1. The financial statements that are dated for a time period (rather than a specific time) are the .' @+ f/ A+ d& V' h! m
A. balance sheet and income statement
; K1 H3 o- f$ ]. c- z9 hB. income statement and statement of cash flows
2 D. @0 l; t8 ^' i2 q) v8 nC. balance sheet and statement of owners' equity. E5 P/ I( h- L0 d: z6 L
D. all of the above& T' F8 u+ @% O2 L/ v0 D
2. Which of the following is an example of off-balance-sheet financing? ______.1 |/ f: L' ]6 [: h; ]- f3 T3 }. W
A. Operating lease+ @' i2 b8 V; f( v1 d/ l0 W, N
B. Debenture bonds
" `) o- Z3 Q: F2 u. f2 `C. Current portion of long-term debt+ y9 ?6 B i6 T! k, M7 t# u, @
D. Convertible bonds
1 B, N6 N, Z* m9 B9 @: N: W3. Borrowers can gain access to the surplus funds of savers ______.4 t. K9 r* O/ {: o
A. by issuing securities to savers$ W! z: L9 m: G+ b3 z; z
B. through financial intermediaries; S) @% D' C) R$ O) K. |8 w
C. by purchasing securities such as stocks and bonds
* n) H! E7 f. q a9 U+ }D. all of the above" n ~% h% F& {) X3 x' y! E* V" G
E. both A and B- D) V# D. V/ z0 `9 k$ ~6 n
4. Which of the following assets are most liquid? ______.8 _0 I2 }6 ^% t! U6 \: [/ J
A. High grade corporate bonds' w1 x$ l8 u. [3 p. u: ?$ N2 I
B. Time" deposits
M0 D8 u( z/ U9 JC. Stocks in General Electric Company$ s% o' }# _; a
D. Passbook savings deposits5 O% m+ T$ M. ^8 w( w
5. Secondary markets for securities .4 y0 J* s _" q% p" k) f7 O8 n
A. deal only in bonds# `9 J6 @* G1 ^. K
B. are markets primarily for the initial sale of new issues* S( ]; F8 e: D/ {; U2 Y: k
C. are markets for trading in outstanding debts and equity claims3 O$ E$ x0 b. d& m) D% ^
D. are also called "investment banks"0 r7 m( ]7 k( R4 a! J" c2 p
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.* _- P. E3 f- N8 ?: @6 k9 z; s: j) k
A. future value
$ f m4 w9 I6 L9 j0 W% }. \B. present value
3 g" y: D9 x; E/ bC. deflation
" r4 P% ^( Q7 Y# `' b% C) Z4 F6 HD. interest
1 z. v: r! c% I0 M- T K, y, i7. Which of the following would not result in a credit entry in the China's balance of payments? .
) Q7 O8 ~1 k6 L) y) ?7 f/ H! P6 bA. The sale of a piece of furniture to a business firm in Japan
5 e1 ?' i3 d ~1 ~B. Interest and dividends paid on foreign investment in China
* K% W7 A" m+ _$ U1 PC. Interests on a Chinese bank deposit in the United Kingdom
' N' {# l; x i( `8 sD. An increase in foreign investment in China
: b* D3 I* R3 Q7 J" e# H8. Futures contracts can be ______.$ d9 P) n c3 u5 }: `
A. used as protection against large price swings
) h/ ?& Y! y8 K6 ]. B4 F. r- ~B. countered by an offsetting purchase or sale% ~9 ]* I; g& d* x* F- W5 `
C. participated by hedgers or speculators
- c+ P' ?# e; v- O9 kD. all of the above
0 a4 v" N( S6 g. y9. Suppose that you own a business and are considering expanding your productive capital through an increase in investment spending. You will invest only if ______.
$ s0 w6 V7 e7 M$ ?; }6 GA. you are able to obtain the necessary funds at a low nominal interest rate( ?% s+ x! U/ H7 A
B. the investment does not affect your cost of production
8 s8 |9 a4 G, ?( B0 [C. the present value of future income exceeds the cost of the investment plus interest on any money that you must borrow
) b* ]$ l8 `5 u- ]) D" _* hD. you observe that your competitors are expanding their productive capital 6 t4 T, v) R. [! P* @& K
* i% `5 r4 S: D! A; v& Z10. If Y and V are constant, and M doubles, the quantity equation implies that the price level .! ~! X d; i1 T3 s4 r
A. more than doubles/ P/ L: f6 G0 ~# C! N* t" C
B. less than doubles9 C0 p i0 B( {3 Z( C1 U3 Z
C. doubles1 G. f! r+ J% z8 _! b# l* D2 D* c
D. might do any of the above/ Q; k9 I% _2 j) F! W m8 v/ {) ^
E. more information is needed6 r; r9 X6 ^+ X7 |" n
11. Posting is the process of transferring information from the ______.
- |4 u5 V3 M$ Z/ DA. journal to the trial balance$ R; w% g" q5 Q+ p4 u H D
B. ledger to the financial statements
1 H& ?7 H) `( cC. ledger to the trial balance
- o2 r# {5 `5 Q2 z: l' N: BD. journal to the ledger
; U' y+ m/ ^( c+ t# {5 D1 |12. A long call option is ______.2 s# j* y9 a8 H7 m
A. the right to buy the underlying instrument& J+ k, {. k+ L3 [
B. the right to sell the underlying instrument/ `; j- u0 o1 T
C. the obligation to buy the underlying instrument
& I/ A6 y/ J9 s- r# ]D. the obligation to sell the underlying instrument7 a1 T0 i+ l$ m4 u8 y5 R) r
13. Which of the following $1 000 face-value securities has the highest yield to maturity? ______.' |. y0 `. f# j4 s/ p% e* _
A. A 5% coupon bond selling for $1000- Q# L( E0 z3 z* l0 ^) L7 z5 {
B. A 15% coupon bond selling for $10006 B5 @3 L3 z. k, h+ {/ `* p D: o! Z
C. A 10% coupon bond selling for $1000
$ F+ Y7 @! k1 j" hD. A 15% coupon bond selling for $900
0 x5 S' q% T% D$ j$ G: y14. When the price of a bond is ______ the equilibrium price, there is an excess demand of bonds and the price will ______.4 k$ f; D; y; y, S' q3 B* `
A. above...rise
5 V) i4 A# V E: K+ GB. above...fall
, d6 y4 Z7 m$ i4 kC. below...fall0 ?1 l6 [8 G3 a8 r- y) {0 V! p
D. below...rise3 a, Y: M( i D2 A- o/ G2 y+ w
15. Which of the following accounts is not closed? ______.
3 M( h5 d F! K" [3 X9 Q5 yA. Supplies Expense! D1 Z! F+ u5 }* |4 g* E/ U3 A
B. Prepaid Insurance/ z8 }# {/ j4 [9 m6 p3 n! X q
C. Interest Revenue
& U$ ~& L1 X) x8 P' uD. Dividends
( n( b; W* P( e; \* Y( }; t16. Which of the following instruments is traded in a capital market? ______.
5 H8 }2 w# N1 M2 W' Z! L* v/ oA. Bankers acceptance* ~+ d, r; V: p0 v( P. X
B. S. Treasury Bill5 k( w3 q {4 D
C. Eurodollar
; s" d \+ Q+ D9 g) E* L5 N: mD. Commercial paper
N" M0 `. v, {; n' N% z- jE. None of the above) G! g, F% S, Y8 y+ T u, ?4 m: B
?5 ~9 T$ z" \8 D$ ]! F: y
17. Which of the following is generally true of all bonds? ______.3 \# u- U3 h7 v$ t
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
5 e$ v6 ]9 V3 t( \B. Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise% P% C$ J) o& q+ L9 b- d0 t
C. Prices and returns for long-term bonds are more volatile than those for shorter-term bonds |