the economics of money, banking, and financial markets

215 #

© 2014 Pearson Canada Inc.#

11. 
    

    Nonfinancial businesses in Germany, Japan, and Canada raise most of their funds ____.
    A) by issuing stock
    B) by issuing bonds
    C) from nonbank loans
    D) from bank loans
    Answer: D
    Diff: 1 Type: MC Page Ref: 161 - 162
    Skill: Recall
    Objective List: 8.1 Depict how asymmetric information results in adverse selection and moral
    hazard

    
    


12. 
    

    As a source of funds for nonfinancial businesses, bonds are relatively more important than
    stocks in ____.
    A) Canada
    B) Germany
    C) Japan
    D) the US
    Answer: D
    Diff: 1 Type: MC Page Ref: 162
    Skill: Recall
    Objective List: 8.1 Depict how asymmetric information results in adverse selection and moral
    hazard

    
    


13. 
    

    Direct finance involves the sale to ____ of marketable securities such as stocks and
    bonds.
    A) households
    B) insurance companies
    C) pension funds
    D) financial intermediaries
    Answer: A
    Diff: 2 Type: MC Page Ref: 162
    Skill: Recall
    Objective List: 8.1 Depict how asymmetric information results in adverse selection and moral
    hazard

    
    


14. 
    

    Regulation of the financial system ____.
    A) occurs only in Canada
    B) protects the jobs of employees of financial institutions
    C) protects the wealth of owners of financial institutions
    D) ensures the stability of the financial system
    Answer: D
    Diff: 1 Type: MC Page Ref: 162
    Skill: Recall
    Objective List: 8.1 Depict how asymmetric information results in adverse selection and moral
    hazard