance? D A) People buy shares in a mutual fund. B) A pension fund manager buys a short-term corporate security in the secondary market. C) An insurance company buys shares of common stock in the over-the-counter markets. D) A corporation issues new shares of stock. 6) Which of the following statements about financial markets and securities is true? D A) A debt

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