Davidson; Management - 3rd Australasian Edition



1.
The purpose of the financial system is to bring savers and borrowers together.
A. True
B. False


2.
Businesses are never DSUs .
A. True
B. False


3.
When an SSU owns a financial claim created by financial intermediation, its residual claim is against a DSU.
A. True
B. False


4.
A financial claim is an “IOU” from a deficit spending unit.
A. True
B. False


5.
A household is an SSU when income for the period exceeds spending.
A. True
B. False


6.
DSUs and SSUs always have some contact with each other in financial markets.
A. True
B. False


7.
Commercial banks lend to businesses in direct financial markets.
A. True
B. False


8.
“Futures contract” and “forward contract” are interchangeable terms.
A. True
B. False


9.
Secondary markets are important because they provide funds directly to DSUs.
A. True
B. False


10.
Primary markets offer liquidity and ways for investors to alter the risk of their portfolios.
A. True
B. False


11.
The money market provides liquidity; the capital market finances economic growth.
A. True
B. False


12.
Private placements are the simplest form of direct finance.
A. True
B. False


13.
All money market instruments are short-term debt.
A. True
B. False


14.
Commercial banks are the major issuer and investor of money market securities.
A. True
B. False


15.
Dealers bring buyer and seller together; brokers make a market.
A. True
B. False


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