1. Which of the following statements about financial institutions is correct?
I. Financial markets are institutions that indirectly connect savers to borrowers.
II. Corporations use equity financing to borrow directly from savers in the bond market.
III. Financial intermediaries indirectly connect savers to investors.
IV. A corporation facing financial difficulty pays bondholders their due before stockholders receive anything at all.
A. I and II only
B. I, II, III, and IV
C. II and III only
D. III and IV only
2. Janet saves $100 in a bank account that pays 4% interest per year. How much is Janet's account worth at the end of one year?
A. $104
B. $100
C. $96
D. $118
3. What is the value of Janet's $100 deposit five years from now? Assume that the interest rate remains at 4% and that Janet makes no withdrawals.
A. $130.04
B. $115.44
C. $121.67
D. $124.55