1. The theory that, when measured in a common currency, the price of a product should be the same in two countries is referred to as the law of: Select one: a. exchange rates. b. one price. c. spot rates. d. large numbers.
2. Previously issued securities are traded among investors in the secondary markets. Select one: a. True b. False c. Not clear d. Partly true
3. The main purpose in contracting to purchase foreign currency in the forward market is to: Select one: a. avoid the more expensive spot rates. b. take advantage of future price reductions. c. lock into a future currency price now. d. earn a premium on the exchange.
4. Which of the following are both a financial intermediary and a financial institution? Select one: a. Hedge funds b. Insurance companies c. Mutual funds d. Pension funds
5. Which one of these enterprises generally acts as an underwriter for an initial public offering? Select one: a. Government b. Insurance company c. Investment bank d. Commercial bank