01: INTRODUCTION TO FINANCIAL MARKETS

Notes on Economic Efficiency in Financial Markets: A. Allocative efficiency in financial markets requires savings to flow into the most desirable combination of feasible investments those that facilitate production of the most valuable combinations of goods and services. This normally means the most profitable set of investments if an economy is reasonably competitive. B. Productive (technical) efficiency requires cost minimization which, in financial markets, translates into minimization of the spread e.g., the difference between the interest rates banks pay depositors and the interest rates charged borrowers. C. Distributive efficiency in financial markets requires asset portfolios to reflect savers relative time horizons and willingness to bear risk, and debt structures to reflect the sources and terms of funding relatively best suited to the needs of economic investors, government agencies, or deficit households. 1. 2. The economic term for payments for the use of capital is: (a) rent. (b) interest. (c) profit. (d) residuals. (e) royalties. The main reason the United States has such a high standard of living is (a) low unemployment. (b) high average labor productivity. (c) low inflation. (d) high government budget deficits. Net economic investment for the economy as a whole occurs when: (a) romance novelist Portia Palpitates buys a $4 ream of paper from Staples to print out the first draft of her latest masterpiece. (b) Punque Roque, a startup sand-and-gravel pit that launched its IPO today, sells Jester common stock for $10,000. (c) Cognitive-Slippage pays Carolina Cab $11,000 for a fully depreciated taxi with 477,164 miles on its odometer. (d) Ima Grate Stoodent, a sophomore economics major, signs a one-year lease on a used double-wide trailer. (e) Microsoft buys all outstanding IBM stock for $20 billion in a hostile takeover of the former computer monolith. Types of output subsequently used to produce other goods are called: (a) land. (b) labor. (c) capital. (d) primary resources. All types of economic capital: (a) require construction of machines and buildings. (b) represent money. (c) are forms of output used for further production. (d) yield profit for their owners. An example of economic capital would be: (a) loanable funds in banks. (b) factory buildings. (c) gold held by price speculators. (d) labor's productive skills. (e) corporate stocks. Examples of economic capital would include: (a) a garbage truck. (b) stock in Google. (c) a college diploma. (d) U.S. Treasury bonds. (e) deeded rights to harvest an oldgrowth forest.

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Labor productivity tends to rise when: (a) the capital-to-labor [K/L] ratio increases. (b) wage levels fall. (c) workers forego education. (d) capital becomes more costly. (e) workers increasingly prefer to consume instead of save. American workers tend to be more productive than their counterparts in South America or Asia in large part because they have: (a) superior natural genetic endowments. (b) access to better sports programming, which promotes teamwork. (c) more capital to work with, and superior technology. (d) less susceptibility to being replaced by automation. (e) stronger work ethics. The group that ultimately makes investment in an economy possible is: (a) business firms. (b) households that consume less than their disposable incomes. (c) banks. (d) savings and loan associations. (e) financial tycoons. The process of financial intermediation occurs when funds are transferred from: (a) financial investors or institutions that have an excess of available funds to people or firms that have a shortage. (b) people who have a shortage of available funds to people who have an excess. (c) never transferred. (d) people who have an excess of available funds to people who also have an excess of available funds. Financial intermediation occurs when financial institutions: (a) incur substantial outflows of funds. (b) channel flows from the ultimate lenders to the ultimate borrowers. (c) face rigid reserve requirement ratios. (d) experience "runs" if depositors fear insolvency. Financial institutions facilitate economic efficiency primarily because: (a) laissez faire markets handle asymmetric information poorly. (b) corporate ownership must be stabilized. (c) they channel funds from agents with surplus funds to agents with shortages of funds. (d) market forces determine fair interest rates. When Bank of America helps match an inventor in need of additional funds to develop a ground breaking invention and a retired school teacher with excess savings, they are performing: (a) love connections. (b) financial intermediation. (c) capital investment matching. (d) brokering functions. (e) channeling. A financial system's major economic purpose is to: (a) channel savings to more efficient and productive uses. (b) print money to support the government. (c) increase the money multiplier. (d) protect individuals against recessions. Financial intermediation is a process in which financial institutions: (a) incur substantial outflows of funds. (b) facilitate financial flows from ultimate lenders to ultimate borrowers. (c) face rigid reserve requirement ratios. (d) experience "runs" if depositors fear insolvency. Financial intermediaries are not: (a) channels linking parties who want to save to parties who want to invest. (b) limited to serving large savers and investors. (c) more important in determining the U.S. money supply than are workers and producers of capital goods. (d) increasingly engaged in international transactions. (e) very innovative in creating new financial instruments to accommodate increasingly complex financial transactions.

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Financial intermediation is, broadly, the process of: (a) lending money out at interest. (b) spending funds faster than revenues are acquired. (c) channeling funds from savers to dissavers, and to investors in economic capital. (d) buying and selling currencies in international money markets. (e) issuing bonds to cover government deficits. Important types of U.S. financial intermediaries include: (a) oil companies. (b) the U.S. Treasury. (c) the local telephone company. (d) insurance companies. (e) steel companies. Financial intermediaries do not include: (a) investment banks. (b) real estate investment trusts. (REITs). (c) mutual funds. (d) commercial banks. (e) credit unions. Financial intermediation is not among the direct activities of: (a) commercial banks. (b) credit unions. (c) insurance companies. (d) central banks [e.g., the Fed]. (e) investment bankers. (f) finance companies. (f) pension funds. (g) venture capital firms. (h) hedge funds. (i) securities exchange markets. (j) over-the-counter markets. (k) primary markets. (l) secondary markets. Relative to direct investments by households, financial intermediaries can more efficiently channel the funds from households that save to firms that invest or households that borrow. The reasons for this do not include: (a) lower transaction costs. (b) economies of scale that facilitate screening to reduce borrowing by parties that pose relatively high default risk. (c) more powerful incentives to maximize wealth. (d) superior information at lower cost per dollar transaction. Gross Domestic Product adjusted to constant prices by dividing by 1% of the GDP deflator is referred to as: (a) real GDP. (b) nominal GDP. (c) the deflated CPI. (d) industrial production. Most stock transactions occur: (a) in the first year of sales. (b) in the initial offering. (c) in the secondary market. (d) in the third year of sales. (e) within the management of the corporation. External funding for expansions of major American corporations in the past four decades has been accomplished primarily by: (a) borrowing from commercial banks. (b) selling record amounts of new shares of corporate stock. (c) borrowing by issuing corporate bonds. (d) spending retained earnings not paid out as dividends to stockholders. (e) borrowing from governmental agencies. When major American corporations have relied on external funding for major expansions during the past four decades, they have usually: (e) borrowed from governmental agencies. (b) sold record amounts of new shares of corporate stock. (c) borrowed by issuing corporate bonds. (d) invested retained earnings not paid out as dividends to stockholders. (e) borrowed from commercial banks. The portfolio with the lowest average annual nominal rate of return during the period 1926-2002 would have been a portfolio based on: (a) Small firm common stocks. (b) Common stocks of Fortune 500 companies. (c) Government bonds. (d) Treasury bills. (e) Corporate bonds.

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The portfolio with the highest average annual nominal rate of return during the period 1926-2002 would have been a portfolio based on: (a) small firm (small cap) common stocks. (b) common stocks of Fortune 500 companies. (c) high-grade municipal bonds. (d) US Treasury bills. (e) corporate bonds issued by firms in the Dow-Jones Index. Financial instruments traded in a money market would not include: (a) bankers acceptances. (b) U.S. Treasury bills. (c) commercial paper. (d) residential mortgages. (e) Eurodollars. If you buy stock from a corporation newly-formed by your sibling when the firm makes its initial public offering (IPO), you would be engaged in: (a) direct primary financing. (b) long-term debt financing. (c) pari-mutuel financing. (d) short term equity financing. (e) mutual funding. New external funding for a corporation occurs when its securities are: (a) redeemed through purchases of its own stock, financed from retained earnings. (b) sold in the primary market. (c) traded at increasingly higher prices in the stock market. (d) indirectly financed through the options market. (e) None of the above. The major reason that owners of the common stock in a corporation can usually expect higher rates of return, on average, than financial investors who own bonds issued by the same corporation is the relatively greater: (a) financial leverage exerted by the stockholders. (b) risk associated with owning stock. (c) liquidity of stocks than of bonds. (d) level of legal liability faced by stockholders. Productive (technical) efficiency in financial intermediation involves minimization of: (a) default risks to savers. (b) the spread between interest paid by borrowers and inters payments to savers. (c) financial profits to intermediaries. (d) default risk to financial intermediaries. (e) interest rates paid to savers. Productive efficiency in the financial system occurs when: (a) artificially differentiated financial intermediaries provide essentially identical services. (b) government regulations eliminate risky loans. (c) interest ceilings are established by the central authority. (d) financial services to borrowers are governmentally subsidized at low interest rates. (e) the spread [the difference between loan costs to borrowers and interest income to ultimate lenders] is minimized. Financial intermediaries cannot be successful in the long run unless they consistently: (a) generate positive economic profits. (b) reduce transactions costs when channeling funds from savers to borrowers. (c) integrate the speediest communication technologies. (d) comply fully with federal regulations. Successful and efficient movements of funds from savers to borrowers (financial intermediation): (a) reduce the returns to small savers. (b) increase the costs of borrowing. (c) reduce transactions costs. (d) regulate corporate efficiency. The economy-wide productive (technical) efficiency of financial intermediation increases when there are decreases in: (a) national debt. (b) the spread. (c) interest rates. (d) rates of return on investment.

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As the ________, or difference between interest rates paid and gained gets larger, the economy-wide efficiency of financial intermediation ___________.: (a) liquidity; increases. (b) liquidity; decreases. (c) liquidity; remains. (d) institutional wealth; increases. (e) spread \ decreases. From a macroeconomic perspective, allocative efficiency in financial intermediation requires: (a) the flows from savers to borrowers to facilitate the investments expected to be most socially valuable. (b) profit maximization by central bankers. (c) minimization of the spread realized by typical intermediaries. (d) maximization of rates of return to investors. (e) maximization of the present values of every investors portfolio. Distributive efficiency in financial intermediation requires: (a) nondiscrimination and fairness in the allocation of savings, investments, and loans. (b) minimization of the difference between the rates of return savers receive and the interest rates charged borrowers. (c) portfolios to reflect savers relative time horizons and willingness to bear risk, and debt structures to reflect the sources and terms of funding relatively best suited to the needs of investors, government agencies, or deficit households. (d) savings to flow into the most desirable combination of feasible investments. A rising stock market index due to higher share prices: (a) increases peoples wealth and tends to increase aggregate consumption. (b) tends to yield growth in federal government budget deficits. (c) is a likely consequence of an decrease in nominal interest rates. (d) makes it harder for newly-established firms to secure funding and succeed. (e) almost invariably precedes recessions in aggregate economic activity. Achieving a macroeconomic goal of economic growth can be most directly facilitated by government policies that encourage: (a) maximum employment. (b) perpetually balancing the federal budget. (c) consumers to save and firms to invest. (d) price level stability. (e) maximization of corporate profits. The most important economic function of financial institutions is: (a) financial intermediation. (b) setting the interest rates for personal loans and commercial paper. (c) redistributing income and wealth. (d) creating money through loans from excess reserves. (e) facilitating the financing of federal budget deficits. The organization responsible for the conduct of monetary policy in the United States is the: (a) Bank of the United States. (b) Internal Revenue Service. (c) Department of the Interior. (d) Federal Reserve System. (e) Internal Monetary Fund [IMF]. The individual Americans or American organizations most likely to be harmed financially by an increase in the exchange rate of the dollar relative to other currencies [ex., the pound, Euro, yen, and yuan, and peso] are American: (a) companies that rely on the international market for customers. (b) students who are studying at the London School of Economics for a semester. (c) consumers. (d) retirees who rely on Social Security and who have moved to Costa Rica because of the low cost of living.

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Suppose half of the world population, randomly selected, was magically vaporized by space aliens, but no other aspect of life on Earth was affected. Ignoring any psychological trauma this calamity might entail, on average, the economic well being of survivors would be: (a) decreased because of decreased specialization and exchange according to comparative advantage. (b) increased because of increases in the per capita availability of land and economic capital. (c) decreased because of declines in the total value of human capital on Earth. (d) increased because of improved efficiencies associated with divisions of labor in productive processes. (e) unaffected because the total value of world production would not be affected in a predictable direction. The organization responsible for the conduct of monetary policy in the United States is the: (a) Bank of America. (b) Department of the Treasury. (c) Federal Reserve System. (d) Comptroller of the Currency. (e) Bureau of Monetary Affairs. Suppose Michael Jordan buys the Charlotte Bobcats NBA franchise and, expecting an explosion of sales at his car dealerships, he orders 200 new extra Nissans. From an economic perspective, his purchase of the Bobcats franchise is: (a) smart marketing strategy. (b) complementary economic investment. (c) likely to generate economic losses. (d) a financial investment. Every financial market: (a) determines the level of nominal interest rates. (b) allows common stock to be traded. (c) allows loans to be made. (d) channels funds from lenders-savers to borrowers-spenders. In 2005, Google allowed individual financial investors to bid when it auctioned billions of dollars worth of new stock in its initial public offering. Googles issuance of these securities was an example of direct financing that used a/an: (a) securities exchange. (b) arbitrageur. (c) primary market. (d) over-the-counter [OTC] market. (e) investment banker for underwriting. (f) secondary market. Accomplishing the macroeconomic goal of economic growth can be most directly facilitated by policies that encourage: (a) higher marginal propensities to consume. (b) price level stability. (c) consumers to save and firms to invest. (d) perpetual balancing of the federal budget. (e) maximum employment. Financial institutions would not exist if: (a) the economy reached a long-run, steady-state, economic equilibrium. (b) transaction costs were also nonexistent. (c) competitive pressures did not make people so greedily self-interested. (d) capitalism was replaced by socialism. (e) people could safely store their money in their own homes. If people become optimistic about living longer and consequently save more for their retirement years, the decline in interest rates will tend to: (a) raise capital costs for business firms. (b) decrease investment expenditures. (c) discourage buying on installment plans. (d) stimulate economic growth. If the price of a share of corporate stock rises, all else equal, there will be a decrease in the: (a) rate of return expected from continued ownership of the stock. (b) likelihood that the owner of the stock will sell it. (c) overall liquidity of a portfolio that includes the stock. (d) liabilities of the individual who owned the stock before the increase.

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Major American corporations have funded the bulk of their expansions in the past four decades primarily by: (a) borrowing from commercial banks. (b) selling record amounts of new corporate stock. (c) borrowing by issuing corporate bonds. (d) investing retained earnings [income not paid out as dividends to stockholders]. (e) borrowing from governmental agencies. People who seek monopoly profits by buying the assets of successful monopolists will probably: (a) receive only normal returns on the investment. (b) realize capitalized profits. (c) achieve monopoly economic profits. (d) thwart competition from innovating procedures of substitute goods. The process whereby reasonably predictable flows of income are converted into wealth is called: (a) capitalization. (b) profiteering. (c) securitization. (c) hedging. (d) rentseeking. (e) convertibility. Between 1970 and 2005, major American corporations: (a) had enormous difficulty in competing with most foreign firms for new financing, primarily because of persistently large federal budget deficits. (b) took advantage of an especially strong stock market to issue record numbers of new shares. (c) largely abandoned corporate bond and commercial paper markets to concentrate on new stock issues. (d) repurchased such large amounts of shares of their own stock that stock issues were a negative net source of corporate finance. (e) absorbed a lot of major foreign companies because our balance of trade surpluses generated enormous profits. The value of one currency relative to the currency issued by another currency is called the (a) terms of trade. (b) exchange rate. (c) swap parameter. (d) arbitrage ratio. (e) currency coefficient. Nominal interest rates are most broadly and directly determined in markets for: (a) loanable funds. (b) newly issued stock. (c) foreign exchange. (d) securitized assets. (e) long term government bonds. Relative to private savers or non-financial business borrowers, financial intermediaries are able to substantially lower transaction costs by exploiting: (a) political connections. (b) good reputations. (c) advantageous locations. (d) economies of scale. (e) superior human capital. Money is traded by both sides of transactions in: (a) money markets. (b) capital markets. (c) foreign exchange markets. (d) mortgage markets. (e) primary markets. (f) secondary markets. (g) commodity markets. Relative to most other countries, the true rate of saving in the United States may be substantially understated because: (a) the U.S. underground economy is proportionally larger than in most other countries. (b) Americans tend to spend proportionally more on education than most foreigners do, and GDP accountants treat education as consumption. (c) federal budget deficits are misleadingly considered to be dissaving. (d) the United States is the worlds largest creditor nation; other countries owe American entities substantial sums.

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Financial intermediaries cannot be successful in the long run unless they consistently: (a) generate positive economic profits. (b) reduce transactions costs when channeling funds from savers to borrowers. (c) integrate the speediest communication technologies. (d) comply fully with federal regulations. The most important of the following factors for determining the economic growth of a country would be the: (a). country's level of resources. (b) independence of the country's central bank. (c) country's rates of saving and investment. (d) level of sophistication of a country's financial markets. Interest rates tend to be negatively related to: (a) household preferences for more liquid assets. (b) typical rates of return on alternative investments. (c) household willingness to delay consumption. (d) investor optimism about rates of return. As the capital-to-labor (K/L) ratio increases: (a) capital becomes more productive. (b) the interest payments to capital will increase. (c) the wages to labor will probably decrease. (d) the average productivity of labor usually increases. (e) the price of capital increases. The real rate of interest equals the: (a) difference between payments by borrowers and the receipts of depositors. (b) nominal interest rate plus the rate of inflation. (c) annual percentage of purchasing power paid for the use of money. (d) rate paid on riskless government securities. An increase in the demand for loanable funds will be mirrored by: (a) an increase in the supply of bonds. (b) a decrease in the interest rate. (c) a lower subjective internal rate of discount by typical savers . (d) a reduction in the federal budget deficit. (e) an increase in the supply of money. Which of the following are least likely to be claimants to a firm's income stream? (a) shareholders (b) managers (c) government (d) suppliers (e) customers. If households become more willing to hold less cash and more stocks or bonds, the: (a) interest rate rises. (b) present value of future income falls. (c) interest rate falls. (d) stock market will crash. Relative to borrowers in financial markets, lenders typically have inferior information about the potential returns and risks of particular investments. This problem is known as (a) asymmetric information. (b) the diversification conundrum. (c) moral hazard. (d) comparative informational disadvantage. (e) a financial panic. Capital accumulation by firms in the form of new plants and equipment is most directly facilitated by: (a) a predictable and stable expansion of the money supply each year. (b) low national saving rates. (c) larger federal deficits at full employment. (d) financial investments in primary markets. (e) high interest rates. The markets most likely to actually transact significant forms of economic capital would be: (a) money markets. (b) capital markets. (c) foreign exchange markets. (d) commodity markets. (e) real estate markets.

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An arbitrager is an individual or organization that will: (a) simultaneously buy low and sell high in different market. (b) create disparities between prices in different markets. (c) resolve disputes between consumers and sellers. (d) buy low and sell high at different time periods. (e) probably suffer losses in the long run. Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called (a) commodity markets. (b) fund-available markets. (c) derivative exchange markets. (d) financial markets. An increase in interest rates tends to: (a) discourage corporate investments. (b) discourage individuals from saving. (c) encourage corporate expansion. (d) encourage corporate borrowing. (e) none of the above. The presence of transaction costs in financial markets explains, in part, why (a) financial intermediaries and indirect finance play such an important role in financial markets. (b) equity and bond financing play such an important role in financial markets. (c) corporations get more funds through equity financing than they get from financial intermediaries. (d) direct financing is more important than indirect financing as a source of funds. A corporation acquires new funds only when its securities are sold in the: (a) secondary market by an investment bank. (b) primary market by an investment bank. (c) international money market by a stock exchange broker. (d) secondary market by a commercial bank. An asset's relative "liquidity" is inversely measured by the: (a) transaction costs in dealing in the asset as a proportion of the market price of the asset. (b) time it takes to convert it to cash. (c) "backing" behind a financial instrument. (d) property rights to buy or sell it. The price of one country's currency in terms of another's is called: (a) the exchange rate. (c) the interest rate. (d) the Dow Jones industrial average. (e) none of the above. The great bulk of external financing for major U.S. corporations over the past 35 years has been: (a) loans from banks. (b) loans from venture capitalists. (c) sales of stock. (d) sales of bonds. (e) retained earnings. Internal financing that enables corporations to expand the scale of their operations is accomplished through: (a) loans from banks. (b) loans from venture capitalists. (c) sales of stock. (d) sales of bonds. (e) retained earnings. (f) dividend payments to stockholders Efficiency in financial intermediation involves minimization of (a) default risks to savers. (b) the spread between interest rates paid by borrowers and interest payments to savers. (c) profits to the financial investors in intermediaries. (d) nominal interest rate. (e) real interest rate. An individuals purchase of shares of a stock from a newly-formed corporation when the corporation makes its initial public offering (IPO) would be an example of (a) debt financing. (b) direct finance. (c) financing through a secondary market. (d) short term financing. (e) mutual funding.

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Major reasons for the rapid expansion of international banking by U.S. banks would NOT include the: (a) rapid growth in international trade. (b) desire for prosperous U.S. banks to expand. (c) growth of multinational corporations. (d) necessity to finance the purchase of U.S. Treasury bonds to fund growing federal deficits. A stronger dollar will be most likely to benefit (a) textile producers in South Carolina. (b) wheat farmers in Montana. (c) automobile manufacturers in Michigan. (d) American consumers. (e) foreigners who buy products imported from the United States. Financial intermediaries can substantially reduce transaction costs per dollar of transactions because their relatively large size enables them to exploit: (a) poorly informed consumers. (b) their market power. (c) divisions of labor. (d) their comparative disadvantages. (e) economies of scale. NOT among the major reasons for the rapid expansion of international banking would be the (a) rapid growth in international trade. (b) desire for U.S. banks to expand. (c) growth of multinational corporations. (d) desire for U.S. banks to escape burdensome domestic regulations. Primary markets would include the: (a) New York Stock Exchange. (b) futures market for U.S. government bonds. (c) over-the-counter stock market. (d) options markets. (e) sale of an initial public offering (IPO) by a newly established corporation. Financial instruments traded in a capital market include: (a) corporate bonds. (b) U.S. Treasury bills. (c) bankers acceptances. (d) repurchase agreements. The most comprehensive measure of a nations aggregate output is (a) gross domestic product. (b) net national product. (c) the stock value of the industrial 500. (d) national income. Long-term financial instruments would include a: (a) negotiable certificate of deposit. (b) bankers acceptance. (c) six-month loan. (d) U.S. Treasury bill. (e) U.S. Treasury bond. The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100 per year) is commonly referred to as the (a) inflation rate. (b) exchange rate. (c) interest rate. (d) aggregate price level.

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95.The intangible assets of an organization do not include: (a) trade marks. (b) copyrights. (c) patents. (d) the technical expertise and loyalty of its career employees. (e) machinery. 96. The financial goal of a corporation is usually assumed to be to maximize: (a) sales revenue. (b) profits. (c) the value of the firm to the shareholders. (d) managers' benefits.

97.Examples of financial intermediaries do not include: (a) North Carolina Employees Credit Union. (b) Microsoft. (c) CitiBank. (d) Dreyfus Mutual Funds. (e) Metropolitan Life Insurance Company. 98. 99. Which of the following is an example of a financial intermediary? (a) General Motors (b) Chase Manhattan Bank (c) Sony (d) Microsoft Compound interest refers to: (a) earning interest on the principal. (b) earning interest on previously earned interest. (c) investing for multiple years. (d) recursive investment planning.

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Activities in financial markets are least likely to have direct effects on: (a) individuals wealth. (b) the behavior of businesses. (c) population growth. (d) the efficiency of our economy. Interest rates, inflation, and business cycles are most powerfully affected by: (a) monetary policy. (b) the Dow-Jones industrial stock index. (c) financial intermediation. (d) foreign exchange markets. (e) e-finance. Ownership shares in a corporation are called: (a) bonds. (b) entrepreneurial capital. (c) retained equity. (d) common stock. The price of one countrys currency in terms of anothers is known as the: (a) foreign exchange market. (b) yield to maturity. (c) foreign exchange rate. (d) interest rate. Such financial institutions as banks, insurance companies, mutual funds, finance companies, and investment banks are, on average, most heavily and directly regulated by: (a) elected boards of directors. (b) the Federal Reserve System. (c) stockholders. (d) tax payers. (e) the government. The bulk of the financial wealth Americans keep in banks is denominated in the form of: (a) fiat money. (b) checking accounts. (c) demand deposits. (d) savings accounts. If the term banks refers to all depository institutions, the term would not include: (a) commercial banks. (b) insurance companies. (c) credit unions. (d) mutual savings banks. (e) savings and loan associations

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