1. The financial statements that are dated for a time period (rather than a specific time) are the .! Z9 l6 D$ P" @4 j7 F
A. balance sheet and income statement
" p( T! j8 H7 o% N( L' n% S1 m1 tB. income statement and statement of cash flows4 D% t! C7 ]+ ]* K. S
C. balance sheet and statement of owners' equity
/ Z) v' D T& E0 W' ^" _D. all of the above, c2 J r/ _# U% n9 [
2. Which of the following is an example of off-balance-sheet financing? ______.: R0 R7 W4 I- y$ m
A. Operating lease
. k) [+ {4 H, C4 ^B. Debenture bonds
7 ^. O v# A4 C5 b6 W$ C, yC. Current portion of long-term debt
3 x; n9 x6 o" P5 oD. Convertible bonds! G& r5 `$ T( o0 z8 e
3. Borrowers can gain access to the surplus funds of savers ______.
8 {; P& F9 r/ q3 d) z NA. by issuing securities to savers
: u+ w# a1 D6 ^' |0 xB. through financial intermediaries5 v1 G) { X" C6 i( b
C. by purchasing securities such as stocks and bonds" m+ ]) `: e$ A
D. all of the above
1 t5 U K' {5 xE. both A and B9 U& [8 y. D9 g) S$ \/ [7 D
4. Which of the following assets are most liquid? ______.' d! a9 L; o" h) t, I' e
A. High grade corporate bonds
* @9 F# W# o, q) C6 TB. Time" deposits
; L/ S# e( y* y& iC. Stocks in General Electric Company) T3 [1 l/ L I! w6 D
D. Passbook savings deposits
4 ~' t- M# j$ \8 g5. Secondary markets for securities .: q( \; [/ O( T, A6 U- X" I
A. deal only in bonds8 x* ]* G6 D7 o: u* w; @; F
B. are markets primarily for the initial sale of new issues; P* a2 H3 h/ G9 V# K
C. are markets for trading in outstanding debts and equity claims% ^- i/ n+ L, C8 k" \: Z1 i9 g
D. are also called "investment banks"
* V! w" K- l1 o7 M/ T6. The concept of ______ is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today. H1 H6 X' x9 n' H$ ?# I7 A
A. future value% W m4 O- ?0 |% h. w/ p1 _
B. present value
0 Y* Q6 ]5 [2 w" d ^C. deflation
1 t& T. c! u% O" a3 d( d0 }D. interest
- f" k' H# z9 D9 E3 s8 Q3 X7. Which of the following would not result in a credit entry in the China's balance of payments? .' b/ [2 w; C5 U
A. The sale of a piece of furniture to a business firm in Japan( W- [6 }1 i& ^$ I& f; i) l
B. Interest and dividends paid on foreign investment in China
, Q% B Z H' MC. Interests on a Chinese bank deposit in the United Kingdom; K) y# g, k1 l N9 A
D. An increase in foreign investment in China
' C0 R% m; P5 @9 z! a* q8. Futures contracts can be ______.
. G' `* D2 W; F5 h% a( H; LA. used as protection against large price swings, b, D7 z. U0 q8 e$ W: y( x
B. countered by an offsetting purchase or sale
6 t8 [. ?, x% @7 o+ v9 K3 C9 OC. participated by hedgers or speculators* v5 P/ j2 A5 q' p" W
D. all of the above
+ B! c! z" K4 y( S9. Suppose that you own a business and are considering expanding your productive capital through an increase in investment spending. You will invest only if ______.
' {* b! a/ n$ Y+ aA. you are able to obtain the necessary funds at a low nominal interest rate
]/ _! x& Z: {4 D8 F7 _B. the investment does not affect your cost of production0 D/ {& p4 U G0 U8 a+ a1 Y' o
C. the present value of future income exceeds the cost of the investment plus interest on any money that you must borrow ?4 o4 p6 w: X2 ?; _9 P/ @
D. you observe that your competitors are expanding their productive capital ( q: p8 m3 a+ ]
7 R- I$ b9 ?( X7 G5 C
10. If Y and V are constant, and M doubles, the quantity equation implies that the price level .
' A( U& _) _" e: S2 M6 }5 dA. more than doubles! x6 b6 @( H, @
B. less than doubles, a% d9 {& w8 g4 n) Z
C. doubles8 W9 U$ F; K, ?. T" V
D. might do any of the above* P, M) g7 f3 h
E. more information is needed8 k) Y" J4 L8 a
11. Posting is the process of transferring information from the ______.
5 m j0 M8 L0 r6 d T6 RA. journal to the trial balance2 Z6 K9 J4 X" U& z
B. ledger to the financial statements
# [" Z: v8 b# V. j) J) |C. ledger to the trial balance- L0 d$ }& a; R7 l# `
D. journal to the ledger: H/ ~, r6 P$ \6 L- h& L
12. A long call option is ______.9 Q6 g: ^+ P' \, p
A. the right to buy the underlying instrument3 V8 l. m! `9 S5 @
B. the right to sell the underlying instrument
" e% w0 G; |' e/ [' f# oC. the obligation to buy the underlying instrument3 Y* D# |' d7 H: I. u/ J
D. the obligation to sell the underlying instrument) [1 J% ~2 B4 u: K2 z/ M
13. Which of the following $1 000 face-value securities has the highest yield to maturity? ______., H u$ Z6 f0 ]" O0 o- _0 u: R
A. A 5% coupon bond selling for $1000# R8 J& v- U: k/ d5 E
B. A 15% coupon bond selling for $1000
' ~8 Q/ j) [& f/ R8 g0 hC. A 10% coupon bond selling for $10008 `4 }% f: S7 L
D. A 15% coupon bond selling for $9006 E. y$ \+ q3 o' @+ c! a8 J
14. When the price of a bond is ______ the equilibrium price, there is an excess demand of bonds and the price will ______.+ x8 }2 p1 ?. I( }" R9 a
A. above...rise
* } q9 R$ d: q+ K8 v0 \7 ~B. above...fall0 u8 w* X# a9 B/ S
C. below...fall! j8 l' k6 b' a4 Y
D. below...rise
* v8 h9 a; ~) G' S3 T( Z8 Z15. Which of the following accounts is not closed? ______.
5 l8 t: J9 o/ {& A( Y+ lA. Supplies Expense$ m3 Q3 s/ w' l- J
B. Prepaid Insurance
8 b/ w, w8 [" l$ B5 PC. Interest Revenue
: K, x, K8 r, F" D+ GD. Dividends
) }& O% S9 g% D3 |16. Which of the following instruments is traded in a capital market? ______.
1 q. L1 h/ T* PA. Bankers acceptance+ f9 g, U. a/ I$ _
B. S. Treasury Bill* g, G( l9 d' m/ G6 t/ L Z: F
C. Eurodollar$ _- s& R" J" ~+ d9 u0 C6 Q/ b
D. Commercial paper
. P$ x( B) I( h0 f. l3 s, z' HE. None of the above1 ]" _# O4 v4 L6 ^; C$ O
8 l/ P$ b' j$ E) W; f8 C, k
17. Which of the following is generally true of all bonds? ______.8 |* U1 K6 {7 R0 z9 g6 e
A. The longer a bond maturity, the lower is the rate of return that occurs as a result of the increase in an interest rate
! h. p2 X) d1 MB. Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise; Y5 C( F: W& o( i6 v/ z
C. Prices and returns for long-term bonds are more volatile than those for shorter-term bonds |