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Joe plans to fund his individual retirement account (IRA) with the maximum
contribution of $2,500 at the end of each year for the next 30 years. If Joe can earn 10
percent on his contributions, how much will he have at the end of the tenth year?
a. $411,235
b. -$411,235.
c. $23,567.
d. -$23,567.
If you buy stock certificates and keep them at the brokerage firm rather than taking
personal possession of them, your stock is in:
a. street name
b. a short sale
c. a limit order
d. none of the above
Your college has agreed to give you a $10,000 tuition loan. As part of the agreement,
you must repay $12,600 at the end of the three-year period. What interest rate is the
college charging?
a. 8%
b. 9%
c. 11%
d. 6%
Which of the following is not an advantage of short-term borrowing?
a. flexibility
b. establishing continuous relationships with a bank or financial institution
c. frequent renewals
d. lower cost
You are considering buying a 10-year, $1,000 par value bond issued by IBM. The
coupon rate is 8% annually, with interest being paid semiannually. If you expect to earn
a 10% rate of return on this bond, what is the maximum price you should be willing to
pay for this IBM bond?
a. $189.93
b. $875.39
c. $898.54
d. $911.46
State-chartered banks:
a. automatically receive membership in the Federal Reserve System
b. are prohibited from membership in the Federal Reserve System
c. may be permitted to join the Federal Reserve system, given a satisfactory financial
condition
d. none of the above
Large time deposits (over $100,000) are included in which of the following money
supply definitions?
a. M1
b. M2
c. M3
d. all of the above
A negative cash conversion cycle indicates that the
a. operating cycle exceeds the average payment period.
b. average payment period is less than 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
Fiat money is:
a. representative full-bodied money
b. full-bodied money
c. legal tender proclaimed to be money by law
d. all of the above
The Export-Import Bank:
a. makes loans and offers guarantees to foreign exporters to the United States
b. may offer emergency credits to assist other countries to maintain their level of
imports from the United States
c. makes loans or offers guarantees when the soundness of the transaction is in doubt
d. makes loans to domestic exporters to encourage foreign trade
A pre-emptive right refers to the right of existing shareholders to sue management in
order to head off potential actions by management that would adversely affect the price
of the stock.
A cash budget is a tool the treasurer uses to forecast future cash flows and estimate
future short-term borrowing needs.
The Export-Import Bank is a corporation owned by the Federal Reserve Banks.
Investment banks accept deposits and makes loans to individuals and businesses.
American depository receipts are receipts which represent foreign shares to U.S.
investors.
Financial analysis using ratios can assist managers in the firm's long-term financial
planning process.
The faster the rate of circulation of the money supply, the greater the output of goods
and services in an economy.
The bankers' acceptance is a draft drawn on and accepted by a bank rather than the
importing firm.
Callable preferred stock gives the corporation the right to retire the preferred stock at its
option.
Gross private domestic investment (GPDI) measures fixed investment in residential and
nonresidential structures, producers' durable equipment, and changes in business
inventories.
