Which of the following statements are correct?
a. debit cards provide for the immediate direct transfer of deposit accounts
b. debit cards may be used for cash advances, even when there is not sufficient money
in the account
c. debit cards may not be used to make cash withdrawals from automatic teller
machines
d. all the above
e. none of the above
The ____________________________ conducts monetary policy for the twelve
European countries that adopted the euro as their common currency.
a. European Central Bank
b. Switzerland Central Bank
c. London Central Bank
d. British National Bank
Assume JP Morgan has a choice between two deposit accounts. Account A has an
annual percentage rate of 7.55 percent but with interest compounded monthly. Account
B has an annual percentage rate of 7.45 percent with interest compounded quarterly.
Which account provides the highest effective annual return?
a. Account A
b. Account B
c. Both provide the same effective annual return.
d. We don’t have sufficient information to make a choice.
The _______________________ made it possible for banks to receive federal charters
and provided a basis for national banking laws.
a. Glass Steagall Act
b. National Banking Act
c. Garn-Saint Germain Act
d. Federal Reserve Act
The price level of goods and services may be eXpressed as the ratio of _____________.
a. GDP to GNP
b. real output to GDP
c. Velocity to GDP
d. real output to velocity
e. none of the above
An agreement whereby an investment banker tries to sell securities of an issuing
corporation, but assumes no risk if the flotation is unsuccessful is called a:
a. due diligence agreement
b. best-effort agreement
c. firm commitment price agreement
d. shelf registration agreement
Earnings before interest and taxes (EBIT) is another way of describing:
a. operating profits
b. net profits before taxes
c. gross profits
d. earnings per share
Successful businesses typically progress through a series of life-cycle stages€from the
idea stage to exiting the business; these five stages include the:
a. development stage, startup stage, survival stage, rapid growth stage, and maturity
stage.
b. idea stage, design stage, operating stage, rebuilding stage, and decline stage
c. development stage, operating stage, rebuilding stage, rapid growth stage, and
maturity stage
d. idea stage, startup stage, rapid growth stage, survival stage, and decline stage
Which of the following statements is false?
a. If the payback period is greater than the maximum acceptable payback period, accept
the project.
b. If the payback period is less than the maximum acceptable payback period, reject the
project.
c. If the payback period is greater than the maximum acceptable payback period, reject
the project.
d. two of the above are false.
If a firm has an after-tax profit margin of 5%, an asset turnover of 2.5 times, and no
debt, the return on equity is:
a. 2%
b. 8.5%
c. 12.5%
d. not enough information available
The objective of managing current assets and liabilities is to
a. achieve as low a level of current assets as possible.
b. achieve as low a level of current liabilities as possible.
c. achieve a balance between profitability and risk that contributes to the firm’s value.
d. achieve as high a level of current liabilities as possible.
e. none of the above
Which of the following statements is most correct?
a. The National Banking Act of 1894 has long lost any relationships tomodern bank
regulation.
b. The Federal Reserve System was created in large measure to force statechartered
banks into conformity with nationally chartered banks.
c. “Wildcat banking” during the first half of the 1800s referred to risky banking
practices by many state banks, such as excessive note issues, lack of adequate bank
capital, and insufficient reserves against their notes and deposits.
d. All the above statements are equally correct.
The principal assets of banks do not include:
a. cash
b. loans
c. time deposits
d. securities owned
Currently, the backing for Federal Reserves notes is primarily in the form of:
a. gold certificates
b. gold bullion
c. eligible paper (business notes and drafts)
d. none of the above
Greater potential savings would result from a (n):
a. age distribution shift to more teenagers
b. shift to more elderly people in the total population
c. shift to more young married couples
d. shift to more middle-aged families
All of the following statements are correct except:
a. Capital budgeting is the process of identifying, evaluating, and implementing a firm’s
investment opportunities.
b. Capital budgeting seeks to identify projects that will enhance a firm’s competitive
advantage and by so doing increase shareholders’ wealth.
c. By its nature, capital budgeting involves long-term projects, although capital
budgeting techniques also can be applied to working capital decisions
d. Capital budgeting projects usually require large initial investments and may involve
acquiring or constructing plant and equipment.
e. all of the above statements are correct
_______________ provide loans directly to consumers and businesses or aid
individuals in obtaining financing of durable goods and homes, whereas
______________ originate mortgage loans on homes and other real property by
bringing together borrowers and institutional investors.
a. thrift institutions, savings and loans
b. thrift institutions, mortgage banking firms
c. property brokers, savings and loans
d. property brokers, mortgage banking firms
e. none of the above
The projections on a cash budget will reflect all of the following EXCEPT:
a. the firm’s marketing effort.
b. the firm’s credit policies.
c. how the firm manages its receivables
d. All of the statements above are correct.
___________________ states that interest rates are a function of the supply and
demand for loanable funds.
a. The expectations theory
b. The market segmentation theory
c. The liquidity preference theory
d. The loanable funds theory
The capital budgeting process consists of all of the following stages except:
a. follow-up.
b. selection.
c. implementation.
d. development.
e. all of the above are included in the capital budgeting process
Voluntary savings are financial assets set aside for use in the future.
The operating profit margin is calculated as the firm’s net income divided by net sales.
A limit order is an order to sell stock at the market price when the price of the stock
falls to a specified level.
When the annual interest rate stays the same, more frequent interest compounding helps
savers earn more interest over the course of the year.
At a zero interest rate, the present value of $1 remains at $1 and is not affected by time.
The direct quotation method expresses the number of foreign currency units needed to
buy one U.S. dollar.