The equity multiplier is calculated as:
a. total assets divided by owners’ equity
b. net income divided by owners’ equity
c. net income divided by total assets
d. net sales divided by total assets
Under required reserves of 20%, the maximum to which the money supply could be
expanded by the banking system is:
a. four times a new primary deposit
b. five times a new primary deposit
c. six times a new primary deposit
d. until all of a new primary deposit has been converted to required reserves
Gross Private Domestic Investment (GPDI) measures fixed investment in:
a. residential and non-residential structures
b. individual expenditures for nondurable goods
c. individual expenditures for services
d. none of the above
Which of the following is considered to be the most risky?
a. U.S. government bonds
b. mortgage bonds
c. corporate bonds
d. common stocks
Coining money and determining its value has been a governmental function in some
culturesfor about:
a. 3,000 years
b. 2,500 years
c. 1,900 years
d. 1,000 years
Primary groups of policy makers that are actively involved in achieving U.S. economic
policy objectives include all of the following EXCEPT:
a. the Federal Reserve System
b. the President
c. Congress
d. all of the above are primary policy makers
All else the same, a trade deficit:
a. increases GDP
b. decreases GDP
c. have no impact on GDP
d. none of the above
Reasons for stock repurchases include all of the following EXCEPT:
a. to sell off shares used in management stock option incentive programs, in which
managers can purchase shares of stock at pre-specified prices.
b.to use in stock-based acquisitions of other firms.
c. the firm has too little cash and sees its own stock as one of its most attractive sales
alternatives.
d. all of the above
e. none of the above
The future value of $200 received today and deposited at 8 percent for three years is
a. $248.
b. $252.
c. $158.
d. $200.
The future value of an ordinary annuity of $5,000 invested at 8% in 5 years would
result in a value of:
a. $25,000
b. $7,345
c. $29,335
d. none of the above
The syndicate dissolves:
a. when members elect to do so
b. 30 days after securities issue
c. when the lead investment banker decides
d. the syndicate never dissolves
Because of portfolio effect, the most significant factor related to the risk of any
investment is its:
a. standard deviation
b. coefficient of variation
c. effect on the risk of the portfolio
d. unsystematic risk
A sinking fund:
a. is a special fund set up to pay of the creditors of bankrupt firms
b. requires specific approval by the firm’s the board of directors
c. requires the issuer to retire a bond issue incrementally over time
d. none of the above
The Federal Open Market Committee:
a. typically buys and sells long-term corporate bonds
b. implements the most powerful and flexible monetary policy tool of the Fed
c. works out of Washington D.C.
d. deals with most of the commercial banks of the nation
A decrease in the supply for loanable funds, holding demand constant, will cause
interest rates to:
a. increase
b. decrease
c. stay the same
d. not enough information to tell
Which of the following is not a stage in the corporation cycle?
a. Start-up stage
b. Capital formation stage
c. Rapid growth stage\
d. Survival stage
e. Maturity Stage
If life insurance is pledged as collateral for a loan, how much can be borrowed?
a. face value of the policy
b. cash surrender of the policy
c. an amount equal to the annual premium
d. none of the above
Common stock possesses the lowest claim on the assets and cash flow of the firm.
A limited liability company can have an unlimited number of shareholders, including
other corporations.
A decrease in demand for a currency relative to other currencies will cause it to
depreciate in value.
A bimetallic standard is a monetary standard based only on gold.
If the compound inflation rate were greater than the compound interest rate, future
purchasing power on our savings would fall.