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Finance Flashcards

Finance 301 Exam 1- chapter 1

At its most basic level, the function of financial intermediaries is to ________. move money from lenders to borrowers and back again
Which of the following is NOT an example of a financial transaction?A) Your parents use their credit card to pay this term’s college tuition.B) You use the ATM to withdraw British pounds so you can fly to London.C) Your roommate lends you $20 and you repay it in one week.D) All of the above are financial transactions. All of the above are financial transactions.
The movement of money from lender to borrower and back again is known as ________. the cycle of money
The common objective of borrowing and lending is to ________. make all parties better off
Which of the following is NOT a function of a financial intermediary in the lending/borrowing process?A) To help establish terms of the lending/borrowing agreementB) To match the borrower and the lenderC) To bear the risk that the borrower will not repayD) All of the above are functions of a financial intermediary. All of the above are functions of a financial intermediary.
You place $500 into your checking account at First Bank and earn 1% APR on your deposit. Your professor borrows money at a rate of 8% from the same bank for a tuition loan for her son. Which of the following statements is true? You benefit from earning interest on your deposit, safety for your funds, and having a recognizable means for paying for your financial obligations without having to hold cash.
The basic function of financial intermediaries is to move advice from lenders to borrowers and back to lenders. FALSE
In the lending/borrowing process, a financial intermediary function is to bear the risk that the borrower will not repay. TRUE
All financial transactions have a buyer and a seller. TRUE
Give three examples of a financial transaction (1) Your parents use their credit card to pay some of your college expenses.(2) You use the ATM to withdraw funds so you can buy your best friend a birthday gift.(3) Your roommate lends you $20 and you repay it back when you get your next pay check.
Which of the following best identifies the four main areas of finance? Corporate finance, investments, financial institutions and markets, international finance
Of the following, which is NOT one of the four main areas of finance?A) International financeB) Corporate financeC) InvestmentsD) All are considered main areas of finance. All are considered main areas of finance.
The set of financial activities that support the OPERATIONS of a business is best described by which main area of finance? Corporate finance
________ is the area of finance concerned with activities such as borrowing funds to finance projects such as plant expansions or new product launches. Corporate finance
________ is the area of finance concerned with activities such as repayment of borrowed funds through dividends or interest payments. Corporate finance
________ is the area of finance concerned with the activities of buying and selling financial assets such as stocks and bonds. Investments
Which of the following is NOT typically thought of as an investment activity? Repaying borrowed funds
The organized financial intermediaries and the forums that promote the cycle of money is a good definition of which of the following main areas of finance? Financial institutions and markets
Financial institutions and markets are the organized financial intermediaries and the forums that promote the cycle of money.
Of the following, which is NOT an example of a financial intermediary?A) Commercial bankB) Insurance companyC) Investment bankD) All of the above are financial intermediaries. All of the above are financial intermediaries.
Of the following, which is NOT an activity engaged in by a financial intermediary?A) Matching borrowers and lendersB) Bearing riskC) Managing retirement portfolios for large classes of employeesD) All of the above are activities of financial intermediaries. All of the above are activities of financial intermediaries.
“Concern with the multinational elements of financial activities” best describes which of the four main areas of finance? International finance
Which of the following is a reason why expertise in international finance is important?A) The process of assessing risk among many countries is more difficult than assessing risk for a single country.B) Financial regulatory rules and requirements differ from country to country.C) Changes in economic conditions impact the relative values of currency among countries.D) All of the above are reasons for gaining expertise in international finance. All of the above are reasons for gaining expertise in international finance.
Which of the following is NOT an activity of a financial institution or market?A) Bringing together buyers and sellers of financial assetsB) Providing a market for the transaction of financial assetsC) Providing information to buyers and/or sellers of financial assetsD) All are activities of financial institutions. All are activities of financial institutions.
Corporate Finance is the set of activities generally concerned with the buying and selling of financial assets such as stocks and bonds. FALSE
Financial institutions and markets are the organized financial intermediaries and the forums that promote the cycle of money. TRUE
The four main areas of finance (corporate, investments, financial markets and institutions, and international finance) are mutually exclusive topics. FALSE

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