1. Commercial paper ______.
& p" M! _& H$ r( OA. is issued mainly by commercial banks
5 W: A, E' A+ K: P0 T! W9 JB.can be either short or long-term debt$ P0 a3 F6 ?4 f5 Y, Q% G
C. is most typically issued in very short maturities, such as one or two months
+ r7 ]( c: z/ e7 \: t. VD. ought to be considered a capital market instrument
. @3 Q3 j/ G& u/ {+ O/ r2 x" P$ `2. The expectations hypothesis assumes that investors regard bonds of different maturities .
4 j K+ U, N, q3 {0 pA. as perfect substitutes9 n8 D( {, U8 Q3 d4 T0 Y
B. as not substitutes at all: _5 f3 J4 d) f9 B# L
C. as substitutes, but not perfect substitutes
( @/ |8 t' [ C2 cD. none of the above
; i+ a5 z5 l0 |2 I3. If the yield on Treasury bills falls from 5.27% to 5.22%, then the yield will decrease by ______ basis points.# T- z Q, I+ X* U3 _; l2 X+ Z0 i
A. 0.05
7 u! [1 i9 {) L3 n5 J, V8 NB. 0.50 b5 H. }4 m& X. j1 A7 Z
C. 5
! V5 [* z- V7 C! I: X/ TD. 50
! j# ]. X$ q2 K. z: x4. Liquidity of a business is measured by ______.1 |) l( Q* H% _$ X3 t2 b1 N4 f0 f& S
A. the rate of return on owner equity7 q z) i* ? q; i
B. the ratio of total revenue to total expenses incurred
8 y9 E# C; O! `3 I' h f. kC. the ratio of current assets to current liabilities
) N; \" g4 |( k0 }0 ND. the ratio of income to costs% K+ q h" {6 ]+ X% P$ u0 R
5. Which of the following is an example of an automatic stabilizer? ______. G3 C: D8 y4 w+ B
A. A change in interest rates4 f! y8 @) W- o; v! Y! D" h
B. An increase in government spending# z1 F1 P7 ?% q7 x
C. Lowering income taxes
7 I% n8 K$ K/ p% Q. O, LD. Unemployment insurance0 E* i" g1 X/ V5 I" P/ l% j! q
6. Which of the following definitions fits depreciation? .
6 V# ~# b; m+ }( Q4 t- u0 d) vA. Allocation of the asset's market value to expense over its useful life/ j* C- c. o$ [( X! {- A7 [
B. Allocation of the asset's cost to expense over its useful life; W3 x0 k& t# t
C. Decreases in the asset's market value over its useful life" l! d2 w" E* O9 |# R$ B* y0 V% E
D. Increases in the fund set aside to replace the asset when it is worn out: |7 Z" u$ @' M ]9 T2 I
7. In the balance of payments accounts, ______ are unilateral transfers.
% A$ E v8 w# @# E+ u; s# FA. direct investments in another nation's businesses
. \/ [7 p# T" m5 K- |B. international transactions in securities with maturities greater than one year
7 x+ m# t2 ]1 Q2 k! p9 g6 |5 wC. international transactions of securities with maturities of less than one year6 S- X. a2 O) |+ Y* D
D. gifts and grants3 y( A/ Z4 I& J6 x( u2 l
8. A self-employed person who wishes to make provisions for retirement and reduce current tax liabilities should invest in .* V/ K' x/ c. [: c+ y7 g; J
A. a money market mutual fund
' J3 \/ ?8 m# x! j; LB. a time deposit
6 _0 ]6 C8 [, |C. Keogh Plan2 {7 I) a, U- x C* h
D. a money market deposit account
3 R1 j( Z$ I0 N9. The central problem in economics is that of______.7 V* o* g3 \6 t$ V& N, ?- D
A. comparing the success of command versus market economies$ a3 i: k3 K9 {9 h0 ^
B. guaranteeing that production occurs in the most efficient manner
- ]8 N O. w& w s# ]4 \% ZC. guaranteeing a minimum level of income for every citizen5 I) a }" ?/ A. S! w/ S
D. allocating scarce resources in such a manner that society's unlimited needs or wants are satisfied as well as possible # M6 m8 @. \) E
2 e5 i' |; _% {7 a. H
10. Which of the following is the most accurate measure of a bond's interest rates? ______.
& k# n2 G( g W( d9 {# n+ AA. Coupon rate
. u4 |! t, Z h8 l8 t- BB. Yield to maturity
4 m2 M7 O% [" T: @9 `C. Current yield% i0 M5 @4 L* l* v0 \
D. Discount yield* p l7 m0 G8 g; [- I
11. Which of the following is a determinant of asset demand? ______.
! Z8 c. w T* o+ x3 t3 SA. Expected return
; T$ n) K. |; sB. Risk
& K7 j1 |+ D! O7 @& e JC. Liquidity
7 G2 x! c. W4 w+ Q6 U* g8 z" kD. All of the above
3 `8 p; e ]9 U- R. s12. Which of the following items are reported as a current liability on the balance sheet? ____.
7 \- H% n7 v5 p% p" tA. Short-term notes payable
6 {" s" H' c8 _* u$ c1 d- O! a$ X! tB. Accrued payroll taxes
6 C' b q4 L4 d! y8 K3 u5 JC. Estimated warranties
9 s4 D! [/ l: r8 O$ H& q% z, V9 RD. All of the above
8 r5 P& G+ C4 q. ^+ @& ]/ d \13. Which of the following is not true of fiscal policy? ______.
5 R3 u" W: V& q3 \; }" l! ^A. Time lags occur with fiscal policy.4 @& \2 w% j7 o: ~. \
B. Automatic stabilizers help the economy.7 J) h2 d3 m9 k" ]2 ?9 z' f
C. "Crowding out" is not a problem of fiscal policy.8 L( H V# h/ W6 s: {3 c
D. None of the above.6 G' b% @9 B2 R% \' {0 G
14. What distinguishes the mortgage markets from other capital markets? ______.. n8 I E1 h( _! m0 ]% d# Q7 L
A. Securities in the mortgage markets are collateralized by real estate
6 p0 e& i% H" U6 uB. The mortgage markets usually involve long-term funds
' L0 u) e0 G6 {! zC. Borrowers in the mortgage markets include individuals and businesses
- U- X& x# t9 Z' kD. All of the above
& y+ T- Z$ Q6 g* R15. The process of closing the business, selling the assets, paying the liabilities, and disbursing remaining cash to the owners is called ______.
& ^: v& m H2 [' PA. withdrawal- Z! y) L1 ]6 T( R
B. liquidation
) V7 c1 S% B: @C. acquisition
$ Y n& |8 i. n: t, }; m) uD. dissolution8 \ z& p! T! o% q. V1 u3 \
16. When an investor is buying stock as an investment, the value of most direct concern is .) D7 V( P1 [' g4 Q
A. par value
( [; n, U, Q m) x+ t# c. UB. liquidation value
p1 N O. h" v, i) D% t( y4 s c& VC. market value$ Z/ G3 a; B. F7 R% g+ r+ l8 K
D. book value
% z7 f+ {+ k, g; Z$ i+ t( _17. Autonomous transactions are ______.
- ~5 r9 S; g% {A. transactions undertaken by governments to enforce a price (exchange rate ) in the foreign exchange market
+ w- _# V; e% @& C: ZB. transactions that are not undertaken in the pursuit of commercial profit8 J$ S8 s8 m. r- D$ X
C. transactions undertaken for normal commercial motives
. l& B6 C3 y3 \' \D. none of the above. f; i: y" E: ^/ E+ x9 \( {
! b9 \/ c n f/ S; X
18. If taxes decrease, which of the following correctly describes the effects? Disposable income______ consumption ______, and savings . |