1. The reinvestment of cash back into the firm’s operations is an example of a flow of savings to investment.
True False
2. Smaller businesses are especially dependent upon internally generated funds.
True False
3. An individual can save and invest in a corporation only by lending money to it or by purchasing additional shares.
True False
4. Apple Computer is well known for its product innovations. Access to financing was not vital to Apple’s growth and profitability.
True False
5. Hedge fund managers, unlike mutual fund managers, do not receive fund-performance-related fees.
True False
6. In the United States, banks are the most important source of long-term financing for businesses.
True False
7. A financial intermediary invests in financial assets rather than real assets.
True False
8. Only small companies can go through financial markets to obtain financing.
True False
9. Previously issued securities are traded among investors in the secondary markets.
True False
10. Only the IPOs for large corporations are sold in primary markets.
True False
11. The markets for long-term debt and equity are called capital markets.
True False
12. The stocks of major corporations trade in many markets throughout the world on a continuous or near-continuous basis.
True False
13. The derivative market is also a source of financing.
True False
14. Households hold more than half of U.S. corporate equities.
True False
15. The key to the banks’ ability to make illiquid loans is their ability to pool liquid deposits from thousands of depositors.
True False
16. For corporate bonds, the higher the credit quality of an issuer, the higher the interest rate.
True False
