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Formula sheets must be handed in with the exam and are to include name and student id number. If you choose not to use one, I need to be informed at the START of the exam , failure to comply results in a reduced score. Write legibly if you wish the possibility of partial credit on the quantitative questions. Use at least 2 decimal digits; this includes percentages (i.e. 23.45%).

1. A five-year security was purchased two years ago by an investor who plans to resell it. The security will be sold by the investor in the so-called a.secondary market.
b.primary market.
c.deficit market.
d.surplus market.

2. When a securities firm acts as a(n) ____, it maintains a position in securities. a.adviser
b.dealer
c.broker
d.none of the above

3. If financial markets were ____, all information about any securities for sale in primary and secondary markets would be continuously and freely available to investors. a.efficient
b.inefficient
c.perfect
d.imperfect

4. Money market securities generally have ____. Capital market securities are typically expected to have a ____. a.less liquidity; higher annualized return
b.more liquidity; lower annualized return
c.less liquidity; lower annualized return
d.more liquidity; higher annualized return

5. Funds are provided to the initial issuer of securities in the a.secondary market.
b.primary market.
c.deficit market.
d.surplus market.

6. A ____ federal government deficit increases the quantity of loanable funds demanded at any prevailing interest rate, causing an ____ shift in the demand schedule. a.higher; inward
b.higher; outward
c.lower; outward
d.none of the above

7. Other things being equal, a ____ quantity of U.S. funds would be demanded by foreign governments and corporations if their domestic interest rates were ____ relative to U.S. rates. a.smaller; high

b.larger; high
c.larger; low
d.none of the above

8. Which of the following is least likely to affect...
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