Finance Chapter 2 Practice

A financial system’s primary concern is funneling money from: lender-savers to borrower-spenders.
Stocks that are traded in the _____ are typically those of smaller and lesser known firms. over-the-counter
Secondary financial markets are similar to: Used-car market
Which of the following theories states that security prices reflect all public information, but not all private information? Semistrong-form efficiency.
The process of converting financial securities with one set of characteristics into securities with another set of characteristics is called: financial intermediation
If you are a borrower, which would you prefer to occur during the life of your loan? A level of inflation that is higher than that anticipated at the outset of the loan.
If inflation is anticipated to be 5 percent during the next year, while the real rate of interest for a one-year loan is 5 percent, then what should the nominal rate of interest be for a risk-free one-year loan? 10%
If the supply of loanable funds decreases relative to the demand for those funds, then we would expect: interest rates to increase.
The cost of borrowing money is called: Interest
Investment banking firms provide: underwriting services

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