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1、Chapter 1 Why Study Financial Markets and Institutions?Single Choice1)Financial markets and institutionsA)involve the movement of huge quantities of money.B)affect the profits of businesses.C)affect the types of goods and services produced in an economy.D)do all of the above.E)do only A and B of the
2、 above.2)Financial market activities affectA) personal wealth.B) spending decisions by individuals and business firms.C) the economys location in the business cycle.D) all of the above.3)Markets in which funds are transferred from those who have excess funds available to those who have a shortage of
3、 available funds are calledA) commodity markets.B) funds markets.C) derivative exchange markets.D) financial markets.4)The price paid for the rental of borrowed funds (usuallyexpressed as a percentage of the rental of $100 per year) is commonly referred to as theA) inflation rate.8) exchange rate.9)
4、 interest rate.10) aggregate price level.11) The bond markets are important becauseA)they are easily the most widely followed financial markets in the United States.B) they are the markets where interest rates are determined.C) they are the markets where foreign exchange rates are determined.D) all
5、of the above.12) Interest rates are important to financial institutions since an interest rateincrease the cost of acquiring funds and the income fromassets.A) decreases; decreasesB) increases; increasesC) decreases; increasesD) increases; decreases13) Typically, increasing interest ratesA) discoura
6、ges individuals from saving.B) discourages corporate investments.C) encourages corporate expansion.D) encourages corporate borrowing.E) none of the above.14) Compared to interest rates on long-term U.S. government bonds, interest rateson fluctuate more and are lower on average.A) medium-quality corp
7、orate bondsB) low-quality corporate bondsC) high-quality corporate bondsD) three-month Treasury billsE) none of the above15) Compared to interest rates on long-term U.S. government bonds, interest rateson three-month Treasury bills fluctuate and are onaverage.A) more; lowerB) less; lowerC) more; hig
8、herD) less; higher16) The stock market is important becauseA) it is where interest rates are determined.B) it is the most widely followed financial market in the United States.C) it is where foreign exchange rates are determined.D) all of the above.17) Stock prices since the 1950s have beenA) relati
9、vely stable, trending upward at a steady pace.B) relatively stable, trending downward at a moderate rate.C) extremely volatile.D) unstable, trending downward at a moderate rate.18) Thelargest one-day drop in the history of the American stock markets occurred inA) 1929.B) 1987.C) 2000.D) 2001.19) A r
10、ising stock market index due to higher share pricesA)increases peoples wealth and as a result may increase their willingness to spend.B)increases the amount of funds that business firms can raise by selling newly issued stock.C)decreases the amount of funds that business firms can raise by selling n
11、ewly issued stock.D) both A and B of the above.20) A declining stock market index due to lower share pricesA) reduces peoples wealth and as a result may reduce their willingness to spend.B)increases peoples wealth and as a result may increase their willingness to spend.C)decreases the amount of fund
12、s that business firms can raise by selling newly issued stock.D) both A and C of the above.E) both B and C of the above.21) Changes in stock pricesA) affect peoples wealth and their willingness to spend.B) affect firms decisions to sell stock to finance investment spending.C) are characterized by co
13、nsiderable fluctuations.D) all of the above.E) only A and B of the above.22) (I) Debt markets are often referred to generically as the bond market. (II) Abond is a security that is a claim on the earnings and assets of a corporation.A) (I) is true, (II) false.B) (I) is false, (II) true.C) Both are t
14、rue.D) Both are false.23) (I) A bond is a debt security that promises to make payments periodically fora specified period of time.(II)A stock is a security that is a claim on the earnings and assets of a corporation.A) (I) is true, (II) false.B) (I) is false, (II) true.C) Both are true.D) Both are f
15、alse.24) The price of one countrys currency in terms of anothers is calledA) the exchange rate.B) the interest rate.C) the Dow Jones industrial average.D) none of the above.25) A stronger dollar benefits and hurts A) American businesses; American consumers.B) American businesses; foreign businesses.C) American consumers; American businesses.D) foreign businesses; American consumers.26) A weaker dollar benefits and hurts A) American businesses; American consumers.B) American businesses; foreign consumers.C) American consumers; American businesses.D) foreign businesses; American consumers.21
