Econ 3131

1. The securities, intermediaries, and markets that exist to match savers and borrowers comprise the financial ________. a. system

b. market

c. economy

d. security

•

2. A contract in which a borrower promises to compensate the lender in the future is called a financial ________. a. stock

b. debt

c. investment

d. security

•

3. A contract that makes the owner of a security a part owner of the company that issued the security is known as a(n) ________ security. a. debt

b. equity

c. bond

d. economic

•

4. A payment (or series of payments) made by the borrower to the investor in a debt security in addition to repayment of the principal is called: a. maturity.

b. interest.

c. dividend.

d. bonus.

•

5. A dividend is the periodic payment made on a(n) ________ security. a. equity

b. debt

c. bond

d. money

•

6. When savers buy securities only from borrowers, they are using ________ finance. a. indirect

b. intermediate

c. macroeconomic

d. direct

•

7. When savers invest through financial intermediaries, they are using ________ finance. a. intermediate

b. indirect

c. macroeconomic

d. direct

•

8. Which of the following is NOT an example of a financial intermediary? a. commercial bank

b. savings institution

c. household

d. life insurance company

•

9. Diversification means ownership of ________ by a(n) ________. a. one security; investor

b. one security; borrower

c. a variety of securities; borrower

d. a variety of securities; investor

•

10. Which of the following is NOT a function of financial intermediaries? a. Helping savers concentrate on just one financial investment.

b. Gathering information about borrowers.

c. Matching borrowers and savers who have different time