Currently, the Chairman of the Federal Reserve is ________________________.
a. Paul Volker
b. Alan Greenspan
c. Ben Bernanke
d. None of the above
Which of the following are not typical of an accounts receivable loan arrangement?
a. basic interest charge
b. compensating balance
c. fee to cover extra work need for such a loan
d. all the above are typical of accounts receivable loans
U.S. debt management is generally designed to:
a. lower interest rates
b. stimulate economic activity
c. encourage orderly economic growth and stability
d. complement Federal Reserve monetary policy
__________________ collect premiums on insurance policies and employee/employer
contributions from pension fund participants and provide retirement benefits and
insurance against major financial losses.
a. Banks
b. Personal service firms
c. Investment banking firms
d. Brokerage firms
e. none of the above
The item on the liabilities and equity section of a bank’s balance sheet that represents
the largest proportion of a typical bank’s assets is:
a. deposits
b. owner’s capital
c. securities
d. federal funds
Your subscription to Consumer Reports is about to expire. You may renew it for $24 a
year or, instead, you may get a lifetime subscription to the magazine for a onetime
payment of $400 today. Payments for the regular subscription are made at the beginning
of each year. Using a discount rate of 5%, how many years does it take to make the
lifetime subscription the better deal?
a. 25 years
b. 28 years
c. 30 years
d. 40 years
Open market operations:
a. are used infrequently
b. are a prime source of income for the U.S. economy
c. are used by the Fed to alter bank reserves
d. none of the above
A firm with an inventory period of 30 days, an accounts receivable period of 30 days,
and an accounts payable period of 90 days has an operating cycle of _____ days.
a. 60
b. -60
c. 30
d. -30
Market stabilization is:
a. disallowed under the Securities Act of 1934
b. permitted for underwriters if the market price falls below the offering price
c. prohibited by the Securities Exchange Commission
d. none of the above
A negative cash conversion cycle indicates that the
a. operating cycle exceeds the average payment period.
b. average payment period exceeds the operating cycle.
c. firm is shortening its average payment period and lengthening its average collection
period.
d. lengthening its average collection period and lengthening its inventory period.
e. none of above are correct
The value of a share of stock currently selling for $50 after a 1 for 5 split is:
a. $10
b.$200
c. $250
d. $500
e. none of the above
The maturity risk premium is the added return expected by lenders because of the
expectation of inflation.
A bond with a coupon rate of 4% and a discount rate of 6% will pay $60 in interest each
year.
Voluntary savings are savings accumulated on a regular schedule for a specified length
of time by prior agreement.
Banks are required by the Fed to hold reserves equal to a part of their deposits as part of
the fractional reserve system of the U.S. banking system.
The return provided by a $100 annuity deposited for 10 years that results in a future
value of $1,593.74 is 15%.