the following is tnac ing two items: 1-a Certificate of Deposit (CD), and 2 - a

Question

the following is tnac ing two items: 1-a Certificate of Deposit (CD), and 2 - a corporate bond A) the CD is more liquid than the bond B) the bond is more liquid than the CD C) both have an equal amount of liquidity D) ncither has much liquidity-so that both are near zero in their degree of liqudinty 21) Financial markets serve as the A) primary source of funds for financial intermediaries B) means of converting cash into tangible assets C) transmission mechanism between savers and borrowers D) economic system's ultimate source of funds 22) If an issuer has the right to pay off a bond before its maturity, the bond is A) convertible speculative callable D) reversible 23) To avoid maturity mismatches, most financial intermediaries tend to A) have asse B) have asse ts whose maturities on average exceed the maturities of their liabilities ts whose maturities on average are less than the maturities of their liabilities maturities on average mirror the maturities of their liabilitics D) hold primanily real assets 24) What types of assets do financial intermmediaries mostly have on their balance sheets? A) Real assets B) Financial assets C) Fixed assets D) Tangible assets 25) Two major types of finance companies are A) captive and specialty B) public and private C) consumer and commercial D) insured and uninsured 26) Reserve requirements are A) typically established by the nation's legislative body B) typically altered anywhere from two to five times per year uniformly applied to any type of deposits in private banks D) the rules specifying the fraction of deposits that banks must hold as reserves

Explanation / Answer

(20) (B)

Since CD has a fixed maturity date unlike a bond which can be sold anytime to get cash, the bond is more liquid.

(21) (C)

Borrowers get access to the saving by the savers in a financial market by use of various, stocks, bonds and other financial assets.

(22) (C)

(23) (C)

(24) (B)

Financial assets are primary source of assets for financial intermediaries.

(25) (B)

(26) (D)

In fractional banking system, reserve requirements specify the percentage of transaction deposits that a commercial bank must hold as required reserve.

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