A firm with a total asset turnover lower than the industry standard and a current ratio
which meets the industry standard may have
a. excessive fixed assets.
b. excessive inventory.
c. excessive accounts receivable.
d. excessive debt.
e. none of the above
Which of the following statements is false?
a. An order bill of lading carries title to the goods being shipped.
b. There are no foreign offices of U.S. banks in foreign countries.
c. In dealing with a foreign bank, an exporter generally works through a local
subsidiary of that bank.
d. All of the above statements are false.
Examples of external economic data required for project analysis include all of the
following except:
a. business cycle stages.
b. inflation trends
c. labor-management relations
d. exchange rate trends
e. all of the above are included
$1,000 invested today at 6% interest would be worth ________ one year from now
a. $1,600
b. $1,060
c. $1,160
d. $1,006
e. none of the above
The Second Bank of the United States was created to:
a. replace the First Bank of the United States
b. appease political interests
c. restore order to chaotic banking conditions
d. all the above
When it is a means of paying for goods and services and discharging debts, money is
referred to as a:
a. store of purchasing power
b. medium of eXchange
c. standard of value
d. liquid asset
Which of the following statements is most correct?
a. Capital markets include short-term and long-term debt securities such as Treasury
bills, notes, and bonds.
b. Money market instruments include commercial paper, federal funds, repurchase
agreements, and Treasury notes.
c. Real estate mortgages are money market instruments.
d. Federal agencies, and state and local governments, generally issue longer-term
financial claims which trade in the capital market.
If a project has a positive net present value, then the profitability index is:
a. greater than one
b. less than one
c. equal to one
d. cannot tell from this information
Although it enjoys substantial independence in its operations, the appointive power of
the president and the ability of Congress to alter its structure make the ______________
a dependent political structure and one of the most powerful monetary organizations in
the world.
a. Presidential Appointment Board (PAB)
b. Board of Directors (BOD)
c. Governing Body (GOB)
d. Financial Governors (FOG)
e. none of the above
Which of the following would not be considered in the fixed charge coverage ratio?
a. sinking fund payments
b. dividend payments
c. lease payments
d. All the above are considered in the fixed charge coverage ratio
Eriez Magnetics purchased goods with a purchase price of $10,000 and credit terms of
2/10 net 30. The firm paid for these goods on the 5th day after the date of sale. The firm
must pay ________ for the goods.
a. $8,000
b. $9,800
c. $9,000
d. $10,000
e. none of the above
You need $8,000 four years from now for a down payment on your future house. How
much money must you deposit today if your credit union pays 5% interest compounded
annually? Pick the closest answer.
a. $6,269.59
b. $6,578.95
c. $6,394.12
d. $6,189.83
________________ facilitate the transfer of financial assets among individuals,
institutions, businesses, and governments.
a. Financial markets
b. Government institutions
c. Regulatory authorities
d. none of the above
_________________________ was created to promote world trade through monitoring
and maintaining fixed exchange rates and by making loans to countries with payments
problems.
a. The World Bank
b. The International Monetary Fund
c. The International Bank for Reconstruction and Development
d. none of the above
John deposits $2,000 per year at the end of the year for the next 20 years into an IRA
account that pays 6%. How much will John have on deposit at the end of 20 years?
a. $67,520
b. $73,572
c. $81,990
d. $75,686
Which of the following accounts is usually part of the owners’ equity for a corporation?
a. common stock
b. paid-in-capital
c. retained earnings
d. all of the above
Finance has its origins in:
a. economics and statistics
b. accounting and mathematics
c. management and operations
d. economics and accounting
For positive interest rates, the present value interest factor is
a. between 2.0 and 0.0.
b. always negative.
c. always less than 1.0.
d. a discount rate.
The factoring of receivables:
a. typically has the factor becoming the firm’s credit department
b. is especially suited to the heavy durable goods industries
c. has now been largely replaced with other types of financing
d. places special risk on the firm whose receivables are being factored
The two routes of check clearance include the _____________ settlement, in which the
transaction takes place entirely within a single Federal Reserve district, and the
_____________ settlement, in which there are relationships between banks of two
Federal Reserve districts.
a. interdistrict, intradistrict
b. intradistrict, interdistrict
c. Fed wire, District wire
d. District wire, Fed wire
e. none of the above
The fourth market is a market for large blocks of listed stocks that operate outside the
confines of the organized exchanges.
The seven members of the Federal Reserve Board of Governors are responsible for the
establishment of monetary policy.
Subordinate debentures are bonds whose claims are junior to the claims of those
holding debenture bonds.
No full-bodied or representative full-bodied money is in use in the United States today.
Enhancement occurs when a project robs cash flow from the firm’s existing line of
business.
Rights offerings among public corporations became infrequent in the United States
during the 1980s and 1990s.
In a financial context, due diligence refers to the detailed study of a corporation.