Financial Institutions

Powerful Essays
International Technological University
FINN 918 Financial Institutions
Final Exam: Answers Textbook: Foundations of Financial Markets and Institutions, 4th Edition, Fabozzi, Modigliani, and Jones, Prentice Hall, 2010, | ISBN –13: 978-0-13613531-9 | ISBN –10: 0-13-613531-5 |

1. Indicate whether each of the following instruments trades in the money market or the capital market: a. General Motors Acceptance Corporation issues a financial instrument with four months to maturity. b. The U.S. Treasury issues a security with 10 years to maturity. c. Microsoft Corporation issues common stock. d. The State of Alaska issues a financial instrument with eight months to maturity. e. GMAC issue trades in the money market. f. U.S. security trades in the capital market. g. Microsoft stock trades in the capital market. h. State of Alaska security trades in the money market.

2. Give three reasons for the trend toward greater integration of financial markets throughout the world.
There are several reasons. These include: a. Deregulation and/or liberalization of financial markets to permit greater participants from other countries; b. Technological innovations to provide globally-available information and to speed transactions; c. Institutionalization -- financial institutions are better able to diversify portfolio and exploit mis-pricings than are individuals.

3 Why does increased volatility in financial markets with respect to the price of financial assets, interest rates, and exchange rates foster financial innovation?

Increased volatility of the prices of financial assets has fostered innovation as investors and institutions seek ways to mitigate financial risk. Among other things, these innovations include the advancement of the modern derivatives markets.

Chapter 2 1. Each year, millions of American investors pour billions of dollars into investment companies, which use those

You May Also Find These Documents Helpful

  • Good Essays

    Financial Institution

    • 680 Words
    • 3 Pages

    Financial Institution In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries. Most financial institutions are regulated by the government. Broadly speaking, there are three major types of financial institutions: Depositary Institutions : Deposit-taking institutions that accept and manage deposits and make loans…

    • 680 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Financial Institutions

    • 7705 Words
    • 31 Pages

    Chapter 01 Why Are Financial Institutions Special? True / False Questions 1. Prior to the financial crisis of 2007-2008, J.P. Morgan Chase was the largest bank holding company in the world and operations in 60 countries. True False 2. As of 2009, U.S. FIs held assets totaling over $35 trillion. True False 3. Financial institutions act as intermediaries between suppliers and demanders of money. True False 4. If a household invests in corporate securities…

    • 7705 Words
    • 31 Pages
    Good Essays
  • Good Essays

    Financial Institutions

    • 753 Words
    • 4 Pages

    They conduct research, make investment recommendations, and conduct purchase and sale of securities. They reduce transaction and information costs: more efficient. Act as asset transformers: FI purchase financial claims issued by corporations and finance these purchases by selling financial claims to household investors. FIs are better at resolving the issues of information cost, price risk and liquidity risks FIs as delegated monitor and information provider Secondary claims are more liquid…

    • 753 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Financial Institutions

    • 948 Words
    • 4 Pages

    Financial institutions are the organizations which perform the essential functions of channeling funds from those with surplus funds (suppliers of funds) to those with shortages of funds (user of funds).Financial institutions are active in today’s global markets include commercial banks, insurance companies credit unions, finance companies, savings and loan associations, saving banks, pension funds, mutual funds, and similar organization. Their fundamental role in the financial system is to serve…

    • 948 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Financial Institutions

    • 4585 Words
    • 19 Pages

    Financial Institutions Term Report "Investment Portfolio" 2012 Submission Date: 10-Dec-2012 Lecturer: Tazeen Arsalan Research and Investment By: ------------------------------------------------- Zohaib Naseer 11499 ------------------------------------------------- Faraz Shah Khan 9412 ------------------------------------------------- Asma Fahim…

    • 4585 Words
    • 19 Pages
    Satisfactory Essays
  • Powerful Essays

    which provides for proper budgetary and expenditure management of government financial resources. In addition, Parliament, over the years has enacted 49 Acts to which the Ministry of Finance is a custodian thereby adding more responsibilities to the Ministry. The functions of the Ministry of Finance are strategic in several ways. As a main function, the Ministry is charged with the responsibility of formulating financial and economic policies. It is also responsible for developing and maintaining…

    • 11784 Words
    • 48 Pages
    Powerful Essays
  • Satisfactory Essays

    What are Financial institutions? International financial institutions (IFIs) are financial institutions that have been established (or chartered) by more than one country, and hence are subjects of international law. Their owners or shareholders are generally national governments, although other international institutions and other organisations occasionally figure as shareholders. The most prominent IFIs are creations of multiple nations, although some bilateral financial institutions (created…

    • 516 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    IMPORTANCE OF FINANCIAL INSTITUTION TO NIGERIA ECONOMY Nature and Role of Financial Institutions in the Economy 1. Nature of financial institutions Financial institutions are the organizations which perform the essential functions of channeling funds from those with surplus funds (suppliers of funds) to those with shortages of funds (user of funds).Financial institutions are active in today’s global markets include commercial banks, insurance companies credit unions, finance companies, savings…

    • 639 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Financial Institution in Bangladesh The financial system in Bangladesh includes Bangladesh Bank (the Central Bank), scheduled banks, non-bank financial institutions, microfinance institutions (MFIs), insurance companies, co-operative banks, credit rating agencies and stock exchange. Among scheduled banks there are 4 nationalized commercial banks (NCBs), 5 state-owned specialized banks (SBs), 30 domestic private commercial banks (PCBs), 9 foreign commercial banks (FCBs) and 29 nonblank financial…

    • 1756 Words
    • 8 Pages
    Good Essays
  • Powerful Essays

    8 2.3.3. Measures for Globalization 9 3. BANK 10 3.1. Introduction 10 3.2. Types 11 3.2.1. Central Bank 11 3.2.2. Development Bank 11 3.2.3. Commercial Bank 12 3.3. History of Banking Sector in Nepal 13 4. REQUISTIE OF A BANK AND FINANCIAL INSTITUTIONS 14 4.1. The capital adequacy to be maintained 14 4.2. Classification of Capital Fund 14 4.3. Total Risk-weight Assets 17 4.4. Description to be sent with regard to capital fund 17 4.5. Provision for Auditing 18 4.6. Actions may be taken…

    • 6060 Words
    • 25 Pages
    Powerful Essays