Test: Banks & Financial Markets

Financial literacy deals with money and all things related to money.  But you know what money is?  Money plays three main roles:  which of the following is not one of them:

Banks play a central role in the financial system.  Their main role is to collect money from depositors and lend it to borrowers.  This is useful because:

Note:  There can be several correct answers to this question

Banks typically accept short-term or demand deposits and extend long-term loans meeting the needs of their customers.  What happens if lots of depositors want to withdraw their funds at the same time?

Governments and central banks seeks to ensure the stability of the banking system by setting capital and liquidity standards.  Capital adequacy requirements define the minimum equity capital that banks must hold.  This is related to:

Note:  There can be several correct answers to this question

Liquidity standards measure the amount of cash and short-term assets a bank holds in order to meet:

Note:  There can be several correct answers to this question

What are stress tests?

Some financial institutions specialize in helping companies issue debt and equity, and manage assets on behalf of investors.  They are called:

Which of the following institutions can lend money to individuals:

Note:  There can be several correct answers to this question

What is the difference between a credit union and a bank?

Some bank accounts allow overdrafts, i.e., spending more than you have in the account and borrowing the balance.  This is generally:

Which of the following are advantages of using a checking account to pay bills:

When you receive your bank statement, you should make sure that:

Note:  There can be several correct answers to this question

What is the capital market:

What does it mean when a company is listed:

What is an Initial Public Offering (IPO)?

What is the difference between a physical and an electronic exchange:

What determines the price of a share:

While stock prices fluctuate in the short term in accordance with market demand and supply, in the long run they tend to reflect fundamental value.  This is based on:

Note:  There can be several correct answers to this question

What is the secondary market for shares:

There are many ways for companies to raise money for investment.  Which of the following represents equity as opposed to debt?

Note:  There can be several correct answers to this question

Banks can issue cashier’s checks.  What is the difference with checks issued by individuals or companies?

What services do stockbrokers offer:

If a mutual fund manager has a successful record over the past 10 years, this means:

When assessing the record of a mutual fund manager, the main benchmark against which the returns they achieved should be compared is:

In which of the following investment fields can active mutual funds be particularly useful:

Note:  There can be several correct answers to this question

Correlation is an important concept in portfolio diversification.  When two investment classes have high correlation, it means that:

Which of the following should be part of a good financial plan:

Note:  There can be several correct answers to this question

Which of the following are important criteria when choosing a financial adviser:

Note:  There can be several correct answers to this question

A financial adviser offers to help you at no cost.  She works for a well-known mutual fund company and suggests a mix of funds managed by them.  What do you do?

Professionals that offer financial advice or services are obliged to:

Note:  There can be several correct answers to this question

A mutual fund charges management fees of 1% a year.  Assuming that during one year, all stocks went up by 10% and no dividends were paid, what is the net return after that year?

You live in the UK and want to buy Canadian dollars for a trip to Vancouver.  If the market rate is 1£ = C$1.20 and you change £2,000, how many C$ will you get?