Acct346 Quizzes and Exams

ACCT346 Quizzes and Exams

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Chapter 1- 20

CHAPTER 1

TRUE/FALSE QUESTIONS

1. The purpose of the financial system is to bring savers and borrowers together.

2. Businesses are never DSUs.

3. A financial claim is an “IOU” from a deficit spending unit.

4. Investment bankers help DSUs bring new primary security issues to market.

5. Deposits in a credit union by a household are an example of direct finance.

6. When an SSU owns a financial claim created by financial intermediation, its

residual claim is against a DSU.

7. Assets of financial intermediaries include direct financial claims only.

8. Finance companies take small consumer deposits and make large consumer

loans.

9. Liabilities of financial intermediaries are indirect financial claims.

10. Direct finance requires a more or less exact match of preferences.

11. There must be an equal number of DSUs and SSUs in a period.

12. Every financial claim appears on two balance sheets.

13. Without a financial sector, real investment must be financed internally by the

DSU.

14. Depository intermediaries issue claims that are for the most part highly liquid.

15. A household is an SSU when income for the period exceeds spending.

16. An SSU must hold a claim until its scheduled maturity.

17. Financial claims or securities are written for the mutual benefit of both SSU and

DSU.

18. DSUs and SSUs always have some contact with each other in financial markets.

19. Commercial banks lend to businesses in direct financial markets.

20. “Futures contract” and “forward contract” are interchangeable terms.

21. Mortgages are capital market debt securities.

2

22. Households are the major source of funds to the financial system.

23. Secondary...