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Questions and Answers
A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital. A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary.
A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital. A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary.
True (A)
A share of common stock is not a derivative, but an option to buy the stock is a derivative because the value of the option is derived from the value of the stock.
A share of common stock is not a derivative, but an option to buy the stock is a derivative because the value of the option is derived from the value of the stock.
True (A)
Financial institutions are more diversified today than they were in the past, when federal laws kept investment banks, commercial banks, insurance companies, and similar organizations quite separate. Today the larger financial services corporations offer a variety of services, ranging from checking accounts, to insurance, to underwriting securities, to stock brokerage.
Financial institutions are more diversified today than they were in the past, when federal laws kept investment banks, commercial banks, insurance companies, and similar organizations quite separate. Today the larger financial services corporations offer a variety of services, ranging from checking accounts, to insurance, to underwriting securities, to stock brokerage.
True (A)
Money markets are markets for
Money markets are markets for
Which of the following statements is CORRECT?
Which of the following statements is CORRECT?
You recently sold 200 shares of Disney stock, and the transfer was made through a broker. This is an example of:
You recently sold 200 shares of Disney stock, and the transfer was made through a broker. This is an example of:
The term "IPO" stands for Introductory Price Offered, and it is the price at which shares of a new company are offered to the public.
The term "IPO" stands for Introductory Price Offered, and it is the price at which shares of a new company are offered to the public.
IPO prices are generally established by the market, and buyers of the new stock must pay the price that prevails at the close of trading on the day the stock is offered to the public.
IPO prices are generally established by the market, and buyers of the new stock must pay the price that prevails at the close of trading on the day the stock is offered to the public.
Flashcards
Financial Intermediary
Financial Intermediary
A corporation that takes funds from investors and provides those funds to those who need capital.
Stock Option as a Derivative
Stock Option as a Derivative
An option to buy a stock is a derivative because its value is derived from the value of the stock.
Diversification of Financial Institutions
Diversification of Financial Institutions
Financial institutions today offer a wider array of services like checking, insurance, underwriting, and stock brokerage.
Money Markets
Money Markets
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Money Market Transactions
Money Market Transactions
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Secondary Market Transaction
Secondary Market Transaction
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IPO (Initial Public Offering)
IPO (Initial Public Offering)
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Study Notes
- A financial intermediary is a corporation that takes funds from investors and provides those funds to those who need capital.
- A bank that takes in demand deposits and uses that money to make long-term mortgage loans exemplifies a financial intermediary.
- A share of common stock isn't a derivative; an option to buy the stock is a derivative because its value is derived from the stock's value.
- Financial institutions exhibit greater diversification today compared to the past, when federal laws maintained the separation of investment banks, commercial banks, insurance companies, and similar entities.
- Larger financial services corporations provide a comprehensive suite of services, spanning checking accounts, insurance, underwriting securities, and stock brokerage.
- Money markets are markets for short-term debt securities like Treasury bills and commercial paper.
- Money market transactions typically involve debt securities with maturities of less than one year.
- Purchasing 100 shares of Disney stock from your brother-in-law isn't a primary market transaction.
- When Disney issues additional shares through an investment banker, it's classified as a secondary market transaction.
- The NYSE isn't an over-the-counter market.
- Both institutions and individuals can participate in derivative market transactions.
- Selling 200 shares of Disney stock through a broker is an example of a secondary market transaction.
- The "IPO" (Initial Public Offering) is the price at which shares of a new company are offered to the public.
- IPO prices are generally established by the market.
- Buyers of the new stock must pay the price that prevails at the close of trading on the day the stock is offered to the public.
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