Which factor does not impact international trade balances?
a. The exchange value of the U.S. dollar relative to other currencies
b. How often the government sells treasury bills
c. Relative inflation rates
d. Economic growth
e. The prices of goods in the U.S.
Which of the following is not a characteristic of a commercial finance company?
a. advances funds to business concerns by discounting accounts receivable
b. makes loans secured by chattel mortgages on machinery
c. finances deferred-payment sales of commercial and industrial equipment
d. holds a bank charter
Which of the following is not considered to be a basic theory used to explain the term
structure of interest rates?
a. expectations theory
b. loanable funds theory
c. liquidity premium theory
d. market segmentation theory
Economists use a ___________________ framework to explain how the prices and
quantities of goods and services are determined in a free-market economic system.
a. opportunity
b. marginal cost
c. supply-and-demand
d. anti-monopoly
e. none of the above
A stock that went from $40 per share at the beginning of the year to $45 at the end of
the year and paid a $2 dividend provided an investor with a ____ return.
a. 8.75%
b. 14%
c. 17.5%
d. 7%
e. none of the above
Which of the following expenditures account for the largest part of the Federal budget?
a. national defense
b. interest on debt
c. direct benefits to individuals
d. none of the above
The degree of operating leverage (DOL) can be measured by the percent change in
operating income (EBIT) divided by percent change in:
a. fixed costs
b. variable costs
c. unit sales
d. total costs
_______________ is the study of how growth-driven, performance-focused, early-stage
(from development through early rapid growth) firms raise financial capital and manage
their operations and assets.
a. Personal finance
b. Corporate finance
c. Entrepreneurial finance
d. Investment banking
e. none of the above
If balances in a bank’s foreign accounts are substantially reduced due to an excess of
demand relative to supply:
a. loans are usually sought from central banks and other institutions to replenish
balances
b. they will buy currency from foreign exchange dealers
c. currency may be shipped abroad for deposit in such accounts
d. Export-Import Bank loans are sought to bolster balances
Which of the following might be a source of industry information?
a. Dun and Bradstreet
b. Risk Management Association
c. the Federal Trade Commission
d. All of the above
Interest on obligations of the federal government:
a. is not taxable by state or local government
b. is not taxable by the federal government
c. is taxable by both the federal and state governments
d. except for Treasury notes is taxable by the federal government
Which of the following might be a characteristic of a field warehouse?
a. it serves a single customer
b. it exists only until the loan is repaid
c. a lease on that portion of the property which is to be used for warehousing purposes
must be obtained
d. all the above
e. none of the above
In an efficient market:
a. it is fairly easy to find stocks whose prices do not fairly reflect the present value of
future expected cash flows
b. expected news will cause a rapid change in prices
c. information flows are random, both in timing and in content
d. all the above
19. 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. these programs waste valuable resources
c. the timing of sale of U.S. savings bonds is instrumental in accomplishing this
objective
d. these programs seldom attain their goals
e. none of the above
Ningbo Shipping has prepared the coming year’s pro forma balance sheet and has
estimated that external financing required would be $230,000. The firm should prepare
to
a. repurchase common stock totaling $230,000.
b. arrange for a loan of $230,000.
c. do nothing; the balance sheet balances.
d. invest in marketable securities totaling $230,000.
Suppose you have a choice of two equally risky annuities, each paying $1,000 per year
for 20 years. One is an annuity due, while the other is an ordinary annuity. Which
annuity would you choose?
a. the ordinary annuity
b. the annuity due
c. either one because the annuities have the same present value
d. without information about the appropriate interest rate, we cannot tell which annuity
is better
In general, the effective rate of interest on a discount loan
a. is lower than that on standard loan
b. is higher than that on a standard loan
c. is identical to that on a standard loan
d. none of the above
As defined in accordance with efficient markets notions, a weak-form efficient market
would be a market in which asset prices reflect all:
a. current information
b. past information
c. inside information
d. public information
Federal Reserve actions that meet the credit needs of individuals and institutions,
clearing checks, and supporting depository institutions are called accommodative
activities.
The greater the total fixed operating costs of a firm, the greater the degree of operating
leverage and the greater the degree of combined leverage.
A current ratio of 2.0 is desirable and it means that a firm has twice as many current
liabilities as current assets.
Three financial system components are the U.S. Treasury, financial institutions, and
financial markets.
15. A traveler’s letter of credit is issued by a bank in one country and addressed to a list
of foreign banks which are usually correspondents of the issuing bank and have agreed
to purchase sight drafts presented to them by persons with appropriate letters of credit.
State-chartered banks were permitted to join the system if they could show evidence of
a satisfactory financial condition
An owner of a business may not assign life insurance as collateral for a short-term loan.
Short-term financing offers greater flexibility than long-term financing.