Finance 7 Capital Markets - Assignment02

Name: JOJIE A.
DADOR Course & Year: BSBA 3rd Year

Subject: Finance 7 – Capital Markets Quiz 01
I. True or False. Write T in the blank if the statement is correct; otherwise, write F.
______ 1. The original or new issues of securities are sold in the primary markets
______ 2. The outstanding shares or securities are sold in the secondary markets.
______ 3. The outstanding shares or securities are termed primary securities.
______ 4. The original or new issues of securities are termed secondary securities.
______ 5. Financial intermediaries are generally used more in primary market
transactions than in secondary market transactions.
______ 6. T-bills are traded in the money market.
______ 7. Stocks and bonds are traded in the capital market.
______ 8. Stocks, bonds, and T-bills are long-term.
______ 9. T-notes, T-bonds, negotiable CDs, and commercial papers are short-term.
______ 10. Debt and equity securities are traded in the money market.
______ 11. T-bills, negotiable CDs, and commercial papers are traded in the capital
market.
______ 12. Stock and bonds are traded in the capital market.
______ 13. T-bills, negotiable CDs and commercial papers are traded in the money
market.
______ 14. Companies needing funds to purchase merchandise and pay operating
expenses borrow in the capital market.
______ 15. Companies needing funds are to buy fixed assets, invest in long-term
project, or expand facilities borrowed in the money market.
______ 16. The interbank call loan market is a money market.
______ 17. Interbank call loans are credits of one bank to another for a period not
exceeding 4 days.
______ 18. Cash management bills are government-issue securities with maturities of
less than 91 days.
______ 19. Government securities are no longer certificated; they are known as
“scripless.”
______ 20. Treasury bills are government-issued securities with maturities of 91 to 364
days.
II. True or False. Write T in the blank if the statement is correct; otherwise, write F.
______ 1. Treasury bills are sold at a discount.

______ 2. Treasury bonds are sold at face value
______ 3. Treasury bills are coupon bills earning interest at regular intervals.
______ 4. Stock market is where long-term debt securities are traded.
______ 5. Stock market is where equity securities are traded.
______ 6. If the closing price of a stock is higher than the opening price there will be an
upward trend in the price of the stock.
______ 7. A big difference in the low and high price will indicate high volatility of a stock.
______ 8. The value of a stock is generally determined by its market price.
______ 9. The yield or cash yield of the stock is the ratio of stock price to earnings per
share.
______ 10. The price-earnings ratio is the ratio of cash dividends to stock price.
______ 11. General obligation bonds are LGU bonds issued to raise immediate capital to
cover expenses of LGUs.
______ 12. The negotiated capital market deals with negotiable marketable securities.
______ 13. A syndicated loan is one that is obtained by a syndicate.
______ 14. When a person borrows from a relative or a bank, the transaction takes
place in a loan market.
______ 15. When someone borrows from a loan shark, the transaction takes place in a
loan market.
______ 16. Real properties and other capital goods can be mortgaged.
______ 17. Personal properties like jewelry can be mortgaged with a pawnshop.
______ 19. The party who is to use the property in exchange of the rent of lease is the
lessor.
______ 20. Households are the clients in the consumer credit market.
III. Identification
_________ 1. It is a transaction where dealer/broker buy or sell restricted securities

openly in an exchange.
_________ 2. It is the rate at which the central bank of a country lends money to
commercial banks in the event of any shortfall of funds.
_________ 3. It is the sale of securities for cash with a commitment to repurchase them
at a specified price at a future date.
_________ 4. It is an electronic mode by which the national government sells
government securities to a network to government securities eligible dealer (GSEDs)
_________ 5. It is a SEC – licensed securities dealers belonging to a service industry
supervised and regulated by the government.
_________ 6. It is the official registry of absolute ownership, legal, or beneficial titles or
interest in government securities (T-bills and T-bonds).
_________ 7. It is the interest on an investment in government securities.
_________ 8. It is the tender to buy an amount of government securities with an
indicated yield rate per annum.
_________ 9. It is the tender to buy a specified amount of GS by a GSED in the primary
auction of government securities without indicating any yield rate.
_________ 10. It is the method in which successful competitive bidders pay the price
they have bid, and all the winning bidders may pay different prices.
_________ 11. It is the payment process both in the primary and secondary markets for
government securities.
_________ 12. It is the US-dollar-denominated CDs in foreign banks.
_________ 13. It is the rate for Eurodollar funds.
_________ 14. These are the markets for long-term securities.
_________ 15. These are the equity securities.
_________ 16. These are the primary debt securities.
_________ 17. These are the long-term assets used to produce goods and services to
generate revenues.
_________ 18. It is the type of capital market where negotiable instruments like stocks
and bonds are traded.
_________ 19. It is the type of capital market where a borrower directly enter into a
loan agreement with the lender.
_________ 20. It is the market where exchange transactions dealing with equity
securities happen.

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Name: JOJIE A.

DADOR Course & Year: BSBA 3rd Year

______ 1. Treasury bills are sold at a discount.

_________ 1. It is a transaction where dealer/broker buy or sell restricted securities

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