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Exam 14: Capital Markets

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Question 51

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A key influence in recent years has been the growth in market value of futures exchanges.

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Question 52

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Foreign investors have preferred to invest in the United States EXCEPT for which of the following reasons?

A) Less stringent regulation of securities markets
B) The political stability of the U.S.government
C) The U.S.dollar is the world's international currency.
D) All of these options are reasons that foreign investors prefer to invest in the United States.

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Question 53

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Internal funds generated by corporations include retained earnings and non-cash expenses such as depreciation.

The NASDAQ Market is composed of large nationwide companies that are traded in the over-the-counter market.

Municipal securities are called "tax-exempt" because no federal taxes must be paid on interest received.

The "semi-strong" form of the efficient market hypothesis states that

All of the following are recognized as important influences in the development of the banking crisis of 2008 and the resulting credit crisis EXCEPT for which one?

Which stock exchange is considered the most liquid?

As corporate bonds mature and become due for payment, it's common for the borrowing corporation to replace this debt with the issuance of new bonds.

The formation of the European Monetary Union and its single currency Euro is expected to

The NYSE purchased Archipelago (an ECN) in order to expand its floor-trading capabilities. The acquisition was actually to bring electronic trading capabilities and expertise as a complement to the NYSE's established floor-trading skills.

U.S. government agency securities are directly guaranteed by the full faith and credit of the U.S. Treasury.

A key variable of market efficiency is the certainty of the income stream. The most efficient market is for corporate securities. The most efficient market is for U.S. securities, particularly the short-term U.S. Treasury Bill.

The majority of total dollar trading volume in 2008 took place in U.S. financial markets.

The emergence of trading via ECNs has

The purpose of secondary trading is to

Federal government agency issues, though backed directly by the U.S. Treasury, are deemed substantially more risky than regular government issues. The government does not "directly" back the debts of these agencies, thereby increasing their risk slightly over U.S. securities.

Upon entering the capital markets, an investor might invest in common stocks, preferred stock, negotiable certificates of deposit, and convertible securities. Short-term negotiable CDs would be instruments of the money market.