Over-the-counter (OTC) markets:
A. are centralized exchanges but you must be a dealer to be part of an exchange.
B. only deal in the stocks of companies with over $100 million in capital.
C. employ specialists to minimize price volatility.
D. are networks of security dealers linked electronically.
Answer: D
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You are a Canadian citizen who works in Toronto and owns a winter home in Phoenix, Arizona. When you spend the winters in Phoenix, an increase in the value of the Canadian dollar relative to the U.S. dollar should
A) help you as each Canadian dollar of your salary is now worth more U.S. dollars. B) hurt you as each Canadian dollar of your salary is now worth less U.S. dollars. C) hurt you as it is now more expensive to live in Phoenix since the Canadian dollar appreciation. D) help you as it is now less expensive to live in Canada since the Canadian dollar appreciation.
The presence of deposit insurance in the savings and loan industry
A) created an adverse selection problem because good S&Ls were forced out of the market. B) solved its own adverse selection problem because it pushed badly managed S&Ls out of the market. C) contributed to "depositor moral hazard" but did not involve a moral hazard problem with owners. D) contributed to "moral hazard by owners" but did not involve a moral hazard problem with depositors. E) contributed to both "depositor moral hazard" and "moral hazard by owners."