金融英语练习题第二章

Economics of Money, Banking, and Financial Markets, 11e, Global Edition (Mishkin) Chapter 2 An Overview of the Financial System2.1 Function of Financial Markets1) Every financial market has the following characteristic.A) It determines the level of interest rates.B) It allows common stock to be traded.C) It allows loans to be made.D) It channels funds from lenders-savers to borrowers-spenders.Answer: DAACSB: Reflective Thinking2) Financial markets have the basic function ofA) getting people with funds to lend together with people who want to borrow funds.B) assuring that the swings in the business cycle are less pronounced.C) assuring that governments need never resort to printing money.D) providing a risk-free repository of spending power.Answer: AAACSB: Reflective Thinking3) Financial markets improve economic welfare becauseA) they channel funds from investors to savers.B) they allow consumers to time their purchase better.C) they weed out inefficient firms.D) they eliminate the need for indirect finance.Answer: BAACSB: Reflective Thinking4) Well-functioning financial marketsA) cause inflation.B) eliminate the need for indirect finance.C) cause financial crises.D) allow the economy to operate more efficiently.Answer: DAACSB: Reflective Thinking5) A breakdown of financial markets can result inA) financial stability.B) rapid economic growth.C) political instability.D) stable prices.Answer: CAACSB: Reflective Thinking6) The principal lender-savers areA) governments.B) businesses.C) households.D) foreigners.Answer: CAACSB: Application of Knowledge7) Which of the following can be described as direct finance?A) You take out a mortgage from your local bank.B) You borrow $2500 from a friend.C) You buy shares of common stock in the secondary market.D) You buy shares in a mutual fund.Answer: BAACSB: Analytical Thinking8) Assume that you borrow $2000 at 10% annual interest to finance a new business project. For this loan to be profitable, the minimum amount this project must generate in annual earnings isA) $400.B) $201.C) $200.D) $199.Answer: BAACSB: Analytical Thinking9) You can borrow $5000 to finance a new business venture. This new venture will generate annual earnings of $251. The maximum interest rate that you would pay on the borrowed funds and still increase your income isA) 25%.B) 12.5%.C) 10%.D) 5%.Answer: DAACSB: Analytical Thinking10) Which of the following can be described as involving direct finance?A) A corporation issues new shares of stock.B) People buy shares in a mutual fund.C) A pension fund manager buys a short-term corporate security in the secondary market.D) An insurance company buys shares of common stock in the over-the-counter markets. Answer: AAACSB: Analytical Thinking11) Which of the following can be described as involving direct finance?A) A corporation takes out loans from a bank.B) People buy shares in a mutual fund.C) A corporation buys a short-term corporate security in a secondary market.D) People buy shares of common stock in the primary markets.Answer: DAACSB: Analytical Thinking12) Which of the following can be described as involving indirect finance?A) You make a loan to your neighbor.B) A corporation buys a share of common stock issued by another corporation in the primary market.C) You buy a U.S. Treasury bill from the U.S. Treasury at .D) You make a deposit at a bank.Answer: DAACSB: Analytical Thinking13) Which of the following can be described as involving indirect finance?A) You make a loan to your neighbor.B) You buy shares in a mutual fund.C) You buy a U.S. Treasury bill from the U.S. Treasury at Treasury .D) You purchase shares in an initial public offering by a corporation in the primary market. Answer: BAACSB: Analytical Thinking14) Securities are ________ for the person who buys them, but are ________ for the individual or firm that issues them.A) assets; liabilitiesB) liabilities; assetsC) negotiable; nonnegotiableD) nonnegotiable; negotiableAnswer: AAACSB: Reflective Thinking15) With ________ finance, borrowers obtain funds from lenders by selling them securities in the financial markets.A) activeB) determinedC) indirectD) directAnswer: DAACSB: Application of Knowledge16) With direct finance, funds are channeled through the financial market from the ________ directly to the ________.A) savers, spendersB) spenders, investorsC) borrowers, saversD) investors, saversAnswer: AAACSB: Reflective Thinking17) Distinguish between direct finance and indirect finance. Which of these is the most important source of funds for corporations in the United States?Answer: With direct finance, funds flow directly from the lender/saver to the borrower. With indirect finance, funds flow from the lender/saver to a financial intermediary who then channels the funds to the borrower/investor. Financial intermediaries (indirect finance) are the major source of funds for corporations in the U.S.AACSB: Reflective Thinking2.2 Structure of Financial Markets1) Which of the following statements about the characteristics of debt and equity is FALSE?A) They can both be long-term financial instruments.B) They can both be short-term financial instruments.C) They both involve a claim on the issuer's income.D) They both enable a corporation to raise funds.Answer: BAACSB: Reflective Thinking2) Which of the following statements about the characteristics of debt and equities is TRUE?A) They can both be long-term financial instruments.B) Bond holders are residual claimants.C) The income from bonds is typically more variable than that from equities.D) Bonds pay dividends.Answer: AAACSB: Reflective Thinking3) Which of the following statements about financial markets and securities is TRUE?A) A bond is a long-term security that promises to make periodic payments called dividends to the firm's residual claimants.B) A debt instrument is intermediate term if its maturity is less than one year.C) A debt instrument is intermediate term if its maturity is ten years or longer.D) The maturity of a debt instrument is the number of years (term) to that instrument's expiration date.Answer: DAACSB: Reflective Thinking4) Which of the following is an example of an intermediate-term debt?A) a fifteen-year mortgageB) a sixty-month car loanC) a six-month loan from a finance companyD) a thirty-year U.S. Treasury bondAnswer: BAACSB: Analytical Thinking5) If the maturity of a debt instrument is less than one year, the debt is calledA) short-term.B) intermediate-term.C) long-term.D) prima-term.Answer: AAACSB: Application of Knowledge6) Long-term debt has a maturity that isA) between one and ten years.B) less than a year.C) between five and ten years.D) ten years or longer.Answer: DAACSB: Application of Knowledge7) When I purchase ________, I own a portion of a firm and have the right to vote on issues important to the firm and to elect its directors.A) bondsB) billsC) notesD) stockAnswer: DAACSB: Application of Knowledge8) Equity holders are a corporation's ________. That means the corporation must pay all of its debt holders before it pays its equity holders.A) debtorsB) brokersC) residual claimantsD) underwritersAnswer: CAACSB: Reflective Thinking9) Which of the following benefits directly from any increase in the corporation's profitability?A) a bond holderB) a commercial paper holderC) a shareholderD) a T-bill holderAnswer: CAACSB: Reflective Thinking10) A financial market in which previously issued securities can be resold is called a ________ market.A) primaryB) secondaryC) tertiaryD) used securitiesAnswer: BAACSB: Application of Knowledge11) An important financial institution that assists in the initial sale of securities in the primary market is theA) investment bank.B) commercial bank.C) stock exchange.D) brokerage house.Answer: AAACSB: Application of Knowledge12) When an investment bank ________ securities, it guarantees a price for a corporation's securities and then sells them to the public.A) underwritesB) undertakesC) overwritesD) overtakesAnswer: AAACSB: Application of Knowledge13) Which of the following is NOT a secondary market?A) foreign exchange marketB) futures marketC) options marketD) IPO marketAnswer: DAACSB: Reflective Thinking14) ________ work in the secondary markets matching buyers with sellers of securities.A) DealersB) UnderwritersC) BrokersD) ClaimantsAnswer: CAACSB: Application of Knowledge15) A corporation acquires new funds only when its securities are sold in theA) primary market by an investment bank.B) primary market by a stock exchange broker.C) secondary market by a securities dealer.D) secondary market by a commercial bank.Answer: AAACSB: Reflective Thinking16) A corporation acquires new funds only when its securities are sold in theA) secondary market by an investment bank.B) primary market by an investment bank.C) secondary market by a stock exchange broker.D) secondary market by a commercial bank.Answer: BAACSB: Reflective Thinking17) An important function of secondary markets is toA) make it easier to sell financial instruments to raise funds.B) raise funds for corporations through the sale of securities.C) make it easier for governments to raise taxes.D) create a market for newly constructed houses.Answer: AAACSB: Reflective Thinking18) Secondary markets make financial instruments moreA) solid.B) vapid.C) liquid.D) risky.Answer: CAACSB: Reflective Thinking19) A liquid asset isA) an asset that can easily and quickly be sold to raise cash.B) a share of an ocean resort.C) difficult to resell.D) always sold in an over-the-counter market.Answer: AAACSB: Reflective Thinking20) The higher a security's price in the secondary market the ________ funds a firm can raise by selling securities in the ________ market.A) more; primaryB) more; secondaryC) less; primaryD) less; secondaryAnswer: AAACSB: Reflective Thinking21) When secondary market buyers and sellers of securities meet in one central location to conduct trades the market is called a(n)A) exchange.B) over-the-counter market.C) common market.D) barter market.Answer: AAACSB: Application of Knowledge22) In a(n) ________ market, dealers in different locations buy and sell securities to anyone who comes to them and is willing to accept their prices.A) exchangeB) over-the-counterC) commonD) barterAnswer: BAACSB: Application of Knowledge23) Forty or so dealers establish a "market" in these securities by standing ready to buy and sell them.A) secondary stocksB) surplus stocksC) U.S. government bondsD) common stocksAnswer: CAACSB: Application of Knowledge24) Which of the following statements about financial markets and securities is TRUE?A) Many common stocks are traded over-the-counter, although the largest corporations usually have their shares traded at organized stock exchanges such as the New York Stock Exchange. B) As a corporation gets a share of the broker's commission, a corporation acquires new funds whenever its securities are sold.C) Capital market securities are usually more widely traded than shorter-term securities and so tend to be more liquid.D) Prices of capital market securities are usually more stable than prices of money market securities, and so are often used to hold temporary surplus funds of corporations.Answer: AAACSB: Reflective Thinking25) A financial market in which only short-term debt instruments are traded is called the________ market.A) bondB) moneyC) capitalD) stockAnswer: BAACSB: Analytical Thinking26) Equity instruments are traded in the ________ market.A) moneyB) bondC) capitalD) commoditiesAnswer: CAACSB: Analytical Thinking27) Because these securities are more liquid and generally have smaller price fluctuations, corporations and banks use the ________ securities to earn interest on temporary surplus funds.A) money marketB) capital marketC) bond marketD) stock marketAnswer: AAACSB: Reflective Thinking28) Corporations receive funds when their stock is sold in the primary market. Why do corporations pay attention to what is happening to their stock in the secondary market? Answer: The existence of the secondary market makes their stock more liquid and the price in the secondary market sets the price that the corporation would receive if they choose to sell more stock in the primary market.AACSB: Reflective Thinking29) Describe the two methods of organizing a secondary market.Answer: A secondary market can be organized as an exchange where buyers and sellers meet in one central location to conduct trades. An example of an exchange is the New York Stock Exchange. A secondary market can also be organized as an over-the-counter market. In this type of market, dealers in different locations buy and sell securities to anyone who comes to them and is willing to accept their prices. An example of an over-the-counter market is the federal funds market.AACSB: Reflective Thinking2.3 Financial Market Instruments1) Prices of money market instruments undergo the least price fluctuations because ofA) the short terms to maturity for the securities.B) the heavy regulations in the industry.C) the price ceiling imposed by government regulators.D) the lack of competition in the market.Answer: AAACSB: Reflective Thinking2) U.S. Treasury bills pay no interest but are sold at a ________. That is, you will pay a lower purchase price than the amount you receive at maturity.A) premiumB) collateralC) defaultD) discountAnswer: DAACSB: Analytical Thinking3) U.S. Treasury bills are considered the safest of all money market instruments because there isa low probability ofA) defeat.B) default.C) desertion.D) demarcation.Answer: BAACSB: Analytical Thinking4) A debt instrument sold by a bank to its depositors that pays annual interest of a given amount and at maturity pays back the original purchase price is calledA) commercial paper.B) a certificate of deposit.C) a municipal bond.D) federal funds.Answer: BAACSB: Analytical Thinking5) A short-term debt instrument issued by well-known corporations is calledA) commercial paper.B) corporate bonds.C) municipal bonds.D) commercial mortgages.Answer: AAACSB: Analytical Thinking6) ________ are short-term loans in which Treasury bills serve as collateral.A) Repurchase agreementsB) Negotiable certificates of depositC) Federal fundsD) U.S. government agency securitiesAnswer: AAACSB: Analytical Thinking7) Collateral is ________ the lender receives if the borrower does not pay back the loan.A) a liabilityB) an assetC) a presentD) an offeringAnswer: BAACSB: Analytical Thinking8) Federal funds areA) funds raised by the federal government in the bond market.B) loans made by the Federal Reserve System to banks.C) loans made by banks to the Federal Reserve System.D) loans made by banks to each other.Answer: DAACSB: Analytical Thinking9) An important source of short-term funds for commercial banks are ________ which can be resold on the secondary market.A) negotiable CDsB) commercial paperC) mortgage-backed securitiesD) municipal bondsAnswer: AAACSB: Application of Knowledge10) Which of the following are short-term financial instruments?A) a repurchase agreementB) a share of Walt Disney Corporation stockC) a Treasury note with a maturity of four yearsD) a residential mortgageAnswer: AAACSB: Analytical Thinking11) Which of the following instruments are traded in a money market?A) state and local government bondsB) U.S. Treasury billsC) corporate bondsD) U.S. government agency securitiesAnswer: BAACSB: Analytical Thinking12) Which of the following instruments are traded in a money market?A) bank commercial loansB) commercial paperC) state and local government bondsD) residential mortgagesAnswer: BAACSB: Analytical Thinking13) Which of the following instruments is NOT traded in a money market?A) residential mortgagesB) U.S. Treasury BillsC) negotiable bank certificates of depositD) commercial paperAnswer: AAACSB: Analytical Thinking14) Bonds issued by state and local governments are called ________ bonds.A) corporateB) TreasuryC) municipalD) commercialAnswer: CAACSB: Application of Knowledge15) Equity and debt instruments with maturities greater than one year are called ________ market instruments.A) capitalB) moneyC) federalD) benchmarkAnswer: AAACSB: Application of Knowledge16) Which of the following is a long-term financial instrument?A) a negotiable certificate of depositB) a repurchase agreementC) a U.S. Treasury bondD) a U.S. Treasury billAnswer: CAACSB: Analytical Thinking17) Which of the following instruments are traded in a capital market?A) U.S. Government agency securitiesB) negotiable bank CDsC) repurchase agreementsD) U.S. Treasury billsAnswer: AAACSB: Analytical Thinking18) Which of the following instruments are traded in a capital market?A) corporate bondsB) U.S. Treasury billsC) negotiable bank CDsD) repurchase agreementsAnswer: AAACSB: Analytical Thinking19) Which of the following are NOT traded in a capital market?A) U.S. government agency securitiesB) state and local government bondsC) repurchase agreementsD) corporate bondsAnswer: CAACSB: Analytical Thinking20) The most liquid securities traded in the capital market areA) corporate bonds.B) municipal bonds.C) U.S. Treasury bonds.D) mortgage-backed securities.Answer: CAACSB: Reflective Thinking21) Mortgage-backed securities are similar to ________ but the interest and principal payments are backed by the individual mortgages within the security.A) bondsB) stockC) repurchase agreementsD) negotiable CDsAnswer: AAACSB: Application of Knowledge2.4 Internationalization of Financial Markets1) Equity of U.S. companies can be purchased byA) U.S. citizens only.B) foreign citizens only.C) U.S. citizens and foreign citizens.D) U.S. mutual funds only.Answer: CAACSB: Diverse and multicultural work environments2) One reason for the extraordinary growth of foreign financial markets isA) decreased trade.B) increases in the pool of savings in foreign countries.C) the recent introduction of the foreign bond.D) slower technological innovation in foreign markets.Answer: BAACSB: Diverse and multicultural work environments3) Bonds that are sold in a foreign country and are denominated in the country's currency in which they are sold are known asA) foreign bonds.B) Eurobonds.C) equity bonds.D) country bonds.Answer: AAACSB: Application of Knowledge4) Bonds that are sold in a foreign country and are denominated in a currency other than that of the country in which it is sold are known asA) foreign bonds.B) Eurobonds.C) equity bonds.D) country bonds.Answer: BAACSB: Application of Knowledge5) If Microsoft sells a bond in London and it is denominated in dollars, the bond is aA) Eurobond.B) foreign bond.C) British bond.D) currency bond.Answer: AAACSB: Reflective Thinking6) U.S. dollar deposits in foreign banks outside the U.S. or in foreign branches of U.S. banks are calledA) Atlantic dollars.B) Eurodollars.C) foreign dollars.D) outside dollars.Answer: BAACSB: Application of Knowledge7) If Toyota sells a $1000 bond in the United States, the bond is aA) foreign bond.B) Eurobond.C) Tokyo bond.D) currency bond.Answer: AAACSB: Application of Knowledge8) Distinguish between a foreign bond and a Eurobond.Answer: A foreign bond is sold in a foreign country and priced in that country's currency. A Eurobond is sold in a foreign country and priced in a currency that is not that country's currency. AACSB: Reflective Thinking2.5 Function of Financial Intermediaries: Indirect Finance1) The process of indirect finance using financial intermediaries is calledA) direct lending.B) financial intermediation.C) resource allocation.D) financial liquidation.Answer: BAACSB: Reflective Thinking2) In the United States, loans from ________ are far ________ important for corporate finance than are securities markets.A) government agencies; moreB) government agencies; lessC) financial intermediaries; moreD) financial intermediaries; lessAnswer: CAACSB: Reflective Thinking3) The time and money spent in carrying out financial transactions are calledA) economies of scale.B) financial intermediation.C) liquidity services.D) transaction costs.Answer: DAACSB: Application of Knowledge4) Economies of scale enable financial institutions toA) reduce transactions costs.B) avoid the asymmetric information problem.C) avoid adverse selection problems.D) reduce moral hazard.Answer: AAACSB: Reflective Thinking5) An example of economies of scale in the provision of financial services isA) investing in a diversified collection of assets.B) providing depositors with a variety of savings certificates.C) hiring more support staff so that customers don't have to wait so long for assistance.D) spreading the cost of writing a standardized contract over many borrowers.Answer: DAACSB: Reflective Thinking6) Financial intermediaries provide customers with liquidity services. Liquidity servicesA) make it easier for customers to conduct transactions.B) allow customers to have a cup of coffee while waiting in the lobby.C) are a result of the asymmetric information problem.D) are another term for asset transformation.Answer: AAACSB: Reflective Thinking7) The process where financial intermediaries create and sell low-risk assets and use the proceeds to purchase riskier assets is known asA) risk sharing.B) risk aversion.C) risk neutrality.D) risk selling.Answer: AAACSB: Analytical Thinking8) The process of asset transformation refers to the conversion ofA) safer assets into risky assets.B) safer assets into safer liabilities.C) risky assets into safer assets.D) risky assets into risky liabilities.Answer: CAACSB: Analytical Thinking9) Reducing risk through the purchase of assets whose returns do not always move together isA) diversification.B) intermediation.C) intervention.D) discounting.Answer: AAACSB: Analytical Thinking10) The concept of diversification is captured by the statementA) don't look a gift horse in the mouth.B) don't put all your eggs in one basket.C) it never rains, but it pours.D) make hay while the sun shines.Answer: BAACSB: Reflective Thinking11) Risk sharing is profitable for financial institutions due toA) low transactions costs.B) asymmetric information.C) adverse selection.D) moral hazard.Answer: AAACSB: Reflective Thinking12) Typically, borrowers have superior information relative to lenders about the potential returns and risks associated with an investment project. The difference in information is calledA) moral selection.B) risk sharing.C) asymmetric information.D) adverse hazard.Answer: CAACSB: Analytical Thinking13) If bad credit risks are the ones who most actively seek loans and, therefore, receive them from financial intermediaries, then financial intermediaries face the problem ofA) moral hazard.B) adverse selection.C) free-riding.D) costly state verification.Answer: BAACSB: Reflective Thinking14) The problem created by asymmetric information before the transaction occurs is called________, while the problem created after the transaction occurs is called ________.A) adverse selection; moral hazardB) moral hazard; adverse selectionC) costly state verification; free-ridingD) free-riding; costly state verificationAnswer: AAACSB: Application of Knowledge15) Adverse selection is a problem associated with equity and debt contracts arising fromA) the lender's relative lack of information about the borrower's potential returns and risks of his investment activities.B) the lender's inability to legally require sufficient collateral to cover a 100% loss if the borrower defaults.C) the borrower's lack of incentive to seek a loan for highly risky investments.D) the borrower's lack of good options for obtaining funds.Answer: AAACSB: Reflective Thinking16) An example of the problem of ________ is when a corporation uses the funds raised from selling bonds to fund corporate expansion to pay for Caribbean cruises for all of its employees and their families.A) adverse selectionB) moral hazardC) risk sharingD) credit riskAnswer: BAACSB: Ethical understanding and reasoning abilities17) Banks can lower the cost of information production by applying one information resource to many different services. This process is calledA) economies of scale.B) asset transformation.C) economies of scope.D) asymmetric information.Answer: CAACSB: Application of Knowledge18) Conflicts of interest are a type of ________ problem that can happen when an institution provides multiple services.A) adverse selectionB) free-ridingC) discountingD) moral hazardAnswer: DAACSB: Ethical understanding and reasoning abilities19) Studies of the major developed countries show that when businesses go looking for funds to finance their activities they usually obtain these funds fromA) government agencies.B) equities markets.C) financial intermediaries.D) bond markets.Answer: CAACSB: Application of Knowledge20) The countries that have made the least use of securities markets are ________ and ________; in these two countries finance from financial intermediaries has been almost ten times greater than that from securities markets.A) Germany; JapanB) Germany; Great BritainC) Great Britain; CanadaD) Canada; JapanAnswer: AAACSB: Application of Knowledge21) Although the dominance of ________ over ________ is clear in all countries, the relative importance of bond versus stock markets differs widely.A) financial intermediaries; securities marketsB) financial intermediaries; government agenciesC) government agencies; financial intermediariesD) government agencies; securities marketsAnswer: AAACSB: Reflective Thinking22) Because there is an imbalance of information in a lending situation, we must deal with the problems of adverse selection and moral hazard. Define these terms and explain how financial intermediaries can reduce these problems.Answer: Adverse selection is the asymmetric information problem that exists before the transaction occurs. For lenders, it is the difficulty in judging a good credit risk from a bad credit risk. Moral hazard is the asymmetric information problem that exists after the transaction occurs. For lenders, it is the difficulty in making sure the borrower uses the funds appropriately. Financial intermediaries can reduce adverse selection through intensive screening and can reduce moral hazard by monitoring the borrower.AACSB: Reflective Thinking2.6 Types of Financial Intermediaries1) Financial institutions that accept deposits and make loans are called ________ institutions.A) investmentB) contractual savingsC) depositoryD) underwritingAnswer: CAACSB: Application of Knowledge2) Thrift institutions includeA) banks, mutual funds, and insurance companies.B) savings and loan associations, mutual savings banks, and credit unions.C) finance companies, mutual funds, and money market funds.D) pension funds, mutual funds, and banks.Answer: BAACSB: Analytical Thinking3) Which of the following is a depository institution?A) a life insurance companyB) a credit unionC) a pension fundD) a mutual fundAnswer: BAACSB: Analytical Thinking。

Part21. Multiple Choice(1) According to Basel Accord issued in 1988, the capital adequacy ratio should be higher than________.A. 6%B. 7%C. 8%D. 9%(2)Basle Accord issued in 1988 divides the capital of a bank into ________.A. tier 1 and 2B. pass and special mentionC. outstanding and excellentD. standard andsubstandard(3) In CAMELS system, the best performance is rated as ________.A. 1B. passC. 5D. outstanding(4) In China, _________has the power to carry out financial supervision obligation.A. central bankB. the CBRCC. fiscal departmentD. the State Council(5) The 'C' in CAMELS system refers to _________.A. capacityB. currencyC. capitalD. capability(6) There are _______kinds of risk weight about assets quality in Basel Accord.A. 3B. 4C. 5D. 6(7) ________is the core of bank licensing process.A. An information pre-filing stageB. The application stageC. The organizing stageD. The operation stage(8) The supervision authority will not scrutinize __________ when it licenses a proposed bank. A.the qualification of managers B. business site C. the source of capital D. operation plan(9) The aim of financial supervision is ________.A. to save failing banksB. to protect all savings accountC. to maintain reputation of financial systemD. to control asset quality(10) In China, the minimum capital requirement for a national-level commercial bank isRMB________billion. A. 1 B. 150 C. 180 D. 2002. True or False(1) The banking organizations are not so highly geared as the industrial companies.A. trueB. false(2) The limit on the deposit insurance coverage also serves to minimize moral hazard on the part ofthe depositors. A. true B. false(3) Bank charter is usually granted by the central bank or a separate supervisory body of a country.A. trueB. false(4) Banking, by its nature, entails taking a wide array of risks.A. trueB. false(5) The most important types of operational risk involve breakdowns in external controls or corporate governance. A. true B. false(6) Reputation risk is particularly damaging for banks since the nature of their business requiresmaintaining the confidence of depositors, creditors, and the general marketplace.A. trueB. false(7) From the bank supervisor's perspective, the most attractive approach is to try to encourage theassisted merger of the failing bank into a sound institution.A. trueB. false(8) If a bank has already licensed, it need not inform the supervision authority that the director or thesenior management has changed. A. true B. false(9) The banking supervision authority in a country has the right to supervise all kinds of financial institutions. A. true B. false(10) Selling unprofitable assets is a kind of measures to improve the bank's capital level.A. trueB. false3. ClozePassage 1positions rates visible increase openBanks face a risk of losses in ____1____ arising from movements in exchange rates. Established accounting principles cause these risks to be typically most ___2____ in a bank's trading activities. Banks act as "market-makers" in foreign exchange markets by quoting ____3_ to their customers and by taking _____4___ positions in foreign currencies. The risks inherent in foreign exchange business, particularly in running open foreign exchange positions, ____5____ during periods of instability in exchange rates.Passage 2credit require exceptions portfolio performance　Under CAMELS rating system, banks rated "1" are ____1___in every aspect, while those rated "5" are likely to___2____ in the absence of immediate and substantial corrective action and external support. The composite is not determined by calculating a simple____3___ of the separate components. Rather, it is the result of a __4_____assessment by the examiner-in-charge of the overall condition of the bank. The composite includes additional considerations, such as the bank's competitive position, including its future prospects and trends in its financial performance. Thus, the summary rating provides a broad ___5____of the examiner's findings regarding a bank's overall financial condition and immediate prospects.Passage3sound average fail measure comprehensive A key ingredient of a good lending function is a strong and independent credit administration department. This department's functions___1___ independent analysts charged with the review and analysis of borrower's financial condition and prospects. The department also evaluates loan___2____and adherence to loan covenants, reviews statistical data and trends in the portfolio, and identifies __3____to policies and procedures. Much of this information is regularly shared with senior management and, where necessary, with the board of directors. The internal review should also focus on the types of ____4____being extended, the level of risk concentration in particular areas, the loss experience in various segments of the____5__, and the need for changes in credit standards and guidelines.4. Translation(1) Effective supervision of banking organizations is an essential component of a strong economic environment in that the banking system plays a central role in making payments and mobilizing and distributing savings.　 (2) Deciding on the appropriate level of systemic protection is by and large a policy question to be taken by the relevant authorities (including the central bank), particularly where it may result in a commitment of public funds.　(3) A key aspect of the licensing process is an evaluation of the competence, integrity and qualifications of proposed management, including the board of directors.　(4) If there will be a corporate shareholder with a significant holding, an assessment of the financial condition of the corporate parent should be made, including its capital strength.　(5) The host authority should also consider whether the home country supervisor capably performs its supervisory task on a consolidated basis.　(6) Serious banking problems have arisen from the failure of banks to recognize impaired assets, to create reserves for writing off these assets, and to suspend recognition of interest income when appropriate.(7) Banks are particularly susceptible to legal risks when entering new types of transactions and when the legal right of a counterparty to enter into a transaction is not established.　(8) Under the loan classification system, criteria used to assign credit quality ratings are primarily based upon the degree of risk and the likelihood of orderly repayment, and their effect on a bank's safety and soundness.　 (9) Pending factors may include a proposed merger or acquisition, liquidation proceedings, capital injection, preferring liens on additional collateral, or refinancing plans.　(10) Bank failures can serve a useful purpose by rewarding strong managements and penalizing weak ones.(11) Prudential requirements cover a broad spectrum of banking activities and play an important part in assuring the effectiveness of the supervisory process. Of which, there are five key areas where the extensive prudential policies have been implemented by bank regulators of most countries, these are capital adequacy, asset concentrations, loan classification system and adequacy of loan loss reserves, liquidity and risk management and internal controls.　(12) Banking supervisors recognize that banking is a business of taking risks in order to earn profit and assumes varied and complex risks that warrant a risk-oriented supervisory approach. Consequently, bank regulators in many countries have adopted risk-based approach to supervise banks. Under this approach, supervisors do not attempt to restrict risk-taking but rather determine whether banks identify, understand and control the risks they assume.　(13) Supervisors must assess the ownership structure of banking organizations including the bank's direct and indirect controlling and major direct or indirect shareholders. This assessment should review the controlling shareholders' past banking and non-banking business ventures and their integrity and standing in the business community, as well as the financial strength of all major shareholders and their ability to provide further financial support should it be needed. As part of theprocess of checking integrity and standing, the supervisor should determine the source of the initial capital to be invested. Where a bank will be part of a larger organization, licensing and supervisory authorities should determine that the ownership and organizational structure will not be a source of weakness and will minimize the risk to depositors of contagion from the activities conducted by other entities within the larger organization. The other interests o f the bank's major shareholders should be reviewed and the financial condition of these related entities assessed.　5. Reading ComprehensionPassage OneBanking organizations are highly geared, much more than commercial or industrial companies. They have custody of large volumes of monetary items, which makes them vulnerable to misappropriation and fraud. They therefore need to establish formal operating procedures, well defined limits for individual discretion and rigorous systems of internal control. Banking organizations engage in a large volume and variety of transactions. This necessarily requires complex accounting and internal control systems and widespread use of electronic data processing. Banking organizations often assume significant commitments without any transfer of funds. These items may not involve accounting entries and consequently the failure to record such items may be difficult to detect. And most importantly, the failure of a bank unlike most commercial firms, affects more than the fortunes of its shareholders and creditors, and may destabilize the whole economy. Effective supervision of banking organizations is an essential component of a strong economic environment in that the banking system plays a central role in making payments and mobilizing and distributing savings. Strong and effective banking supervision provides a public good that may not be readily available in the marketplace. Along with effective macroeconomic policy, it is critical to financial stability in any country. While the cost of banking supervision is indeed high, the cost of poor supervision has proved to be even higher.(1) Banking organizations are highly geared, much more than commercial or industrial companies. The implication of this sentence means________.A. Banking organizations are, in nature, companies like commercial or industrial companies.B. Banking organizations are profit-seeking companies like commercial or industrial companies.C. Banking organizations carry more liabilities than other commercial or industrial companies.D. Banking organizations carry fewer liabilities than other commercial or industrial companies.(2) Why is it necessary to require a bank to establish complex accounting and internal control systems? ____.A. Because banking organizations make trade business with other commercial companies everyday.B. Because banking organizations are like other commercial companies and have a large number of commercial transactions everyday.C. Because banking organizations have the same business transactions with larger commercial companies.D. Because banking organizations engage in a large amount of funds and variety of fund transactions.(3) The failure of a bank _____.A. has little influence to his shareholders or creditors.B. has the same influence to his shareholders or creditors with most commercial firms.C. may not destabilize the country's economy.D. has substantial influence to his shareholders orcreditors.(4) Strong and effective banking supervision is an essential component of a strong economic environment because banking system plays an important role in ________.A. making paymentsB. mobilizing savingsC. distributing savingsD. all of the above(5) What's the main idea of this passage? ________.A. It tells that banks are like other commercial or industrial companies.B. It tells that banks are unlike other commercial firms.C. It tells that banks are much more important than other commercial firms.D. It tells the reasons why banks need strong and effective supervision.Passage Two Capital is at the top of any bank supervisor's list. The most basic form of capital is equity capital, which is the shareholder's financial interest or net worth. Equity capital serves several purposes: it provides a permanent source of revenue for the shareholders and funding for the bank; it is available to bear risk and absorb losses; it provides a base for further growth; and it gives the shareholders reason to ensure that the bank is managed in a safe and sound manner. Minimum capital adequacy ratios are necessary to reduce the risk of loss to depositors, creditors and other stockholders of the bank and to help supervisors pursue the overall stability of the banking industry. The Basle Committee's "Core Principles for Effective Banking Supervision" requires that supervisors set prudent and appropriate minimum capital adequacy requirements and encourage banks to operate with capital in excess of the minimum. When it appears appropriate due to the particular risk profile, uncertainties regarding the asset quality, risk concentrations or other adverse characteristics of a bank's financial condition, considerations of requiring higher than minimum capital ratios are encouraged. If a bank's ratio falls below the minimum, banking supervisors will act to ensure that it has realistic plans to restore the minimum in a timely fashion, or may consider putting additional restrictions on the bank's operations.(1) How does the bank supervisor concern the capital of a commercial bank?A. Bank supervisor puts the capital to the most important place of his concerns.B. Bank supervisor cares less about the capital of a commercial bank.C. Bank supervisor lists the capital in the first line of his notebook.D. Bank supervisor does not concern the capital too much.(2) Which is NOT true about equity capital of a bank?A. It can bring income for its shareholders.B. It can provide financial support to a bank.C. It can improve the development of a bank.D. It cannot indicate whether a bank is managed in a safe or sound manner.(3) What's the use of minimum capital adequacy ratio for a bank? The ratio is used ________.A. to measure whether a bank is managed in a safe way.B. to reduce risks to depositors and creditors of a bank.C. to help supervisors pursue the stability of banking industry.D. all of the above(4) Supervisors usually encourage commercial banks to operate with capital ________the minimum standard. A. above B. below C. within D. equal to(5) This passage tells us about the importance of ________.A. capital adequacyB. minimum capital ratioC. equity capitalD. Core Principles for Effective Banking SupervisionPassage Three From a procedural standpoint, it is not necessary for examiners to analyze every single credit on the books of the bank, since a fairly reliable picture can be obtained by analyzing the bank's largest and most important credits. In general, examiners aim to evaluate a minimum of 50 percent of the value of a bank's loan portfolio, generally the commercial loan portfolio. At banks with recognized problems, a higher level of coverage, perhaps up to 80 percent, would be sought. To achieve the appropriate level of coverage, a minimum value of a loan to an individual borrower or group of borrowers is established, and this minimum is called the "line limit". It normally would equal l/2 percent to l percent of the bank's total capital funds. Once the line limit is established, examiners will read and evaluate all loans at or over that minimum amount. In addition, all previously identified problem loans and all high risk credits, including those seriously past due or delinquent, would also be evaluated. In cases where bank examiners have confirmed that a bank has a well-developed and effective internal loan review function, they also employ a statistical sampling program. In this program, a random sample of credits in the bank's loan portfolio is considered; this sample is sufficiently large to provide a high degree of confidence that it is representative of the entire loan portfolio. The credits are then read and the examiners' rating of each loan is compared with the bank's internal risk rating for the same credits. If the examiners' ratings agree with the bank's, then examiners will use the bank's internal risk reviews to round out their review of the bank's loan portfolio.(1) To achieve a fairly reliable conclusion about a bank's asset quality, examiners shouldanalyze________.A. every single credit on the books of the bankB. the bank's largest and most important creditsC. the terms and structure of the loansD. the uses of the loans(2) Generally, examiners evaluate at least ________of the value of a bank's loan portfolio.A. 80%B. 70%C. 60%D. 50%(3) The line limit of a loan to an individual borrower or group of borrowers for examiners to cover normally equals to ________of the bank's total capital funds.A. 10%B. 8%C. 0.5%-1%D. 6%(4) Besides the largest and important credits, examiners should also analyze ________.A. previously identified problem loansB. all high risk loansC. past due loansD. all of the above(5) In the sentence '…examiners will use the bank's internal risk reviews to round out their review of the bank's loan portfolio', 'round out' means________.A. to become roundB. to completeC. to collect togetherD. to travel aroundPart31. Multiple Choice(1) The ways of correcting deficit include several measures except________.A. import restrictionB. export restrictionC. monetary measuresD. devaluation(2) The prefix "Euro" in the word "Eurocurrency" means ________.A. EuropeanB. Some country in EuropeC. OffshoreD. All the countries in Europe(3) China adopts ________ method. A. the direct quotation B. the indirect quotationC. themean quotation D. the dollar quotation(4) In ________ the customers have the option granted by the bank to perform or to give up the contracts.A. spot transactionsB. forward transactionsC. option forward transactionsD. swap transactions(5) ________ is not the member of Group of TenA. LuxembourgB. NetherlandsC. The United StatesD. Switzerland(6) When the outflows are smaller than inflows in a currency, then there is　________.A. a short positionB. a long positionC. an exchange positionD. an interest rate position(7) In facing foreign exchange risks, a manager may choose to cover using ________.A. forward marketB. money marketC. either forward market or money marketD. capital market(8) Accepting or creating a swap position depends on the manager's forecast for ______ .A. the particular maturity dates of the instrumentsB. interest rate differentials for a future periodC. the operation of the multinational firmD. exchange rates relative to francs(9) In the forward market the exchange risk is covered by ________.A. buying the inflow currency on the specific dateB. selling the inflow currency against the outflow currencyC. borrowing a large amount of currency at a later timeD. expecting the inflow currency against the outflow currency(10) The ________is regarded as the beginning of the reconstruction of the postwar financial system.A. Bretton WoodsB. IMFC. IBRDD. Bretton Wooods Agreement(11) Direct quotation is given in terms of the amount of ________ currency required to buy one unit of a ________ currency. A. local; foreign B. foreign; local C. local; local D. foreign; foreign(12) you will make money if you buy a futures contract ________.A. (go short) and the futures price goes upB. (go short) and the futures price goes downC. (go long) and the futures price goes upD. (go long) and the futures price does not change(13) If you sell a futures contract (go short) and the futures price ______, you will surely lose money.A. goes upB. goes downC. does not changeD. changes greatly(14) A balance of payments statement shows a country's ___ foreign countries during a given periodof time. A. receipts and payments of B. receipts and payments fromC. receipts from, and payments toD. receipts to, and payments from(15) ________ referred to as foreign exchange.A.The currency of a foreign country isB.The convertible currency of a foreign country isC.The process of exchanging foreign currency isD. Both the currency of a foreign country and theprocess of exchanging it for the currency of another country are(16) Foreign exchange rates are determined ________.A. by supply and demand in the same way that prices of ordinary commodities are determined by supply and demandB. by supply and demand in a different way that prices of or dinaommodities are determined by supply and demandC. by interest ratesD. by inflow and outflow of money(17) If we import more goods than we export, there will be ________.A. a deficit in balance of paymentB. an adverse balance of tradeC. a surplus in balance of paymentD. a favorable balance of trade(18) If China has a favorable movement in the balance of payments, then ________.A. the exchange rate will appreciateB. the exchange rate will depreciateC. the RMB exchange rate will appreciateD. the foreign exchange rate will depreciate(19) ________exchange rates system has the advantage of avoiding the competitive depreciation of exchange rates. A. Floating B. Managed floating C. Fixed D. Flexible(20) ______ exchange rates system has the advantage of being free to carry out an independent monetary policy, without too much attention to the balance of payments.A. FloatingB. PeggedC. FixedD. Any2. True or False(1) International financial leasing is one example of international commercialloans.A. trueB. false(2) The registration certificate for external debt shall be formulated, signed and issued by the Ministry of Foreign Trade and Economic Cooperation.A. trueB. false(3) Domestic entities have freedom in leasing, lending or cross-using their foreign exchange accounts.A. trueB. false(4) The agents of transactions have the obligation of reporting balance of payments statistics to the relevant authorities.A. trueB. false(5) The exchange rate of the Chinese currency is determined by the inter-bank foreign exchange market.A. trueB. false(6) The foreign exchange market is not a physical place but a network of telephones & telex systems connecting large banks all over the world.A. trueB. false(7) When a firm is subject to changes in interest rate differentials, it has a swap position.A. trueB. false(8) Foreign-funded enterprises may retain their export earnings if those earnings do not exceed the limit set by the SAFE.A. trueB. false(9) In order to be marketable on exchanges, options are standardized in terms of quantity, settlement dates and quotation.A. trueB. false(10) The obligation to exercise a purchase of a certain amount of a currency at a strike price at a prearranged expiry date is called a call option.A. trueB. false(11) Swaps are the simultaneous purchase and sale of identical amounts of a currency for different value dates. A. true B. false(12) Outright forward operations can be hedges, and safe deals if they lack a commercial or financial background.A. trueB. false(13) Indirect quotation means that the exchange rates give the equivalent of a certain quantity of the foreign currency quoted. A. true B. false(14) Arbitrage is the process of taking advantage of price differences in different places.A. trueB. false(15) The Chinese currency is the RMB, and China has maintained a unified fixed foreign exchange rate since Jan. 1994. A. true B. false3. ClozePassage1line empowers letter combined made guarantorsrevenue exceed mortgages entitiesExternal guarantees refer to those in the form of guarantee ___1_____ , stand-by letters of credit, promissory notes, checks and drafts,___2____ on real properties, hypothecation on movables, provided by domestic _____3___ to institutions outside China or foreign-funded financial institutions inside China with the pledges that when the debtor fails to repay in _____4___with the contract,the ___5_____shall perform the obligation of repayment. The People's Bank of China _____6_ the SAFE to be responsible for the examination, approval, administration and registration of guarantees made for external liabilities. The ___7_____ balance of guarantees _____8___ overseas, foreign exchange guarantees within Chinese territory and foreign exchange debts of a financial institution may not exceed 20 times their foreign exchange funds. The balance of guarantees made overseas provided by a non-financial institution shall not ____9____ 50% of its net assets or its foreign exchange ___10_____ in the previous year. Guarantors may not provide guarantee for loss-making enterprises. Passage2convert francs case instruct another convertibilityresident consent bank notes non-residentA currency, whether in foreign exchange or ___1_____, is usually called convertible if the person holding it can ____2___ it, in other words change it, freely into ____3____ currency. A distinction needs to be made, however, between unrestricted ____4____ and the various forms of partial convertibility. The Swiss ____5____ , for example, is fully convertible whether the holder is______6__ in Switzerland or abroad, and regardless of whether current payments or financial transactions are concerned. Many countries, on the other hand, recognize only external, or ___7____, convertibility. Until October 1979, for instance, this was still the ___8____ with the United Kingdom: if a German exporter, say, had sterling funds in a British bank, he could (and can) simply ___9____the bank to convert his pounds into any other currency and remit the proceeds abroad; but a person domiciled inBritain could not, as a general rule export capital except with the ___10_____of the Bank of England.4. Translation(1) In line with the growth of international trade and the liberalization of capital movements, thevolume of' foreign exchange business grew tremendously inthe course of the Sixties and the earlySeventies.(2) On November 27, 1996, China formally lifted all remaining current account estrictions andbecame an Article VIII member of the International Monetary Fund. (3) Domestic entities may apply with the SAFE for opening a foreign exchange account for currentaccount transactions, the SAFE shall specify receipts and payments scope, operating duration, ceilingof the account balance according to the utilization of the foreign exchange account, and make a clearindication in the foreign exchange account utilization certificate or the foreign exchange registrationcertificate. (4) External guarantee may be offered by qualified financial institutions and enterprises meetingthe government requirements and approved by the SAFE.　(5) The registration of external debt may be performed on a case-by-case basis or periodically,the registration certificate for external debt shall be formulated, signed and issued by the SAFE.　(6) International commercial loans refer to borrowing by domestic entities from financialinstitutions, enterprises, individuals or other economic organizations outside China territory, orforeign-funded financial institutions within the Chinese territory in the form of loans contracted forrepayment in foreign currencies.　(7) All claims to foreign currency payable abroad, whether consisting of funds held (in foreigncurrency) with banks abroad, or bills or cheques, again in foreign currency and payable abroad, aretermed foreign exchange.(8) A currency, whether in foreign exchange or bank notes, is usually called convertible if the person holding it can convert it, in other words change it, freely into another currency.　(9) "Arbitrage" in the original sense thus meant taking quick advantage of price differences prevailing in different markets, a process which of course tended to make such differences disappear.(10) The buyer of an option decides whether or not he will take up (call) or supply (put) the amount ofa currency stipulated in the contract and pays a premium for this right.　5. Reading ComprehensionPassage One In a spot transaction, the settlement and delivery of currencies take place within two business days from the transaction date of the deal. Using a normal definition of two business days, one can see that a Friday deal will be settled on the following Tuesday if the day is a business day of banks. The spot rate, as a rule, consists of five。

“高职高专商务英语专业规划教材”Unit 1 Financial Market Research练习参考答案I.Read through the text and answer the following questions.1.A financial market is a mechanism that allows people to easily buy andsell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis.2.The raising of capital ;the transfer of risk and international trade3.Capital markets,commodity markets,money markets, derivative markets,insurance markets and foreign exchange markets .4.Financial markets fit in the relationship between lenders andborrowers.5.Individuals, companies, governments, municipalities and publiccorporations.II. Paraphrase the following expressions or abbreviations and translate them into ChineseCheck the answers from the Special Term Lists.III. Fill in the blanks with the proper wordsThe global financial crisis, brewing for a while, really started to show its effects in the middle of 2007 and into 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems.On the one hand many people are concerned that those responsible for the financial problems are the ones being bailed out, while on the other hand, a global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world. The problem could have been avoided, if ideologues supporting the current economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns.IV.Translation.1.金融市场包括很多方面，包括资本市场，华尔街，甚至是市场本身。

Chapter 2 Overview of the Financial System2.1 Single Choice1) Every financial market performs the following function:A) It determines the level of interest rates.B) It allows common stock to be traded.C) It allows loans to be made.D) It channels funds from lenders-savers to borrowers-spenders.2) Financial markets have the basic function ofA) bringing together people with funds to lend and people who want to borrow funds.B) assuring that the swings in the business cycle are less pronounced.C) assuring that governments need never resort to printing money.D) both A and B of the above.E) both B and C of the above.3) Which of the following can be described as involving direct finance?A) A corporation's stock is traded in an over-the-counter market.B) People buy shares in a mutual fund.C) A pension fund manager buys commercial paper in the secondary market.D) An insurance company buys shares of common stock in the over-the-counter markets.E) None of the above.4) Which of the following can be described as involving direct finance?A) A corporation's stock is traded in an over-the-counter market.B) A corporation buys commercial paper issued by another corporation.C) A pension fund manager buys commercial paper from the issuing corporation.D) Both A and B of the above.E) Both B and C of the above.5) Which of the following can be described as involving indirect finance?A) A corporation takes out loans from a bank.B) People buy shares in a mutual fund.C) A corporation buys commercial paper in a secondary market.D) All of the above.E) Only A and B of the above.6) Which of the following can be described as involving indirect finance?A) A bank buys a U.S. Treasury bill from one of its depositors.B) A corporation buys commercial paper issued by another corporation.C) A pension fund manager buys commercial paper in the primary market.D) Both A and C of the above.7) Financial markets improve economic welfare becauseA) they allow funds to move from those without productive investment opportunities to those who have such opportunities.B) they allow consumers to time their purchases better.C) they weed out inefficient firms.D) they do all of the above.E) they do A and B of the above.8) A country whose financial markets function poorly is likely toA) efficiently allocate its capital resources.B) enjoy high productivity.C) experience economic hardship and financial crises.D) increase its standard of living.9) Which of the following are securities?A) A certificate of depositB) A share of Texaco common stockC) A Treasury billD) All of the aboveE) Only A and B of the above10) Which of the following statements about the characteristics of debt and equity are true?A) They both can be long-term financial instruments.B) They both involve a claim on the issuer's income.C) They both enable a corporation to raise funds.D) All of the above.E) Only A and B of the above.11) The money market is the market in which _________ are traded.A) new issues of securitiesB) previously issued securitiesC) short-term debt instrumentsD) long-term debt and equity instruments12) Long-term debt and equity instruments are traded in the _________ market.A) primaryB) secondaryC) capitalD) money13) Which of the following are primary markets?A) The New York Stock ExchangeB) The U.S. government bond marketC) The over-the-counter stock marketD) The options marketsE) None of the above14) Which of the following are secondary markets?A) The New York Stock ExchangeB) The U.S. government bond marketC) The over-the-counter stock marketD) The options marketsE) All of the above15) A corporation acquires new funds only when its securities are sold in theA) secondary market by an investment bank.B) primary market by an investment bank.C) secondary market by a stock exchange broker.D) secondary market by a commercial bank.16) Intermediaries who are agents of investors and match buyers with sellers of securities are calledA) investment bankers.B) traders.C) brokers.D) dealers.E) none of the above.17) Intermediaries who link buyers and sellers by buying and selling securities at stated prices are calledA) investment bankers.B) traders.C) brokers.D) dealers.E) none of the above.18) An important financial institution that assists in the initial sale of securities in the primary market is theA) investment bank.B) commercial bank.C) stock exchange.D) brokerage house.19) Which of the following statements about financial markets and securities are true?A) Most common stocks are traded over-the-counter, although the largest corporations have their shares traded at organized stock exchanges such as the New York Stock Exchange.B) A corporation acquires new funds only when its securities are sold in the primary market.C) Money market securities are usually more widely traded than longer-term securities and so tendto be more liquid.D) All of the above are true.E) Only A and B of the above are true.20) Which of the following statements about financial markets and securities are true?A) A bond is a long-term security that promises to make periodic payments called dividends to the firm's residual claimants.B) A debt instrument is intermediate term if its maturity is less than one year.C) A debt instrument is long term if its maturity is ten years or longer.D) The maturity of a debt instrument is the time (term) that has elapsed since it was issued.21) Which of the following statements about financial markets and securities are true?A) Few common stocks are traded over-the-counter, although the over-the-counter markets have grown in recent years.B) A corporation acquires new funds only when its securities are sold in the primary market.C) Capital market securities are usually more widely traded than longer term securities and so tend to be more liquid.D) All of the above are true.E) Only A and B of the above are true.22) Which of the following markets is sometimes organized as an over-the-counter market?A) The stock marketB) The bond marketC) The foreign exchange marketD) The federal funds marketE) all of the above23) Bonds that are sold in a foreign country and are denominated in that country's currency are known asA) foreign bonds.B) Eurobonds.C) Eurocurrencies.D) Eurodollars.24) Bonds that are sold in a foreign country and are denominated in a currency other than that of the country in which they are sold are known asA) foreign bonds.B) Eurobonds.C) Eurocurrencies.D) Eurodollars.25) Financial intermediariesA) exist because there are substantial information and transaction costs in the economy.B) improve the lot of the small saver.C) are involved in the process of indirect finance.D) do all of the above.E) do only A and B of the above.26) The main sources of financing for businesses, in order of importance, areA) financial intermediaries, issuing bonds, issuing stocks.B) issuing bonds, issuing stocks, financial intermediaries.C) issuing stocks, issuing bonds, financial intermediaries.D) issuing stocks, financial intermediaries, issuing bonds.27) The presence of transaction costs in financial markets explains, in part, whyA) financial intermediaries and indirect finance play such an important role in financial markets.B) equity and bond financing play such an important role in financial markets.C) corporations get more funds through equity financing than they get from financial intermediaries.D) direct financing is more important than indirect financing as a source of funds.28) Financial intermediaries can substantially reduce transaction costs per dollar of transactions because their large size allows them to take advantage ofA) poorly informed consumers.B) standardization.C) economies of scale.D) their market power.29) The purpose of diversification is toA) reduce the volatility of a portfolio's return.B) raise the volatility of a portfolio's return.C) reduce the average return on a portfolio.D) raise the average return on a portfolio.30) An investor who puts all her funds into one asset _________ her portfolio's _________.A) increases; diversificationB) decreases; diversificationC) increases; average returnD) decreases; average return31) Through risk-sharing activities, a financial intermediary _________ its own risk and _________ the risks of its customers.A) reduces; increasesB) increases; reducesC) reduces; reducesD) increases; increases32) The presence of _________ in financial markets leads to adverse selection and moral hazardproblems that interfere with the efficient functioning of financial markets.A) noncollateralized riskB) free-ridingC) asymmetric informationD) costly state verification33) When the lender and the borrower have different amounts of information regarding a transaction, _________ is said to exist.A) asymmetric informationB) adverse selectionC) moral hazardD) fraud34) When the potential borrowers who are the most likely to default are the ones most actively seeking a loan, _________ is said to exist.A) asymmetric informationB) adverse selectionC) moral hazardD) fraud35) When the borrower engages in activities that make it less likely that the loan will be repaid, _________ is said to exist.A) asymmetric informationB) adverse selectionC) moral hazardD) fraud36) The concept of adverse selection helps to explainA) which firms are more likely to obtain funds from banks and other financial intermediaries, rather than from the securities markets.B) why indirect finance is more important than direct finance as a source of business finance.C) why direct finance is more important than indirect finance as a source of business finance.D) only A and B of the above.E) only A and C of the above.37) Adverse selection is a problem associated with equity and debt contracts arising fromA) the lender's relative lack of information about the borrower's potential returns and risks of his investment activities.B) the lender's inability to legally require sufficient collateral to cover a 100 percent loss if the borrower defaults.C) the borrower's lack of incentive to seek a loan for highly risky investments.D) none of the above.38) When the least desirable credit risks are the ones most likely to seek loans, lenders are subjectto theA) moral hazard problem.B) adverse selection problem.C) shirking problem.D) free-rider problem.E) principal-agent problem.39) Financial institutions expect thatA) moral hazard will occur, as the least desirable credit risks will be the ones most likely to seek out loans.B) opportunistic behavior will occur, as the least desirable credit risks will be the ones most likely to seek out loans.C) borrowers will commit moral hazard by taking on too much risk, and this is what drives financial institutions to take steps to limit moral hazard.D) none of the above will occur.40) Successful financial intermediaries have higher earnings on their investments because they are better equipped than individuals to screen out good from bad risks, thereby reducing losses due toA) moral hazard.B) adverse selection.C) bad luck.D) financial panics.41) In financial markets, lenders typically have inferior information about potential returns and risks associated with any investment project. This difference in information is calledA) comparative informational disadvantage.B) asymmetric information.C) variant information.D) caveat venditor.42) The largest depository institution at the end of 2004 wasA) life insurance companies.B) pension funds.C) state retirement funds.D) none of the above.43) Which of the following financial intermediaries are depository institutions?A) A savings and loan associationB) A commercial bankC) A credit unionD) All of the aboveE) Only A and C of the above44) Which of the following is a contractual savings institution?A) A life insurance companyB) A credit unionC) A savings and loan associationD) A mutual fund45) Which of the following are not investment intermediaries?A) A life insurance companyB) A pension fundC) A mutual fundD) Only A and B of the above46) Which of the following are investment intermediaries?A) Finance companiesB) Mutual fundsC) Pension fundsD) All of the aboveE) Only A and B of the above47) The government regulates financial markets for three main reasons:A) to ensure soundness of the financial system, to improve control of monetary policy, and to increase the information available to investors.B) to improve control of monetary policy, to ensure that financial intermediaries earn a normal rate of return, and to increase the information available to investors.C) to ensure that financial intermediaries do not earn more than the normal rate of return, to ensure soundness of the financial system, and to improve control of monetary policy.D) to ensure soundness of financial intermediaries, to increase the information available to investors, and to prevent financial intermediaries from earning less than the normal rate of return.48) Which of the following government regulations has the chief purpose of improving control of the money supply?A) deposit insuranceB) restrictions on entry into banking or insuranceC) reserve requirementsD) restrictions on the assets financial intermediaries can hold49) Asymmetric information can lead to widespread collapse of financial intermediaries, referred to as aA) bank holiday.B) financial panic.C) financial disintermediation.D) financial collapse.50) Foreign currencies that are deposited in banks outside the home country are known asA) foreign bonds.B) Eurobond.C) Eurocurrencies.D) Eurodollars.51) U.S. dollars deposited in foreign banks outside the United States or in foreign branches of U.S. are referred to asA) Eurodollars.B) Eurocurrencies.C) Eurobonds.D) foreign bonds.52) Banks providing depositors with checking accounts that enable them to pay their bills easily is known asA) liquidity services.B) asset transformation.C) risk sharing.D) transaction costs.53) A ________ is when one party in a financial contract has incentives to act in its own interest rather than in the interests of the other party.A) moral hazardB) riskC) conflict of interestD) financial panic54) Fire and casualty insurance companies are what type of intermediary?A) Contractual savings institutionB) Depository institutionsC) Investment intermediariesD) None of the above55) The country whose banks are the most restricted in the range of assets they may hold isA) Japan.B) Canada.C) Germany.D) the United States.答案：1-5：DAEBE 6-10:DECDD 11-15:CCEEB 16-20:CDADC 21-25:BEABD 26-30:AACAB 31-35:BCABC 36-40:DABCB 41-45:BDDAD 46-50:EACBC 51-55:AACAD。

（完整版）第二章金融体系预览（英文习题及答案）Chapter 2 Overview of the Financial System2.1 Single Choice1) Every financial market performs the following function:A) It determines the level of interest rates.B) It allows common stock to be traded.C) It allows loans to be made.D) It channels funds from lenders-savers to borrowers-spenders.2) Financial markets have the basic function ofA) bringing together people with funds to lend and people who want to borrow funds.B) assuring that the swings in the business cycle are less pronounced.C) assuring that governments need never resort to printing money.D) both A and B of the above.E) both B and C of the above.3) Which of the following can be described as involving direct finance?A) A corporation's stock is traded in an over-the-counter market.B) People buy shares in a mutual fund.C) A pension fund manager buys commercial paper in the secondary market.D) An insurance company buys shares of common stock in the over-the-counter markets.E) None of the above.4) Which of the following can be described as involving directfinance?A) A corporation's stock is traded in an over-the-counter market.B) A corporation buys commercial paper issued by another corporation.C) A pension fund manager buys commercial paper from the issuing corporation.D) Both A and B of the above.E) Both B and C of the above.5) Which of the following can be described as involving indirect finance?A) A corporation takes out loans from a bank.B) People buy shares in a mutual fund.C) A corporation buys commercial paper in a secondary market.D) All of the above.E) Only A and B of the above.6) Which of the following can be described as involving indirect finance?A) A bank buys a U.S. Treasury bill from one of its depositors.B) A corporation buys commercial paper issued by another corporation.C) A pension fund manager buys commercial paper in the primary market.D) Both A and C of the above.7) Financial markets improve economic welfare becauseA) they allow funds to move from those without productive investment opportunities to those who have such opportunities.B) they allow consumers to time their purchases better.C) they weed out inefficient firms.D) they do all of the above.E) they do A and B of the above.8) A country whose financial markets function poorly is likely toA) efficiently allocate its capital resources.B) enjoy high productivity.C) experience economic hardship and financial crises.D) increase its standard of living.9) Which of the following are securities?A) A certificate of depositB) A share of Texaco common stockC) A Treasury billD) All of the aboveE) Only A and B of the above10) Which of the following statements about the characteristics of debt and equity are true?A) They both can be long-term financial instruments.B) They both involve a claim on the issuer's income.C) They both enable a corporation to raise funds.D) All of the above.E) Only A and B of the above.11) The money market is the market in which _________ are traded.A) new issues of securitiesB) previously issued securitiesC) short-term debt instrumentsD) long-term debt and equity instruments12) Long-term debt and equity instruments are traded in the _________ market.A) primaryB) secondaryC) capitalD) money13) Which of the following are primary markets?A) The New York Stock ExchangeB) The U.S. government bond marketC) The over-the-counter stock marketD) The options marketsE) None of the above14) Which of the following are secondary markets?A) The New York Stock ExchangeB) The U.S. government bond marketC) The over-the-counter stock marketD) The options marketsE) All of the above15) A corporation acquires new funds only when its securities are sold in theA) secondary market by an investment bank.B) primary market by an investment bank.C) secondary market by a stock exchange broker.D) secondary market by a commercial bank.16) Intermediaries who are agents of investors and match buyers with sellers of securities are calledA) investment bankers.B) traders.C) brokers.D) dealers.E) none of the above.17) Intermediaries who link buyers and sellers by buying and selling securities at stated prices are calledA) investment bankers.B) traders.C) brokers.D) dealers.E) none of the above.18) An important financial institution that assists in the initial sale of securities in the primary market is theA) investment bank.B) commercial bank.C) stock exchange.D) brokerage house.19) Which of the following statements about financial markets and securities are true?A) Most common stocks are traded over-the-counter, although the largest corporations have their shares traded at organized stock exchanges such as the New York Stock Exchange.B) A corporation acquires new funds only when its securities are sold in the primary market.C) Money market securities are usually more widely traded than longer-term securities and so tendto be more liquid.D) All of the above are true.E) Only A and B of the above are true.20) Which of the following statements about financial markets and securities are true?A) A bond is a long-term security that promises to make periodic payments called dividends to the firm's residual claimants.B) A debt instrument is intermediate term if its maturity is less than one year.C) A debt instrument is long term if its maturity is ten years or longer.D) The maturity of a debt instrument is the time (term) that has elapsed since it was issued.21) Which of the following statements about financial markets and securities are true?A) Few common stocks are traded over-the-counter, although the over-the-counter markets have grown in recent years.B) A corporation acquires new funds only when its securities are sold in the primary market.C) Capital market securities are usually more widely traded than longer term securities and so tend to be more liquid.D) All of the above are true.E) Only A and B of the above are true.22) Which of the following markets is sometimes organized as an over-the-counter market?A) The stock marketB) The bond marketC) The foreign exchange marketD) The federal funds marketE) all of the above23) Bonds that are sold in a foreign country and are denominated in that country's currency are known asA) foreign bonds.B) Eurobonds.C) Eurocurrencies.D) Eurodollars.24) Bonds that are sold in a foreign country and are denominated in a currency other than that of the country inwhich they are sold are known asA) foreign bonds.B) Eurobonds.C) Eurocurrencies.D) Eurodollars.25) Financial intermediariesA) exist because there are substantial information and transaction costs in the economy.B) improve the lot of the small saver.C) are involved in the process of indirect finance.D) do all of the above.E) do only A and B of the above.26) The main sources of financing for businesses, in order of importance, areA) financial intermediaries, issuing bonds, issuing stocks.B) issuing bonds, issuing stocks, financial intermediaries.C) issuing stocks, issuing bonds, financial intermediaries.D) issuing stocks, financial intermediaries, issuing bonds.27) The presence of transaction costs in financial markets explains, in part, whyA) financial intermediaries and indirect finance play such an important role in financial markets.B) equity and bond financing play such an important role in financial markets.C) corporations get more funds through equity financing than they get from financial intermediaries.D) direct financing is more important than indirect financing as a source of funds.28) Financial intermediaries can substantially reduce transaction costs per dollar of transactions because their largesize allows them to take advantage ofA) poorly informed consumers.B) standardization.C) economies of scale.D) their market power.29) The purpose of diversification is toA) reduce the volatility of a portfolio's return.B) raise the volatility of a portfolio's return.C) reduce the average return on a portfolio.D) raise the average return on a portfolio.30) An investor who puts all her funds into one asset _________ her portfolio's _________.A) increases; diversificationB) decreases; diversificationC) increases; average returnD) decreases; average return31) Through risk-sharing activities, a financial intermediary _________ its own risk and _________ the risks of its customers.A) reduces; increasesB) increases; reducesC) reduces; reducesD) increases; increases32) The presence of _________ in financial markets leads to adverse selection and moral hazardproblems that interfere with the efficient functioning of financial markets.A) noncollateralized riskB) free-ridingC) asymmetric informationD) costly state verification33) When the lender and the borrower have different amounts of information regarding a transaction, _________ is said to exist.A) asymmetric informationB) adverse selectionC) moral hazardD) fraud34) When the potential borrowers who are the most likely to default are the ones most actively seeking a loan, _________ is said to exist.A) asymmetric informationB) adverse selectionC) moral hazardD) fraud35) When the borrower engages in activities that make it less likely that the loan will be repaid, _________ is said to exist.A) asymmetric informationB) adverse selectionC) moral hazardD) fraud36) The concept of adverse selection helps to explainA) which firms are more likely to obtain funds from banks and other financial intermediaries, rather than from the securities markets.B) why indirect finance is more important than direct finance as a source of business finance.C) why direct finance is more important than indirect finance as a source of business finance.D) only A and B of the above.E) only A and C of the above.37) Adverse selection is a problem associated with equity and debt contracts arising fromA) the lender's relative lack of information about the borrower's potential returns and risks of his investment activities.B) the lender's inability to legally require sufficient collateral to cover a 100 percent loss if the borrower defaults.C) the borrower's lack of incentive to seek a loan for highly risky investments.D) none of the above.38) When the least desirable credit risks are the ones most likely to seek loans, lenders are subjectto theA) moral hazard problem.B) adverse selection problem.C) shirking problem.D) free-rider problem.E) principal-agent problem.39) Financial institutions expect thatA) moral hazard will occur, as the least desirable credit risks will be the ones most likely to seek out loans.B) opportunistic behavior will occur, as the least desirable credit risks will be the ones most likely to seek out loans.C) borrowers will commit moral hazard by taking on too much risk, and this is what drives financial institutions to take steps to limit moral hazard.D) none of the above will occur.40) Successful financial intermediaries have higher earnings on their investments because they are better equipped than individuals to screen out good from bad risks, thereby reducing losses due toA) moral hazard.B) adverse selection.C) bad luck.D) financial panics.41) In financial markets, lenders typically have inferior information about potential returns and risks associated with any investment project. This difference in information is calledA) comparative informational disadvantage.B) asymmetric information.C) variant information.D) caveat venditor.42) The largest depository institution at the end of 2004 wasA) life insurance companies.B) pension funds.C) state retirement funds.D) none of the above.43) Which of the following financial intermediaries are depository institutions?A) A savings and loan associationB) A commercial bankC) A credit unionD) All of the aboveE) Only A and C of the above44) Which of the following is a contractual savings institution?A) A life insurance companyB) A credit unionC) A savings and loan associationD) A mutual fund45) Which of the following are not investment intermediaries?A) A life insurance companyB) A pension fundC) A mutual fundD) Only A and B of the above46) Which of the following are investment intermediaries?A) Finance companiesB) Mutual fundsC) Pension fundsD) All of the aboveE) Only A and B of the above47) The government regulates financial markets for three main reasons:A) to ensure soundness of the financial system, to improve control of monetary policy, and to increase the information available to investors.B) to improve control of monetary policy, to ensure that financial intermediaries earn a normal rate of return, and to increase the information available to investors.C) to ensure that financial intermediaries do not earn more than the normal rate of return, to ensure soundness of the financial system, and to improve control of monetary policy.D) to ensure soundness of financial intermediaries, to increase the information available to investors, and to prevent financial intermediaries from earning less than the normal rate of return.48) Which of the following government regulations has the chief purpose of improving control of the money supply?A) deposit insuranceB) restrictions on entry into banking or insuranceC) reserve requirementsD) restrictions on the assets financial intermediaries can hold49) Asymmetric information can lead to widespread collapse of financial intermediaries, referred to as aA) bank holiday.B) financial panic.C) financial disintermediation.D) financial collapse.50) Foreign currencies that are deposited in banks outside the home country are known asA) foreign bonds.B) Eurobond.C) Eurocurrencies.D) Eurodollars.51) U.S. dollars deposited in foreign banks outside the United States or in foreign branches of U.S. are referred to asA) Eurodollars.B) Eurocurrencies.C) Eurobonds.D) foreign bonds.52) Banks providing depositors with checking accounts that enable them to pay their bills easily is known asA) liquidity services.B) asset transformation.C) risk sharing.D) transaction costs.53) A ________ is when one party in a financial contract has incentives to act in its own interest rather than in the interests of the other party.A) moral hazardB) riskC) conflict of interestD) financial panic54) Fire and casualty insurance companies are what type of intermediary?A) Contractual savings institutionB) Depository institutionsC) Investment intermediariesD) None of the above55) The country whose banks are the most restricted in the range of assets they may hold isA) Japan.B) Canada.C) Germany.D) the United States.答案：1-5：DAEBE 6-10:DECDD 11-15:CCEEB 16-20:CDADC 21-25:BEABD 26-30:AACAB 31-35:BCABC 36-40:DABCB 41-45:BDDAD 46-50:EACBC 51-55:AACAD。