1. The financial statements that are dated for a time period (rather than a specific time) are the .2 |* y3 t; [1 E
A. balance sheet and income statement
( ^+ X- b+ R" G' z/ x" S) l) IB. income statement and statement of cash flows" c/ k; O+ n- E9 _/ c R% q+ ]$ B
C. balance sheet and statement of owners' equity
& p. r! Q4 E5 x% q3 ID. all of the above* j: A3 O! q7 S
2. Which of the following is an example of off-balance-sheet financing? ______.8 [/ ?+ G( S- e; G/ r( `8 @" Q
A. Operating lease
" `8 _4 C) l2 m) n; a* V2 V* K; u: i! FB. Debenture bonds
- S7 s- j- y6 R: A- e" c3 H5 U3 iC. Current portion of long-term debt* H( I+ ~4 q5 p2 d* K
D. Convertible bonds' \$ Y3 R0 V7 ]- }* I; O
3. Borrowers can gain access to the surplus funds of savers ______.. V! H1 s7 A8 `8 U
A. by issuing securities to savers; w- _: ~- z R& S& R- s. P- h
B. through financial intermediaries9 {0 @6 S8 ^% A% y
C. by purchasing securities such as stocks and bonds6 y5 r5 X- y% z& Q
D. all of the above+ D) m) }4 g. m0 {! `! V) {. n
E. both A and B
- V! {6 E7 L) u8 M6 F3 A1 {4. Which of the following assets are most liquid? ______.
I& u( L# U( MA. High grade corporate bonds- }) |0 G/ J# n" B% |% i1 v
B. Time" deposits- M. x* d6 U w0 n
C. Stocks in General Electric Company
6 b+ [3 {& l5 V/ H' B$ aD. Passbook savings deposits
1 |: b8 f& A, ]2 }; `; I: S, }5. Secondary markets for securities .7 {9 r( _" k- @$ Y) I. A
A. deal only in bonds
/ k) ?' R; U6 q; Y% H7 TB. are markets primarily for the initial sale of new issues
8 X. @3 o" d/ t9 y; F: ?9 ~C. are markets for trading in outstanding debts and equity claims
( `; h# X: s; {+ ^% k$ N3 F4 a8 KD. are also called "investment banks", {( D7 z1 ~$ Z8 g& P9 l8 Q$ 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.) e+ Q8 L4 c0 h' W: _( i8 a& D5 j x
A. future value
. ? R: l: h, L k" P3 dB. present value& c/ w( A3 v7 q2 L# b
C. deflation
+ f- y+ J( l- m6 Y' z# PD. interest
+ t8 e. w! [2 O7. Which of the following would not result in a credit entry in the China's balance of payments? .1 \2 \+ Q2 E) r) L( k
A. The sale of a piece of furniture to a business firm in Japan
0 D- l e5 H* E' E* jB. Interest and dividends paid on foreign investment in China
! \% U+ ^: E9 d yC. Interests on a Chinese bank deposit in the United Kingdom
: l% U& v/ W: u4 O# N- D4 W" aD. An increase in foreign investment in China6 G, @2 i& W/ E- L4 S
8. Futures contracts can be ______.
$ Y5 I& d: t' a( d. Q& aA. used as protection against large price swings
# o& N! |6 r3 F' z* DB. countered by an offsetting purchase or sale. [9 V' W E' o) N1 q7 S; u. E
C. participated by hedgers or speculators
; V* \* k8 o& wD. all of the above
& u! D( H5 F0 L0 G& Q9. Suppose that you own a business and are considering expanding your productive capital through an increase in investment spending. You will invest only if ______.
$ w3 f) G' J uA. you are able to obtain the necessary funds at a low nominal interest rate, C/ e0 Z4 y5 X3 R- ?0 k; c
B. the investment does not affect your cost of production
* q4 ]3 K9 M" @) ^- ~C. the present value of future income exceeds the cost of the investment plus interest on any money that you must borrow
2 F% j; ?. ?/ H8 LD. you observe that your competitors are expanding their productive capital ' v$ V2 X/ O3 q0 `% q9 ^1 W7 z
& c) V9 {' J- o' ?* l0 J: X- ]10. If Y and V are constant, and M doubles, the quantity equation implies that the price level .& ?+ Q* Y/ |! @6 o8 b
A. more than doubles
Z/ ~+ N+ Y$ N5 _4 zB. less than doubles
6 [4 }& `7 s( Q0 \C. doubles% U6 G3 e6 z/ f+ w
D. might do any of the above1 t. U8 p' y, W- u- B
E. more information is needed
2 p1 K! K. ]1 Q: O2 j6 A11. Posting is the process of transferring information from the ______.5 {) u3 D% ]/ u' Z9 E$ y9 S- l
A. journal to the trial balance2 L- R( p- x+ J# G
B. ledger to the financial statements
_3 D: e+ u- J. M D* WC. ledger to the trial balance
i, J( [4 l0 L( a9 X* P; W9 AD. journal to the ledger' ?9 [ U6 E( f* i; @; B, Z
12. A long call option is ______.0 n6 @8 A" l& p( s+ U0 @
A. the right to buy the underlying instrument8 }' N, f: c- N) \1 x5 ~
B. the right to sell the underlying instrument
4 Q }& [- S7 x C% C& |5 g1 j. lC. the obligation to buy the underlying instrument: @/ V# T! c$ y6 o6 y
D. the obligation to sell the underlying instrument
) e+ m: X" a0 L13. Which of the following $1 000 face-value securities has the highest yield to maturity? ______.0 o/ i) s+ O2 Y! l) {+ J8 L& X
A. A 5% coupon bond selling for $1000( m6 C! q; n s% y" L+ l0 R
B. A 15% coupon bond selling for $10009 R/ m% R1 l/ Y5 ^
C. A 10% coupon bond selling for $1000
& V8 X) ^1 \9 R, G' m7 E' @D. A 15% coupon bond selling for $900
0 L4 S; j, p7 y- @3 |14. When the price of a bond is ______ the equilibrium price, there is an excess demand of bonds and the price will ______.7 _1 e% q# A) R; _
A. above...rise
* m0 ~8 ^2 i/ |9 N# w+ A- GB. above...fall( u' x/ s% `, F5 a* u
C. below...fall1 D& C# q+ c3 ^) M1 n% N5 f! K& K
D. below...rise$ K# F j7 L- u3 e, T
15. Which of the following accounts is not closed? ______.% x1 f8 R. N& \# B b" `: p4 d
A. Supplies Expense
" @# y( m7 g' j1 j1 ?2 U, P! BB. Prepaid Insurance
2 A* K D- A2 l, Y- s; UC. Interest Revenue
! v3 w0 @& d0 V3 M9 AD. Dividends$ l; v& x3 `0 Y! x9 Z
16. Which of the following instruments is traded in a capital market? ______.4 Y1 K8 O- D) ~5 Z
A. Bankers acceptance
# r' k' b9 n9 MB. S. Treasury Bill- a i2 m) x0 \/ P8 `, c: R
C. Eurodollar9 a) _8 c; K9 z! o& m' v0 e: e
D. Commercial paper
- l% l* C- e/ V1 b Z3 mE. None of the above9 @3 L$ u1 K' v. o! a
% @# k! L* o+ Q: l" Q1 J: G; S17. Which of the following is generally true of all bonds? ______.
/ a8 k/ Y3 U& f9 j0 lA. The longer a bond maturity, the lower is the rate of return that occurs as a result of the increase in an interest rate
) l4 A* I5 h5 M& BB. Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise5 A7 W4 u9 }) X. N7 _3 T% O
C. Prices and returns for long-term bonds are more volatile than those for shorter-term bonds |