Banking Glossary: Bashaier aladwany Chapter 2 Quiz
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Questions and Answers

What is the definition of a security in the context of finance?

  • A document that provides access to current cash flows
  • A document that guarantees fixed returns on investment
  • A document that gives its owner a claim on future cash flows (correct)
  • A document that represents ownership of physical assets
  • Which type of securities represents ownership in a company?

  • Money market securities
  • Debt Securities
  • Convertible securities
  • Preferred stock (correct)
  • What are securities that are convertible into a specified number of common shares in the issuing company known as?

  • Equity and asset-backed Securities
  • Convertible securities (correct)
  • Common stock
  • Debt Securities
  • Which type of securities typically have a maturity period of less than one year?

    <p>Money market securities</p> Signup and view all the answers

    What do capital market securities represent?

    <p>Long-term debt or equity instruments</p> Signup and view all the answers

    What type of securities derive their value from an underlying asset or group of assets?

    <p>Derivative securities</p> Signup and view all the answers

    What is a security in the context of finance?

    <p>A document representing ownership of an asset or a claim on borrowed funds</p> Signup and view all the answers

    What are the two main types of securities mentioned in the text?

    <p>Debt securities and equity securities</p> Signup and view all the answers

    Which type of security pays fixed periodic interest payments?

    <p>Debt securities</p> Signup and view all the answers

    What are examples of non-government money market securities?

    <p>Banker’s acceptances and commercial paper</p> Signup and view all the answers

    What are the two categories of government securities mentioned in the text?

    <p>Marketable and non-marketable issues</p> Signup and view all the answers

    What is the main feature of non-marketable government securities?

    <p>They can only be purchased from the Treasury</p> Signup and view all the answers

    What is the purpose of a sinking fund bond?

    <p>To accumulate funds for repayment of the bond</p> Signup and view all the answers

    Which type of security represents ownership in assets?

    <p>Equity and asset-backed securities</p> Signup and view all the answers

    What is the purpose of negotiable certificates of deposit?

    <p>To be traded in the securities market</p> Signup and view all the answers

    What distinguishes derivative securities from other types of securities?

    <p>They derive their value from an underlying asset or index</p> Signup and view all the answers

    What is the characteristic of special issues under government securities?

    <p>They cannot be traded in the securities market</p> Signup and view all the answers

    What distinguishes banker's acceptances as non-government money market securities?

    <p>They facilitate international trade transactions</p> Signup and view all the answers

    A security represents a claim on future cash flows.

    <p>True</p> Signup and view all the answers

    Convertible securities are not mentioned in the text.

    <p>False</p> Signup and view all the answers

    Preferred stock and common stock are examples of debt securities.

    <p>False</p> Signup and view all the answers

    Money market securities typically have a longer maturity period than capital market securities.

    <p>False</p> Signup and view all the answers

    Equity and asset-backed securities represent ownership in a company.

    <p>True</p> Signup and view all the answers

    Derivative securities derive their value from an underlying asset or group of assets.

    <p>True</p> Signup and view all the answers

    Debt securities are also known as variable income securities because they pay contractually fixed periodic interest payments.

    <p>False</p> Signup and view all the answers

    A security may represent an ownership claim on an asset or a claim on the repayment of borrowed funds with interest.

    <p>True</p> Signup and view all the answers

    A securities market can only be a physical location and not a computer or telephone network.

    <p>False</p> Signup and view all the answers

    Equity and asset-backed securities are types of debt securities.

    <p>False</p> Signup and view all the answers

    Money market securities typically have a maturity period of less than one year.

    <p>True</p> Signup and view all the answers

    Government securities include non-marketable issues that can be traded in the securities market.

    <p>False</p> Signup and view all the answers

    Negotiable certificates of deposit are examples of non-government money market securities.

    <p>True</p> Signup and view all the answers

    Derivative securities derive their value from an underlying asset or group of assets.

    <p>True</p> Signup and view all the answers

    Corporate bonds represent ownership in a company.

    <p>False</p> Signup and view all the answers

    Sinking fund bonds are used for repurchasing shares in the issuing company.

    <p>False</p> Signup and view all the answers

    Commercial paper is an example of non-government money market securities.

    <p>True</p> Signup and view all the answers

    Treasury bills are non-marketable issues under government securities.

    <p>False</p> Signup and view all the answers

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