Banking system reserves plus currency held by the nonbank public is referred to as the:
a. money supply
b. monetary base
c. monetary multiplier
d. monetary requirement
The price/earnings ratio (P/E) is calculated as:
a. stock price divided by earnings per share
b. stock price times earnings per share
c. earnings per share divided by stock price
d. stock price divided by the difference between earnings per share and cash dividends
per share
The ___________________ conducts monetary policy for the twelve European
countries that formed the European Monetary Union and adopted the euro as their
common currency at the beginning of 1999.
a. Bank of England
b. European Central Bank
c. Bank of Europe
d. Bank of Switzerland
e. none of the above
M3 includes all of the following EXCEPT:
a. checking and savings
b. MMMFs
c. stocks and bonds
d. all of the above are included
Which of the following types of stocks have the lowest risk to shareholders?
a. common stock
b. cumulative preferred stock
c. non-cumulative preferred stock
d. callable preferred stock
Clinton plans to fund his individual retirement account (IRA) with the maximum
contribution of $2,000 at the end of each year for the next 20 years. If he can earn 12
percent on his contributions, how much will he have at the end of the twentieth year?
a. $19,292.
b. $14,938.
c. $40,000.
d. $144,104.
If a firm has current earnings per share of $2 and a degree of financial leverage of 4, a
10% increase in sales would result in earnings per share of:
a. $2.80
b. $8
c. $2.20
d. cannot tell from this information
Implicit agency costs:
a. will not harm shareholders
b. have a direct expense associated with them
c. may include restrictive covenants
d. all the above
e. none of the above
Financial analysis is designed to cover four areas or dimensions of the firm. Which one
of the following does not belong to these four areas?
a. liquidity ratios
b. asset utilization ratios
c. financial leverage ratios
d. sources and uses of fund ratios
In reality, an option’s value will equal its intrinsic value only at expiration. At all other
times, the option’s premium or price will exceed its intrinsic value. A major reason for
this is/are _____________.
a. marketability
b. price
c. trade restrictions
d. brand
e. none of the above
The accumulation of reserves in insurance and pension funds is referred to as what type
of savings?
a. voluntary savings
b. contractual savings
c. real savings
d. all of the above
A __________________ is a claim against a customer’s inventory when the individual
items are indistinguishable.
a. floor plan receipt
b. trust receipt
c. warehouse receipt
d. blanket inventory lien
The personal savings rate is calculated as:
a. personal savings divided by personal outlays
b. personal savings divided by disposable personal income
c. disposable personal income divided by personal outlays
d. personal income divided by personal outlays
An importer will generally try to avoid making payment for a purchase before the
goods are actually shipped by:
a. purchasing a letter of credit
b. having payment sent to a bank in the exporter’s country to be held until proper
shipment is made
c. post-dating a check
d. insisting on payment only upon delivery
Ningbo Shipping has common stock with a market price of $25 per share and an
expected dividend of $2 per share at the end of the coming year. The growth rate in
dividends has been 5 percent and this growth is expected to continue indefinitely. Based
on this information, the cost of the firm’s common stock equity is
a. 5%.
b. 8%.
c. 10%.
d. 13%.
e. none of the above.
The primary function of the Federal Reserve System is to:
a. issue currency to member banks
b. regulate the growth of the money supply
c. serve as a fiscal agent for the U.S. government
d. regulate and conduct bank examinations
The National Banking Act of 1864 made it possible for banks to receive federal
charters.
Keynesians believe that when the supply of money eXceeds the quantity demanded, the
public will spend more rapidly causing inflation.
The future value of a $100 annuity deposited for 10 years at 10% is $1,593.74.
Primitive economies have little occasion to eXchange goods or services.
Inventory loans are less expensive than unsecured loans to business borrowers.
The current ratio is computed by dividing the sum of cash, marketable securities, and
accounts receivable by the current liabilities.
Shelf registration allows firms to register only debt issues with the SEC, and have them
available to sell for two years.