36 Questions
What is the definition of a security in the context of finance?
A document that gives its owner a claim on future cash flows
Which type of securities represents ownership in a company?
Preferred stock
What are securities that are convertible into a specified number of common shares in the issuing company known as?
Convertible securities
Which type of securities typically have a maturity period of less than one year?
Money market securities
What do capital market securities represent?
Long-term debt or equity instruments
What type of securities derive their value from an underlying asset or group of assets?
Derivative securities
What is a security in the context of finance?
A document representing ownership of an asset or a claim on borrowed funds
What are the two main types of securities mentioned in the text?
Debt securities and equity securities
Which type of security pays fixed periodic interest payments?
Debt securities
What are examples of non-government money market securities?
Banker’s acceptances and commercial paper
What are the two categories of government securities mentioned in the text?
Marketable and non-marketable issues
What is the main feature of non-marketable government securities?
They can only be purchased from the Treasury
What is the purpose of a sinking fund bond?
To accumulate funds for repayment of the bond
Which type of security represents ownership in assets?
Equity and asset-backed securities
What is the purpose of negotiable certificates of deposit?
To be traded in the securities market
What distinguishes derivative securities from other types of securities?
They derive their value from an underlying asset or index
What is the characteristic of special issues under government securities?
They cannot be traded in the securities market
What distinguishes banker's acceptances as non-government money market securities?
They facilitate international trade transactions
A security represents a claim on future cash flows.
True
Convertible securities are not mentioned in the text.
False
Preferred stock and common stock are examples of debt securities.
False
Money market securities typically have a longer maturity period than capital market securities.
False
Equity and asset-backed securities represent ownership in a company.
True
Derivative securities derive their value from an underlying asset or group of assets.
True
Debt securities are also known as variable income securities because they pay contractually fixed periodic interest payments.
False
A security may represent an ownership claim on an asset or a claim on the repayment of borrowed funds with interest.
True
A securities market can only be a physical location and not a computer or telephone network.
False
Equity and asset-backed securities are types of debt securities.
False
Money market securities typically have a maturity period of less than one year.
True
Government securities include non-marketable issues that can be traded in the securities market.
False
Negotiable certificates of deposit are examples of non-government money market securities.
True
Derivative securities derive their value from an underlying asset or group of assets.
True
Corporate bonds represent ownership in a company.
False
Sinking fund bonds are used for repurchasing shares in the issuing company.
False
Commercial paper is an example of non-government money market securities.
True
Treasury bills are non-marketable issues under government securities.
False
Test your knowledge of banking terminology in the Bashaier aladwany Chapter 2 with this quiz. Explore terms such as securities, types of securities, debt securities, equity and asset-backed securities, stock types, and convertible securities.
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