Correct Answer is: a collection of assets.

Correct Answer is: results from the chance that an individual may have an incentive to act in such a way as to put that individual at a greater risk.

Financial Markets MCQ Multiple Choice Questions Answers | Quiz for Practice

Q: 1. The act of financial intermediation consists of

Correct Answer is: transforming liabilities into assets.

Q: 2. The act of financial intermediation consists of

Correct Answer is: transforming liabilities into assets.

Q: 3. Which one is not a function of intermediation?

Correct Answer is: It provides a safekeeping service for those with excess funds.

Q: 6. Asymmetric information means that

Correct Answer is: one party to a transaction has relatively more information than another party.

Q: 7. The competition bureau stated that it would be concerned that a merger would restrict competition if the post-merger share of the merged entity exceeded .............. of the market, or if the post-merger share of the four largest firms in the market exceeded ....................

Correct Answer is: 35% and 65%.

Q: 9. ……………… institutions are ……………. likely to fail, reducing the impact of a financial crisis.

Correct Answer is: Larger, less

Q: 10. Consolidation in the banking sector ……………….. lead to ………………… pricing.

Correct Answer is: does not, monopoly.

Embark on an enlightening journey through the dynamic world of financial markets with our curated collection of multiple-choice questions and answers. Whether you're a finance enthusiast, an aspiring investor, or a student studying economics or finance, our repository offers a wealth of insights into the intricacies of financial markets. Explore topics such as types of financial markets, trading mechanisms, market efficiency, and investment instruments. Each multiple-choice question is meticulously crafted to challenge your understanding and ignite your curiosity about the fascinating realm of financial markets. From understanding the functioning of stock exchanges to exploring the complexities of derivative markets and foreign exchange trading, our MCQs provide a comprehensive exploration of all aspects of financial markets.

Financial Markets MCQ Questions for Practice

1. The act of financial intermediation consists of

transforming equity shares into debt instruments such as bonds.
converting gold into paper currency.
transforming liabilities into assets.

2. The act of financial intermediation consists of

safekeeping other peoples funds.
transforming equity shares into debt instruments such as bonds.
converting gold into paper currency.
transforming liabilities into assets.

3. Which one is not a function of intermediation?

It provides a safekeeping service for those with excess funds.
It facilitates the acquisition of payment for goods and services.
It facilitates the creation of a portfolio.
It eases the liquidity constraints of households and firms.

4. A portfolio is

a collection of personal liabilities
a collection of assets.
a collection of various debt instruments.

5. A portfolio is

the information collected by banks to evaluate a customers borrowing capacity.
a collection of personal liabilities
a collection of assets.
a collection of various debt instruments.

6. Asymmetric information means that

information is readily available for most parties concerned in a transaction.
all parties to a transaction have the same amount of information on the other party.
information is expensive to obtain.
one party to a transaction has relatively more information than another party.

7. The competition bureau stated that it would be concerned that a merger would restrict competition if the post-merger share of the merged entity exceeded .............. of the market, or if the post-merger share of the four largest firms in the market exceeded ....................

50% and 50%.
35% and 65%.
65% and 35%.
25% and 75%

8. Moral hazard

is when the actions of a group of individuals have undesirable effects on a given individual.
results from the incentive for some people to engage in a transaction that is undesirable to everyone else.
results from the chance that an individual may have an incentive to act in such a way as to put that individual at a greater risk.
is when a party to a transaction has relatively more information than another party.

9. ……………… institutions are ……………. likely to fail, reducing the impact of a financial crisis.

Larger, equally
Larger, less
Smaller, less
Larger, more

10. Consolidation in the banking sector ……………….. lead to ………………… pricing.

does, uniform
does, monopoly.
does, competitive.
does not, monopoly.

11. The reason why the financial system entails some externalities is because

if managed correctly, financial institutions will never be the source of externalities.
the incentives of the managers of financial institutions are, at times, in line with those of its shareholders, depositors, and society in general.
they usually make very large profits.
the incentives of the managers of financial institutions, at times, conflict with those of its shareholders, depositors, and society in general.

12. Chartered Banks are regulated by

a combination of various levels of government including the municipal level in some cases.
the Federal government
at the provincial level.
are self-regulating.

13. A primary market is one in which

financial assets are traded for the first time.
newly printed money is transferred to the banks.
money market dealers make their most important trades.
the Bank of Canada conducts its monetary policy.

14. The money market is for the trading of ………………….. instruments while the capital market is where ………………….. instruments are traded.

short-term, long-term
bonds, Treasury-bills.
long-term, short-term
cash, tangible

15. Securitization means that

describes a situation where securities are sold to the highest bidders.
assets that are normally not liquid are made liquid by pooling them and re-selling them as short-term assets.
short-term liquid assets are pooled and then converted to long-term high yielding assets.
the purchase of newly issued securities by Investment dealers.

16. Currency and deposits at deposit-taking institutions and mortgages account for approximately what proportion of all financial assets?

17. Approximately, what proportion of assets of the Canadian economy are financial in nature?

18. Approximately what is the proportion of assets held by the financial sector?

19. Which category of financial institution is, relatively speaking, the most important?

investment funds.
deposit-taking intermediaries.
non-deposit intermediaries.
insurance companies.

20. Deregulation may ………………. entry into financial markets and thereby ………………….. competition.

enhance, decrease.
slow, decrease.
stop, decrease.
enhance, increase.

21. Consolidation has been shown in some markets to lead to …………………… fees and/but …………………… interest rates.

lower, lower.
higher, lower.
lower, higher.
higher, higher.