strong form‚ efficient market hypothesis. 14.8 What are three implications of the efficient-market hypothesis for corporate finance? 1. The prices of stocks and bonds cannot be affected by the company’s choice of accounting method. 2. Financial managers cannot time issues of stocks and bonds. 3. A firm can sell as many stocks and bonds as it wants without depressing prices. CONCEPT QUESTIONS -
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I. Topic 1. Introduction 1. Explain the difference b/w financial assets and real assets. Real Assets: (37%‚ 1%) Used to produce goods and services: property‚ plant & equipment‚ human capital‚ consumer durable‚ land‚ building etc (Material wealth of society: productive capacity‚ real asset) Financial Assets (debt‚ equity and derivative): Claims on real assets or claims on asset income. The largest financial asset of U.S. households is: pension reserve (real assets generate net income to the
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and equity instruments are traded 20. . Capital market comprises of the bond market‚ the mortgage market and stock market. . IPO is primary market . primary issuers of capital markets securities are federal and local governments and corporations. . Largest purchasers of capital market securities are households. Household use funds to purchase capital market instruments such as bonds and stock. . Includes both primary and secondary markets as capital markets
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investment bankers and then resold to the general public. Answer: False Level: Easy 6. Money markets are the markets for securities with an original maturity of 1 year or less. Answer: True Level: Easy 7. Eurodollar bonds are dollar denominated bonds issued outside the United States. Answer: True Level: Easy 8. Financial intermediaries such as banks typically have assets that are riskier than their liabilities. Answer: True Level: Easy 9. Spinning is the process
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The Global Financial Crisis of 2008-2008: The Role of Greed‚ Fear‚ and Oligarchs The global financial crisis of 2008-2009 is considered to be worst financial crisis since the Great Depression of the 1930s. Large financial institutions collapsed‚ banks received bailouts by the government‚ and stock markets plummeted as well. In result‚ people were being denied loans. The housing market became a problem because of financial issues and many people were unable to continue to pay their mortgages
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higher a. rise; higher • Question 5 1 out of 1 points Which of the following is a money market security? Answer Selected Answer: Correct Answer: a. commercial paper a. commercial paper • Question 6 1 out of 1 points Interest income from municipal bonds is exempt from state taxes but is subject to federal taxes. Answer Selected Answer: Correct Answer: False False • Question 7 0 out of 1 points The Securities Exchange Commission (SEC) was established by the Answer Selected Answer: Correct
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Glossary – Financial Markets & Institutions ________________________________________ A advances A bank’s borrowings from the Federal Reserve System. Also known as discount loans. adverse selection The problem created by asymmetric information before a transaction occurs: the people who are the most undesirable from the other party’s point of view are the ones who are most likely to want to engage in the financial transaction. agency theory The analysis of how asymmetric information problems
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Social Bond Theory Social bond theory was created by Travis Hirschi and it is a form of social control theory. Social control theorists are more interested in explaining why someone is not being deviant rather than why they are. In this theory it is expected that deviance will occur at some point. Hirschi’s social bond theory explains that deviane is expected to occur because crime is easy to do; you do not need any special skills to commit crimes. Everyone has the same amount of motivation to
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Treasury Management - Debt Market Reshma Lilani Masters in Management Studies 2011-13 Under the Guidance of Prof. Amit Kamkhalia University of Mumbai Vivekananda Education Society’s Institute of Management studies and Research Certificate I‚ Prof. Amit Kamkhali hereby certify that Ms. Reshma Lilani ‚ SYMMS Student of Vivekananda Education Society’s Institute of Management studies and Research‚ has completed a project titled “Treasury
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the generation of solid waste will increase significantly. For this reason‚ Abba et al. (2013) conducted a case study to assess the environmental impacts of municipal solid waste of Johor by analytical hierarchy process. The assessment is conducted in the city of Johor Bahru which involved Municipals of Johor Bahru Tengah‚ Johor Bahru municipal council and Pasir Gudang municipality. Data were collected through contacts and questionnaire survey and analytical
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