International Finance And Treasury - Study Mode

[#456] Type of security backed by mortgage cash flows and are packed by financial instruments is classified as
Correct Answer

(B) securitized mortgage

Explanation

Solution: Type of security backed by mortgage cash flows and are packed by financial instruments is classified as securitized mortgage. Securitization is the procedure where an issuer designs a marketable financial instrument by merging or pooling various financial assets into one group. The issuer then sells this group of repackaged assets to investors. Securitization offers opportunities for investors and frees up capital for originators, both of which promote liquidity in the marketplace.

[#457] Markets in which transactions are done through computers and telephone without any specific location are classified as
Correct Answer

(C) over counter markets

Explanation

Solution: Markets in which transactions are done through computers and telephone without any specific location are classified as over counter markets. An over-the-counter (OTC) market is a market where trading is done directly between two parties, without any supervision. The difference between OTC markets and exchange markets, is that in exchange markets, trading occurs via exchanges.

[#458] Institutions deals in financial functions and protects corporations and individuals against accidents, theft and death are considered as
Correct Answer

(B) insurance companies

Explanation

Solution: Institutions deals in financial functions and protects corporations and individuals against accidents, theft and death are considered as insurance companies. Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.

[#459] Saving banks, insurance companies, mutual funds and commercial banks are all examples of
Correct Answer

(C) financial institutions

Explanation

Solution: Saving banks, insurance companies, mutual funds and commercial banks are all examples of financial institutions. A financial institution (FI) is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange.

[#460] Additional debt instruments or equity instruments of publicly traded firm are included in markets classified as
Correct Answer

(B) primary markets

Explanation

Solution: Additional debt instruments or equity instruments of publicly traded firm are included in markets classified as primary markets. The primary market is where securities are created. It's in this market that firms sell (float) new stocks and bonds to the public for the first time. An initial public offering, or IPO, is an example of a primary market.