1. The financial statements that are dated for a time period (rather than a specific time) are the . k F) d+ y3 z# s% l( w3 u
A. balance sheet and income statement9 o4 q4 Q4 s1 y: U
B. income statement and statement of cash flows4 N' [* {, L# s. @) k
C. balance sheet and statement of owners' equity) q' K& o1 _+ B/ g# @
D. all of the above
3 z% P# i/ _4 ]& T1 @2. Which of the following is an example of off-balance-sheet financing? ______.
. q. Z/ e/ A& J* o% i! P' dA. Operating lease
5 |1 A4 ?- O2 HB. Debenture bonds# O* F: Y# k! k5 t/ t
C. Current portion of long-term debt
' a( L6 z$ |7 Y G) _2 OD. Convertible bonds1 g8 ^. x# S; E5 c
3. Borrowers can gain access to the surplus funds of savers ______.( ~2 @: K/ X; W( T1 a
A. by issuing securities to savers1 e: y6 r! H7 A4 G
B. through financial intermediaries% P0 u- M+ S* E
C. by purchasing securities such as stocks and bonds" z' A5 u4 D( w4 o
D. all of the above* ^8 u0 b# |4 m y! z. L K
E. both A and B0 h' y0 N6 W8 G- w& @$ y% _6 q
4. Which of the following assets are most liquid? ______.
( Z, b/ d. Y6 [# V; vA. High grade corporate bonds5 m9 ~( s7 _; k9 v5 @9 I
B. Time" deposits
0 G. `( g# o3 u* Q+ _' p$ B$ ]C. Stocks in General Electric Company, v, N4 r! F) K+ N9 j
D. Passbook savings deposits
3 n) U5 W7 \( ?- V4 G* H3 C X* A' Z4 D5. Secondary markets for securities ." c* E( J+ N5 _4 z% F
A. deal only in bonds, H" |3 P) L! L$ l5 J1 p) `! V X
B. are markets primarily for the initial sale of new issues
7 I; G! K, e9 ]! g" SC. are markets for trading in outstanding debts and equity claims) c" R6 |9 P' [' a
D. are also called "investment banks"+ S5 o3 }6 ]6 S+ d& a
6. 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.
/ y7 @/ \ T4 n) a2 ^2 | Z! ]A. future value: N( k& F( b( F6 k2 L
B. present value
8 U4 Z1 d* v% R1 K( p6 s6 qC. deflation+ s, M: L t7 ?$ S U
D. interest
& ~& G% H( @$ o7. Which of the following would not result in a credit entry in the China's balance of payments? .
5 K! c/ L5 D( B) \0 {; U1 ^1 y9 QA. The sale of a piece of furniture to a business firm in Japan
; E0 S. P! t w. h- PB. Interest and dividends paid on foreign investment in China! w K4 R8 w9 C* ?% z6 c
C. Interests on a Chinese bank deposit in the United Kingdom7 e% m: c- \% @3 j* M) I
D. An increase in foreign investment in China0 P, L$ x$ O" f; I
8. Futures contracts can be ______.) z% W8 B2 U" e! j6 E$ R% z
A. used as protection against large price swings
" Y2 Y0 i3 [3 k- j# cB. countered by an offsetting purchase or sale. M9 Z* A/ j2 I$ X* t
C. participated by hedgers or speculators
! n% S! ?' E$ H6 \D. all of the above3 {0 d2 a, n1 s3 e1 `
9. Suppose that you own a business and are considering expanding your productive capital through an increase in investment spending. You will invest only if ______.& r5 ~; Y: N. z( w0 }
A. you are able to obtain the necessary funds at a low nominal interest rate
7 C+ ?' i7 x" ?' [5 BB. the investment does not affect your cost of production }+ ?/ w3 U% F4 `5 _4 p1 p
C. the present value of future income exceeds the cost of the investment plus interest on any money that you must borrow. ^) U& G% W, R t/ `' @' W
D. you observe that your competitors are expanding their productive capital 0 D4 i7 _% N* ^; y
4 H7 B) E7 h6 H7 V6 q
10. If Y and V are constant, and M doubles, the quantity equation implies that the price level .0 N# h$ K9 b9 ^6 J+ l) {0 A) [
A. more than doubles( f- `6 n* u# j' p
B. less than doubles
" y; ~/ k W( ?C. doubles1 [% t: n5 M& e; a {1 y% g
D. might do any of the above
3 v2 D& B! k6 o/ ME. more information is needed
( D d0 g! Q: C+ b: ~$ ^11. Posting is the process of transferring information from the ______.
/ ]1 J: {1 q0 u/ K, @" D I1 WA. journal to the trial balance/ e2 o5 k+ H0 A: [; L8 h
B. ledger to the financial statements2 W" S6 C0 G! f. g1 p! ]! B
C. ledger to the trial balance1 e; d, O, v1 ]3 {; g4 M. T- J
D. journal to the ledger
! d4 E& N2 F* ]9 U12. A long call option is ______.
8 O( t: X0 G# b( eA. the right to buy the underlying instrument% o/ o7 K! K. q$ d, O
B. the right to sell the underlying instrument8 j: G) D# e x. f, o W/ b
C. the obligation to buy the underlying instrument. G& i6 |# \! p" t9 s
D. the obligation to sell the underlying instrument
$ b8 |4 O3 c. x c$ ?4 U8 u; g" O3 v13. Which of the following $1 000 face-value securities has the highest yield to maturity? ______." K' {4 I# q( I$ b/ l
A. A 5% coupon bond selling for $1000
( @ A: c; S# [6 tB. A 15% coupon bond selling for $10005 x8 r( T% F) I9 H! f
C. A 10% coupon bond selling for $10005 C0 w1 I, C* I& ~
D. A 15% coupon bond selling for $900
. | E: s0 h3 E4 _0 u1 Q. C B14. When the price of a bond is ______ the equilibrium price, there is an excess demand of bonds and the price will ______.
( D) \8 N' T* UA. above...rise
+ m- ~9 s% u, |) cB. above...fall
, g7 A- s6 V! `C. below...fall
+ Q) f- ]4 [1 v2 z7 a5 [D. below...rise: B4 i- _* K8 @4 m
15. Which of the following accounts is not closed? ______.9 \3 M1 S* n3 i1 U
A. Supplies Expense7 X6 z( a& x& b- c8 O
B. Prepaid Insurance) g: i: ^# z. h1 W+ t1 p( o# Z
C. Interest Revenue
! O8 D- D& t) N, jD. Dividends
& i7 p2 }5 { d' P5 _16. Which of the following instruments is traded in a capital market? ______.1 ?0 Z8 @+ x; u. h
A. Bankers acceptance
9 h9 P/ ~4 M% u$ U$ dB. S. Treasury Bill
$ W: [" H. ]0 ?) H0 TC. Eurodollar+ T4 b( v* e! p& u, g4 V
D. Commercial paper
4 j% D; V; j0 g# X: _: ~$ u+ dE. None of the above
) C8 n# P2 e3 K" e- I+ n6 c) r7 R- h3 K; C* [8 p! \* F$ W* E
17. Which of the following is generally true of all bonds? ______.( z/ F1 p z) D: C
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- w. S: l* J$ G/ y- e$ Q7 l
B. Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise3 B' P6 l$ }9 G0 h' d
C. Prices and returns for long-term bonds are more volatile than those for shorter-term bonds |