1. Trading in securities previously issued (i.e. existing issues) takes place in the:

open market

secondary market

primary market

negotiated market

capital market

2. The financial system provides all the following services EXCEPT:

Provide credit

Payment services

Equitably distribute wealth

Provide liquidity

Risk protection

3. The function of the financial system that consists of providing a means of raising funds by converting securities and other assets into cash balances is called the:

savings function

wealth function

credit function

liquidity function

none of the above

4. Following the cut in U.S. credit rating by Standard & Poor's from AAA to AA+ on August 5, 2011,

Interest rates on U.S. Treasury bonds shot up sharply

The stock market tumbled

The stock market shot up sharply

The bond market remained unchanged

None of the above

5. As a result of the 2007-2009 global financial crisis, one U.S. dollar is now more valuable than one euro.

True

False

6. Due to the ongoing European debt crisis, one euro is now less in value than one U.S. dollar.

True

False

7. Since a rise in interest rates increases the cost of money in the economy, it is bad for everyone.

True

False