Chapter 25a test bank.docVIP

Chapter 25 Saving, Investment, and the Financial System Test A . When a country saves a smaller portion of its GDP, it will have a. more investment, and so have more capital and higher productivity. b. more investment, and so have less capital and lower productivity. c. less investment, and so have more capital and higher productivity. d. less investment, and so have less capital and lower productivity. ANSWER: d. less investment, and so have less capital and lower productivity. TYPE: M KEY1: D OBJECTIVE: 1 RANDOM: Y . What are the two basic categories of financial institutions? a. the foreign exchange markets and the stock markets b. the financial markets and financial intermediaries c. the market for loanable funds and the market for capital d. the lending market and the deposit market ANSWER: b. the financial markets and financial intermediaries TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y . Which of the following is not a nonsensical headline? a. British perpetuities about to mature. b. Disney issues new bonds with term of $1,000 each. c. Government bonds currently pay less interest than corporate bonds. d. Standard and Poor’s judges new junk bond to have very low credit risk. ANSWER: c. Government bonds currently pay less interest than corporate bonds. TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y . A certificate of indebtedness that specifies the obligations of the borrower to the holder is called a a. stock. b. mutual fund. c. bond. d. All of the above are correct. ANSWER: c. bond. TYPE: M KEY1: D SECTION: 1 OBJECTIVE: 1 RANDOM: Y . Rudolph has the choice of two bonds, one that pays 5 percent interest and the other that pays 10 percent interest. Which of the following is most likely? a. The 10 percent bond is less risky than the 5 percent bond b. The 10 percent bond has a shorter term than the 5 percent bond c. The 10 percent bond is a U.S. government bond, and the 5 percent bond is a junk bond d. The 10 percent bond is a corp