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Securities that may be bought and sold through the usual market channels are called:
a. Treasury bonds
b. Treasury notes
c. Treasury bills
d. Marketable government securities
e. none of the above
The supply of a currency in international markets depends largely on the:
a. Federal Reserve System
b. imports of the issuing country
c. amount of eXports that currency will buy from the issuing country
d. confidence of market participants in the restraint and ability of the monetary
authority issuing the currency
Which of the following is a characteristic of commercial paper dealers?
a. provide greater convenience for their clients than bank borrowing but at rates
somewhat higher than bank rates
b. set rates at the beginning of the month
c. recall notes that have been placed with investors if rates change dramatically
d. none of the above is a characteristic of commercial paper dealers
An area of finance that involves the study of organizations or intermediaries that help
the financial system operate efficiently and transfer funds from savers and investors to
individuals, businesses, and governments that seek to spend or invest the funds in
physical assets (inventories, buildings, and equipment) is called:
a. financial management
b. investments
c. financial institutions
d. financial markets
e. none of the above
If a firm's inventories on hand are $200,000 and its cost of goods sold is $600,000, what
is the inventory turnover?
a. 2.0 times
b. 3.0 times
c. 4.0 times
d. 0.33 times
Which of the following is not a reason to use factoring services?
a. it is a form of guaranteed payment
b. it eliminates overhead
c. management is freed from concern with financial matters
d. lower cost
Assume that a bank must keep reserves of 20% against deposits. The bank receives a
primary deposit of $50,000. What amount of excess reserves can the bank safely lend?
a. $10,000
b. $20,000
c. $40,000
d. $50,000
e. none of the above
When investors expect __________ inflation rates they will require __________
nominal interest rates so that a real rate of return will remain after the inflation.
a. higher, higher
b. higher, lower
c. lower, higher
d. none of the above
Various programs of the federal government help stabilize disposable income, and in
turn, economic activity in general. In so doing:
a. income tax rates may be lowered during periods of prosperity and increased during
slack economic periods
b. some programs act on a continuing basis and are described as automatic stabilizers
c. the timing of sale of U.S. savings bonds is instrumental in accomplishing this
objective
d. these programs seldom attain their goals
The market for large blocks of listed stocks that operates outside the confines of the
organized exchanges is called the:
a. primary market
b. secondary market
c. third market
d. fourth market
A bond that allows the same assets to be used as security in future issues is called a (n):
a. first mortgage bond
b. equipment trust certificate
c. closed-end mortgage bond
d. open-end mortgage bond
Business firms hold cash and marketable securities for which of the following reasons
or motives?
a. transactions, precautionary, and goodwill motives
b. precautionary, speculative, and goodwill motives
c. transactions, precautionary, and speculative motives
d. precautionary, goodwill, and transactions motives
The _______ includes ALL international transactions.
a. balance of trade
b. balance of payments
c. current account balance
d. capital account balance
The accommodative activities of the Federal Reserve System are:
a. clearing checks
b. meeting the credit needs of individuals and institutions
c. supporting depository institutions
d. all of the above
When the Federal Reserve System was created, it was thought that its most important
influence over monetary conditions would be:
a. lending to banks to bolster their reserve positions
b. quantitative easing
c. the issuance of Federal Reserve notes
d. the changing of reserve requirements
The notes payable of a firm may be:
a. loans to other businesses
b. loans from a bank
c. money owed by a customer
d. all of the above
The primary market is a market in which securities are traded among investors.
Savings and loan associations are cooperative nonprofit organizations that exist
primarily to provide member depositors with consumer credit.
Interest rates will move from one equilibrium level to another if an anticipated change
occurs that causes the demand for loanable funds to change.
Cannibalization occurs when a project robs cash flow from the firm's existing line of
business.
The liability of all owners in both a limited liability company and a limited partnership
is limited to the owners' investment in the company.
The Federal Reserve act required that ALL national banks were to become members of
the Fed.
Projects favored using payback techniques will be ranked the same using net present
value.
The Treasury€s major influence through its borrowing to finance federal deficits is on
the supply rather than demand for loanable funds.
The disbursement float is the delay in transferring the means of payment from the payor
(customer) to the payee (the provider of goods or services).
