Question

Over the past 100? years, the level of government regulation of financial institutions and markets has ebbed and flowed? or, as some economists might? argue, has ebbed and flooded. Although the laws and regulatory agencies created by the government have various defined and? not-so-well defined? goals, what might you argue is the single biggest benefit of government? regulation?

The biggest benefit of government regulation? is: (Select the best answer? below.)

A.the ability to realign the duties of existing agencies and to create new? agencies, and to require them to report to Congress.

B.the ongoing disclosure by companies whose securities trade in the secondary markets.

C.the resulting trust and confidence in the financial institutions and markets derived by society.

D.the Federal Deposit Insurance Company? (FDIC), which effectively guarantees that individuals would not lose their money if they held it in a bank that failed.

2. A narrow? bid/ask spread? implies:

A.normal market conditions

B.a highly liquid market

C.no clear market

D.the market is closed

In a normal? corporation, management is directly accountable to? (choose the best? answer):

A.the shareholders

B.the Board of Directors acting as agent for the shareholders

C.the customers and clients

D.the employees

The study of issues arising from the separation of ownership and management is known as

A.capital structure theory

B.board vote theory

C.policy monitoring

D.agency theory

What are the two major capital? markets?

A.Loans and bonds

B.Deposits and loans

C.Debt and equity

D.Common stock and preferred stock