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Copyright © 2010 Pearson Education Inc. Publishing as Prentice Hall Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones)
Chapter 14 Secondary Markets
Multiple Choice Questions
1 Function of Secondary Markets
1) The key distinction between a primary market and a secondary market is that, in the secondary
market, ________.
A) funds flow from the seller of the asset to the buyer.
B) the issuer of the asset receives funds from the buyer.
C) funds flow from the buyer of the asset to the seller.
D) the existing issue changes hands in the primary market.
Answer: C
Comment: The key distinction between a primary market and a secondary market is that, in the
secondary market, the issuer of the asset does not receive funds from the buyer. Rather, the
existing issue changes hands in the secondary market, and funds flow from the buyer of the
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Copyright © 2010 Pearson Education Inc. Publishing as Prentice Hall Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones)
Chapter 11 The Term Structure of Interest Rates
Multiple Choice Questions
1 The Yield Curve and the Term Structure
1) Market participants have tended to construct yield curves from observations of prices and
yields in the Treasury market. Two reasons account for this tendency. Which of the below is
ONE of these reasons?
A) The smallest and most inactive bond market, the Treasury market offers the fewest problems
of illiquidity or frequent trading
B) Treasury securities have a small amounts of default risk, and differences in creditworthiness
do affect yield estimates.
C) The largest and most active bond market, the Treasury market offers the fewest problems of
AssumptionsValuesInitial spot exchange rate, $/fc2.00 Price of exports, dollars ($)20.0000 Price of imports, foreign currency (fc)12.0000 Quantity of exports, units100 Quantity of imports, units120 Percentage devaluation of the dollar18.00%Price elasticity of demand, imports(0.900) a. What is the pre-devaluation trade balance?Revenues from exports, $$2,000Expenditures on imports, fc1,440 Expenditures on imports, $$2,880 Pre-devaluation trade balance($880)b. Resulting trade balance immediately after devaluation?Revenues from exports, $$2,000Expenditures on imports, fc1,440 New spot exchange rate, after devaluation2.36 Expenditures on imports, $$3,398 Post-devaluation trade balance (currency contract period)($1,398)Problem 4.25 Trade Deficits and J-Curve Adjustment PathsAssume the United States has the following import/export volumes and prices. Itundertakes a major "devaluation" of the dollar, say 18% on average against all majortrading partner' currencies. What is the pre-devaluation and post-devaluation tradebalance?
Chapter 4 重要知识点
The measurement of all international economic transactions between the residents of a
country and foreign residents is called the balance of payments (BOP).
BOP data is also important
1. An indication of pressure on a country’s foreign exchange rate
2. A signal of the imposition or removal of controls in various sorts of payments
3. A forecast of a country’s market potential (especially in the short run)
The BOP must balance.
The measurement of all international transactions in and out of a country over a year
is a daunting task. Mistakes, errors, and statistical discrepancies （统计误差）will
occur. The primary problem is that double-entry bookkeeping is employed in theory,
but not in practice. Current, financial, and capital account entries are recorded
independently of one another, not together as double-entry bookkeeping would
