Debt Instruments and Maturity Date Quiz

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What is the main difference between a debt instrument and an equity instrument?

Debt instruments pay interest, while equities pay dividends.

Debt instruments are riskier than equities.

Debt instruments have a maturity date, while equities do not. (correct)

Debt instruments are issued by the government, while equities are issued by private companies.

What is the term used to describe an equity holder?

Shareholder

Residual claimant (correct)

Creditor

Debtor

What is the definition of a short-term debt instrument?

A debt instrument with a maturity of 1-10 years.

A debt instrument with a maturity of less than 1 year. (correct)

A debt instrument with a maturity of 10 years or longer.

A debt instrument that pays interest at regular intervals.

What is the main advantage of owning a corporation's debt over its equity?

Debt holders are paid first before equity holders. Signup and view all the answers

What is the definition of an intermediate-term debt instrument?

A debt instrument with a maturity of 1-10 years. Signup and view all the answers

Which of the following is NOT a type of debt instrument mentioned in the text?

Preferred stock Signup and view all the answers

What is the main function of brokers in the securities market?

Match buyers and sellers of securities Signup and view all the answers

How does a corporation acquire new funds?

When securities are sold in the primary market Signup and view all the answers

What happens when an individual buys a security in the secondary market?

The seller receives money, but the corporation gets no new funds Signup and view all the answers

Why do secondary markets make financial instruments more liquid?

To raise cash quickly by selling financial instruments Signup and view all the answers

How do conditions in the secondary market affect the primary market price of securities?

Higher secondary market prices lead to higher primary market prices Signup and view all the answers

Which market is most relevant to corporations issuing securities?

Secondary market Signup and view all the answers

What are money market securities characterized by?

High liquidity and short-term duration Signup and view all the answers

Which entities actively use the money market to earn interest on temporary surplus funds?

Corporations and banks Signup and view all the answers

What type of securities are often held by financial intermediaries like insurance companies and pension funds?

Capital market securities Signup and view all the answers

What is the term used to describe the process of indirect finance involving financial intermediaries?

Financial intermediation Signup and view all the answers

Which source of financing is more important for corporations than securities markets?

Financial intermediaries Signup and view all the answers

What is the primary route for moving funds from lenders to borrowers?

Indirect finance through financial intermediaries Signup and view all the answers

What is the primary objective of the Bangko Sentral ng Pilipinas?

To maintain price stability conducive to a balanced and sustainable growth of the economy Signup and view all the answers

Which of the following international entities is mentioned in the text as influencing the financial system?

The International Monetary Fund (IMF) Signup and view all the answers

What is the key role played by commercial banks in the financial system?

All of the above Signup and view all the answers

What is the relationship between the Bangko Sentral ng Pilipinas and the financial system?

The Bangko Sentral ng Pilipinas supervises and regulates the financial system Signup and view all the answers

How does the Bangko Sentral ng Pilipinas influence the financial system?

All of the above Signup and view all the answers

What is the role of commercial banks in the financial system?

All of the above Signup and view all the answers

What is the main advantage of financial intermediaries in reducing transaction costs?

They have developed expertise in lowering transaction costs. Signup and view all the answers

How do financial intermediaries benefit individuals with excess funds to lend?

They facilitate indirect lending to those with productive investment opportunities. Signup and view all the answers

What is an example of a liquidity service provided by financial intermediaries?

Providing checking accounts for easy bill payments. Signup and view all the answers

How do financial intermediaries help reduce the exposure of investors to risk?

By taking advantage of their low transaction costs to share risk. Signup and view all the answers

What is the term used to describe the reduction in transaction costs as the size of a transaction increases?

Economies of scale Signup and view all the answers

What is the main problem faced by individuals with excess funds to lend, which financial intermediaries help solve?

High transaction costs Signup and view all the answers

Debt Instruments and Maturity Date Quiz

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Questions and Answers

What is the main difference between a debt instrument and an equity instrument?

What is the term used to describe an equity holder?

What is the definition of a short-term debt instrument?

What is the main advantage of owning a corporation's debt over its equity?

What is the definition of an intermediate-term debt instrument?

Which of the following is NOT a type of debt instrument mentioned in the text?

What is the main function of brokers in the securities market?

How does a corporation acquire new funds?

What happens when an individual buys a security in the secondary market?

Why do secondary markets make financial instruments more liquid?

How do conditions in the secondary market affect the primary market price of securities?

Which market is most relevant to corporations issuing securities?

What are money market securities characterized by?

Which entities actively use the money market to earn interest on temporary surplus funds?

What type of securities are often held by financial intermediaries like insurance companies and pension funds?

What is the term used to describe the process of indirect finance involving financial intermediaries?

Which source of financing is more important for corporations than securities markets?

What is the primary route for moving funds from lenders to borrowers?

What is the primary objective of the Bangko Sentral ng Pilipinas?

Which of the following international entities is mentioned in the text as influencing the financial system?

What is the key role played by commercial banks in the financial system?

What is the relationship between the Bangko Sentral ng Pilipinas and the financial system?

How does the Bangko Sentral ng Pilipinas influence the financial system?

What is the role of commercial banks in the financial system?

What is the main advantage of financial intermediaries in reducing transaction costs?

How do financial intermediaries benefit individuals with excess funds to lend?

What is an example of a liquidity service provided by financial intermediaries?

How do financial intermediaries help reduce the exposure of investors to risk?

What is the term used to describe the reduction in transaction costs as the size of a transaction increases?

What is the main problem faced by individuals with excess funds to lend, which financial intermediaries help solve?

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