While the Chicago Board Options Exchange remains the main market for exchange
traded options, the ______________ exchange also deals in option contracts.
a. New York
b. American
c. Pacific
d. Philadelphia
e. all of the above.
The Federal Reserve System consists of all of the following components EXCEPT:
a. Federal Reserve District Banks
b. Board of Governors
c. Federal Open Market Committee
d. all of the above
Which of the following organizations are involved in accounts receivable financing for
businesses?
a. consumer finance companies
b. commercial finance companies
c. factors
d. commercial finance companies and factors
The item on the liabilities and equity section of a bank’s balance sheet that represents
the smallest proportion of bank’s assets is:
a. deposits
b. owner’s capital
c. securities
d. federal funds
Which of the following would not be a use of funds?
a. increase in an asset account
b. decrease in a liability account
c. decrease in an equity account
d. all the above are uses of funds
The _________ value of a savings or investment is its amount or value at the current
time.
a. present
b. future
c. book
d. none of the above
A major international development occurred on January 1, 2002, when twelve European
countries gave up their individual currencies and adopted a unified currency called the
_____________.
a. Dollar
b. Pound
c. Euro
d. none of the above
_______________________issue shares to customers and invest the proceeds in highly
liquid, very-short-maturity, interest-bearing debt instruments called money market
investments.
a. Commercial banks
b. Corporations
c. Insurance companies
d. none of the above
When compounding more than once a year, the true opportunity costs measure of the
interest rate is indicated by the:
a. annual percentage rate
b. contract rate
c. stated rate
d. effective annual rate
The ratio between the present value of a project’s cash inflows and the present value of
its initial investment is called the:
a. MIRR.
b. IRR.
c. PI.
d. NPV.
e. none of the above are correct
Unlike other corporations undertaking the capital budgeting process, ___________
need to consider possible added political and economic risks such as the possibility of
seizure of assets, unstable currencies, foreign exchange controls and foreign tax
regulations.
a. MOGs.
b. INCs.
c. SWOTs.
d. LTDs.
e. none of the above
The Small Business Administration cannot assist in the financing of small enterprises
by:
a. making direct loans to businesses
b. participating jointly with private banks in extending loans to businesses
c. engaging in accounts receivable factoring
d. agreeing to guarantee a bank loan
The ________ is the time period that elapses from the point when the firm purchases
raw materials on account to the point when payment is made to the supplier of the
goods.
a. cash conversion cycle
b. average payment period
c. average age of inventory
d. average collection period
e. none of the above
If the market rate of return is 12%, and the beta on Consolidated Edison is .8, the return
on Con Ed is:
a. greater than 12%
b. less than 12%
c. greater or less than 12%, depending on the risk-free rate of return
d. dependent on some other factors
The Bank Holding Company Act of 1956:
a. established uniform standards to evaluate the legality of bank holding company
acquisitions
b. allowed bank holding companies to acquire credit card companies
c. defined a bank holding company as one which owns 25% or more of the votingshares
of each of two or more banks
d. included all the above
If the present-value interest factor for i percent and n periods is 0.270, the future-value
interest factor for the same i and n is
a. 0.730.
b. 3.797.
c. 3.704.
d. cannot be determined.
Consolidated Edison has just paid an annual dividend of $3 per share. If the expected
growth rate for Con Ed is 10%, and your required rate of return is 16%, how much are
you willing to pay for this stock?
a. $55
b. $50
c. $46.50
d. none of the above
Two or more projects that perform the same function are said to be:
a. mutually exclusive projects
b. independent projects
c. joint projects
d. none of the above
What is the payback period for Sweetbay Supermarket’s new project if its initial
after-tax cost is $5,000,000 and it is expected to provide after-tax operating cash flows
of $1,800,000 in year 1, $1,900,000 in year 2, $700,000 in year 3 and $1,800,000 in
year 4?
a. 4.33 years
b. 3.33 years
c. 2.33 years
d. none of the above
To maximize shareholder wealth, a financial manager needs to find capital budgeting
projects that have positive net present values.
The largest proportion of government revenue comes from corporate income taxes.
The profitability index is calculated by subtracting the net investment from the present
value of the cash flows.
The future value of a $100 annuity deposited for 10 years at 10% is $614.46.
The net profit margin is an example of a market value ratio.