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______________ occurs during economic expansions when demand for goods and
services is greater than supply.
a. Administrative inflation
b. Speculative inflation
c. Cost-push inflation
d. Demand-pull inflation
The value of a share of stock currently selling for $100 after a 1 for 5 split is:
a. $20
b.$40
c. $500
d. $1000
e. none of the above
The present value of a $20,000 perpetuity at a 7 percent discount rate is
a. $186,915.
b. $285,714.
c. $140,000.
d. $325,000.
Rico bought 100 shares of Banana Republic stock for $24.00 per share on January 1,
2010. He received a dividend of $2.00 per share at the end of 2010 and $3.00 per share
at the end of 2011. At the end of 2012, Rico collected a dividend of $4.00 per share and
sold his stock for $18.00 per share. What was Rico's realized holding period return?
a. -12.5%
b. 12.5%
c. -16.7%
d. 16.7%
e. none of the above
All of the following accounts are considered to be fixed assets on the balance sheet
except:
a. buildings
b. equipment
c. plant
d. machinery
e. all of the above are fixed assets
You deposit $1,000 in a long-term certificate of deposit with an interest rate of 9%.
How many years will it take for you to triple your deposit? Pick the closest answer.
a. 11 years
b. 12 years
c. 13 years
d. 14 years
You want to buy a Volvo in seven years. The car is currently selling for $50,000, and
the price will increase at a compound rate of 10% per year. You can presently invest in
high-yield bonds earning a compound annual rate 14% per year. How much must you
invest at the end of each of the next seven years to be able to purchase your dream car
in seven years?
a. $8,831.46
b. $9,080.20
c. $9,125.42
d. $9,282.09
Most bonds pay coupon interest
a. monthly
b.quarterly
c. semi-annually
d. annually
e. none of the above
Sales of securities that the seller does not own is called a:
a. stop-loss order
b. short sale
c. limit order
d. maintenance margin
If the nominal rate of interest is 11%, the risk-free rate of interest is 2%, the default
premium is 4%, the liquidity premium is 0.5%, and the maturity premium is 1.5%, then
the inflation premium must be ______.
a. 2.0%
b. 2.5%
c. 3.0%
d. none of the above
During the past 75 years, corporate bonds have provided investors with higher average
annual returns than stocks.
Money is anything generally accepted as a means of paying for goods and services and
for paying off debts.
Mortgage bonds are secured by home mortgages.
Payback explicitly considers the time value of money.
The primary types of assets on a bank's balance sheet include cash, securities, and
loans.
Primary deposits are deposits that add new reserves to a bank while secondary deposits
are deposits that were borrowed from the reserves of primary deposits.
The primary factors that influence the total amount of savings in an economy in any
given period include the trade surplus or deficit and exchange rates.
There is no opportunity cost associated with retained earnings.
