The future value of an annuity of $1,000 each quarter for 10 years, deposited at 12
percent compounded quarterly is
a. $17,549
b. $75,401
c. $93,049
d. $11,200
A (n) ________ in current assets ________ net working capital, thereby ________ the
risk of technical insolvency.
a. decrease; increases; increasing
b. decrease; decreases; reducing
c. increase; decreases; increasing
d. increase; increases; reducing
Which of the following is the most liquid form of savings?
a. cash balances
b. time deposits
c. insurance reserves
d. securities
Holding all other factors constant, if a firm increases its current liabilities relative to
total assets,
a. it increases return and reduces risk.
b. it increases return and increases risk.
c. it reduces return and reduces risk.
d. it reduces return and increases risk.
e. none of above are correct
If Stock A had a price of $120 at the beginning of the year, $150 at the end of the year
and paid a $6 dividend during the year, what would be the annualized holding period
return?
a. 36%
b. 30%
c. 24%
d. none of the above
Investment banks engage in all of the following activities EXCEPT:
a. underwrite corporate securities
b. buy and sell commercial paper
c. mergers and acquisitions
d. all of the above
e. none of the above
Federal regulation of investment banking is administered primarily under the provisions
of the ___________________.
a. Investment Banking Act of 1977
b. The Garn-St. Germain Act of 1997
c. The Securities Act of 1933
d. none of the above
Which of the following are not included in M1?
a. negotiable orders of withdrawal
b. automatic transfer service accounts
c. money market deposit accounts
d. credit union share draft accounts
The initial impact of increasing the use of debt for a firm which had no prior debt
financing is to:
a. lower the cost of capital
b. lower the weight of the debt component
c. increase the cost of capital
d. lower the cost of retained earnings
As part of the measurement of financial leverage, the total debt ratio is calculated as:
a. total liabilities divided by total assets
b. total liabilities times total assets
c. current liabilities divided by total assets
d. total assets minus current liabilities divided by total liabilities divided by total
liabilities
Which one of the following best explains the impact on a firm that accepts a project
with a negative NPV?
a. negative cash flows
b. decrease in the value of the firm
c. high marginal cost of capital
d. low initial returns
All of the following components are needed to calculate the sustainable growth rate
except:
a. return on assets
b. retention rate
c. return on equity
d. all are needed
A company with a DCL of 12 and a DFL of 2 has a DOL of?
a. 24
b. 14
c. 6
d. cannot tell from this information
Which of the following bonds can be redeemed prior to maturity by the firm?
a. callable bonds
b. convertible bonds
c. putable bonds
d. retractable bonds
Crucial elements of well-developed financial systems include all of the following
except:
a. government control of the economy
b. financial intermediaries
c. financial markets
d. all of the above
The life stages of an individual saver include all of the following EXCEPT:
a. the formative/education developing stage
b. the career earning/family creating stage
c. the wealth building stage
d. the tax minimizing stage
Federal Reserve actions that offset unexpected monetary developments and contribute
to the smooth everyday functioning of the economy are called
a. defensive actions
b. dynamic actions
c. accommodative actions
d. none of the above
The effect of an increase of required reserves by the Fed is:
a. a decrease in loanable funds of depository institutions
b. a decrease in interest rates
c. an increase of excess reserves
d. to stimulate activity in the home construction field
What is the real rate of interest if the nominal rate of interest is 15%, the IP is 3%, the
DRP is 3%, the MRP is 3%, and the LP is 2%?
a. 3%
b. 4%
c. 5%
d. none of the above
The annual percentage rate (APR) overstates the true or effective interest cost.
A major objective of the Fed is to regulate and control the supply of money and the
availability of credit.
Zero coupon bonds are not suited for tax-exempt accounts such as IRAs or pension
funds.
Savings surplus occurs when all of an economic unit’s income is not consumed, but held
in the form of cash and other financial assets.
When the interest expense is zero, the percentage change in earnings per share will be
the same as the percentage change in EBIT.
Personal consumption expenditures indicate expenditures by individuals for durable
goods, nondurable goods, and services.
In the fractional reserve system, banks must hold, with the Fed, reserves equal to a
certain percentage of their deposits.