Archives: Quiz

A major function of the New York Stock Exchange is to raise money for firms. When funds are deposited in a savings account, the excess reserves of banks are unaffected. Answer: F If a firm’s current assets and current liabilities […]

A major difference between the net present value and internal rate of return is the interest factor. Many bonds have a call feature, which permits the firm to retire the bonds prior to maturity. Answer: T An investor who expects […]

An increase in a current asset or long-term liability produces a cash inflow. If a firm uses short-term sources of finance instead of long-term, its financial risk is increased. Answer: T If a firm has retained earnings, it has an […]

In an underwriting, the firm selling (issuing) the securities forms the syndicate. As the price of the stock rises, the probability that a convertible bond will be called increases. Answer: T An out of the money option will expire at […]

The cost of debt is less than the cost of equity. Since depreciation is a non-cash expense, it has no impact on a firm’s income taxes. Answer: F Short-term financing is an inappropriate source of finance to acquire long-term assets. […]

AZ’s dividend rose from $1 to $1.61 in five years. What has the dividend’s annual rate of growth? Lower beta coefficients imply the investment may be analyzed on a stand-alone basis. Answer: F A prime reason for leasing is to […]

The more frequently interest is compounded, the larger will be the final or terminal amount. Higher rates of interest are associated with greater present values. Answer: F 1X = $200,000 X = $200,000 / 4.1 = $48,780 The person may […]

When a convertible bond is called, the bondholder must convert the bond or lose the appreciation achieved by the stock. If accounts receivable are collected, the quick ratio increases. Answer: F Preferred stock dividends are not a legal obligation of […]

If a firm has a need for finance, it may sell an asset and lease it back. The use of margin increases the potential percentage return on an investment in stock. Answer: T The numerical value of the slope of […]

If a firm uses accelerated depreciation, its earnings are initially increased. If a corporation operates at a loss, the loss may not be used to offset income from other years. Answer: F The intrinsic value of the put is the […]

The current yield on a bond is the interest (coupon) paid by the bond divided by the market price of the bond. A grower of corn enters a contract to make future delivery of corn to reduce the risk of […]

A cash budget seeks to determine estimated costs and revenues in order to forecast earnings. When a commercial bank grants a loan, it may decrease the cost of the loan by requiring an origination fee. Answer: F The Open Market […]

The lower the rate of interest, the smaller is a. the economic order quantity b. the number of units sold c. the cost of carrying inventory d. the safety stock Money market mutual funds invest in a. corporate bonds b. […]

The Board of Governors a. manages the nation’s stock of gold b. has the substantive control over the money supply c. controls the U.S. Treasury d. is appointed by the U.S. Treasurer A risky $1,000 investment is expected to generate […]

Which is smallest if the interest rate is 10%? a. present value of $100 annuity for five years b. future value of $100 annuity for five years c. present value of $100 after five years d. $100 received right now […]

As the firm expands, the spontaneous increase in which of the following is a source of finance? a. equipment b. inventory c. accounts payable d. accounts receivable A financial manager is considering two possible sources of funds necessary to finance […]

Buying stock on margin a. 1 and 2 b. 1 and 3 c. 2 and 3 d. all three Straight-line break-even analysis implies that a. 1 and 2 b. 1 and 3 c. 2 and 3 d. only 3 Answer: […]

The current price of a bond is not affected by a. current interest rates b. the risk classification of the bond c. the maturity date d. last year’s interest rates A firm with sales of $5,000 has the following balance […]

The risk associated with dispersion around an expected value (e.g., expected return) is measured by the a. beta coefficient b. range (i.e., high-low values) c. standard deviation d. debt to total assets (i.e., the debt ratio) A diversified portfolio a. […]

A firm has the following investment alternatives: Each investment costs $1,400 and the firm’s cost of capital is 10 percent. a. What is each investment’s internal rate of return? b. Should the firm make any of these investments? c. What […]

The futures price and the spot price must be equal a. when the contract is sold b. when the contract is bought c. when the contract is canceled d. when the contract expires More lenient terms of credit will probably […]

2/10, n30 implies a. a 10% discount if the bill is paid in 30 days b. a 2% discount if the bill is paid in 30 days c. a 10% discount if the bill is paid in 10 days d. […]

Which of the following reduces the investor’s risk associated with investing in bonds? a. 1 and 2 b. 1 and 3 c. 2 and 3 d. 1, 2, and 3 Convertible bonds have a call feature to a. protect stockholders […]

For a security to help diversify a portfolio, the asset a. must generate a greater return than the average return on the portfolio b. should not be sensitive to changes in security prices c. should have a return that is […]

Stock repurchases reduce a. 1 and 2 b. 1 and 3 c. 2 and 3 d. 3 and 4 To determine the realized return on an investment, the investor needs to know a. 1 and 2 b. 1 and 3 […]

Debt financing a. 1 and 3 b. 1 and 4 c. 2 and 3 d. 2 and 4 Which of the following causes a currency inflow? a. 1 and 3 b. 1 and 4 c. 2 and 3 d. 2 […]

English Common Law was developed so that the law was common to everyone The rule that a person cannot be charged a crime that became a crime after he committed the act made illegal is _____________. Answer: ex post facto […]

The Supremacy Clause states that the Constitution is the supreme law of the land. When Congress passes a law, it often instructs a federal agency or agencies to develop ___________ that provide guidance on how the law should be enforced. […]

The concept that a conflict that was not life threatening escalates to life threatening levels is ___________________. The most common punishment in the U.S. penal system is _________________ or being put in prison. Answer: incarceration A witness whose testimony is […]

In what ways is the judiciary restrained by the legislative and executive branches? What power does the judiciary have to restrain the other branches? The Constitution’s Commerce Clause allows the federal government to regulate _________ commerce. Answer: interstate. Explain the […]

Parole officers monitor convicts after they have served part of their sentence. You represent a client accused of rape and murder. The prosecution experts have presented DNA evidence from the crime scene tying your client to the victim. What options […]

The crime where a person requests or encourages another to perform a criminal act is ______________. How does cyber-bullying play into cyber crime? Is it just free speech? Where does it cross the line into cyber crime? Write a short […]

In District of Columbia v. Heller, the U.S. Supreme Court ruled that: A) the District of Columbia could have an absolute prohibition on handguns. B) the Second Amendment protects the individual right to bear arms. C) state and local governments […]

What principle was stated in the decision for the case Duncan v. Louisiana? A) States must provide trial by jury as an option for anyone accused of a capital crime. B) States have autonomy from the federal government. As such, […]

Which of the following is probably a case of incest? A) Non-consensual intercourse with a girl under age 18 B) Consensual intercourse between a man and his adult daughter C) Consensual intercourse between a woman and her 10-year-old nephew D) […]

An essential element of solicitation is that the person solicited actually commits the crime. Stalking can be a type of assault. Answer: True A jury that hears evidence and decides if the accused should be indicted and tried for the […]

A person can justify the use of force in the defense of others. A victim’s consent to engage in oral sex is sufficient for a defendant to assume vaginal sex is consensual as well. Answer: False The Patriot Act was […]

Corpus delicti is a term referring to the facts that show that a crime has been committed. Controlled substances have no valid medical uses. Answer: False The Sex Offender Registry is an ex post facto law. Answer: False Bribery is […]

A person who has been ruled insane prior to trial can still be tried and convicted, but cannot be executed prior to regaining sanity. Under the PATRIOT Act of 2001, wiretaps must be tied to a specific phone number. Answer: […]

The fact that a person was wrongfully threatened and was not intentionally involved in the situation is one condition of the duress defense. Every state crime requires a jury trial. Answer: False The fact that a person was wrongfully threatened […]

Incest is generally defined as sexual conduct between a father and a daughter. All defendants are entitled to a discretionary appeal. Answer: False In the case Atkins v. Virginia, the Supreme Court found that contemporary standards of what is appropriate […]

Auditors General are responsible for auditing which types of organizations? A) Public companies with shares issued to investors B) Private companies that have loans outstanding to banks or other creditors C) Ministries, departments, agencies, and crown corporations D) Any organization […]

The auditor and the entities should agree on the criteria to be used in the audit A) before the audit starts. B) after the audit planning has been done. C) as they progress with the audit as they can determine […]

If a potential loss on a contingent liability is likely and the amount of the loss can be reasonably estimated, the liability should be A) accrued and indicated in the body of the financial statements. B) disclosed in footnotes, but […]

Cash receipts from sales on account have been misappropriated. Which of the following acts would conceal this defalcation and be least likely to be detected by an auditor? A) postponing recording of cash receipt entries B) overstating the accounts receivable […]

Audit risk is ordinarily set by the auditor during planning and A) held constant for each major cycle and account. B) held constant for each major cycle but varies by account. C) varies by each major cycle and by each […]

The overall objective in the audit of the inventory and distribution cycle is to determine that A) costs of goods sold and gross profit are correctly stated on the income statement. B) inventory items on the balance sheet are neither […]

A large PA firm has assessed evidence collected during an engagement. Criteria used to assess the financial statements were International Financial Reporting Standards (IFRS). A high level of assurance was obtained. The type of engagement conducted was a(n) A) audit. […]

Attribute sampling would be an appropriate method to use on which one of the following procedures in an audit program? A) Review sales transactions for large and unreasonable amounts. B) Observe whether the duties of the accounts receivable clerk are […]

A sample in which the characteristics of the sample are the same as those of the population is a(n) A) random sample. B) variables sample. C) attribute sample. D) representative sample. To help with corporate governance and a positive “tone […]