1. The financial statements that are dated for a time period (rather than a specific time) are the .3 J9 p; `; a1 e7 X2 \8 C; \
A. balance sheet and income statement
% c4 i( G+ ?2 p6 M; iB. income statement and statement of cash flows0 N( E: G r! o7 U- {+ L
C. balance sheet and statement of owners' equity
" l% F3 I; C: v1 aD. all of the above: h, @. U% y/ e' m D# H
2. Which of the following is an example of off-balance-sheet financing? ______.' H: C* k; i9 ]5 N; G' D3 G& S
A. Operating lease& F. B7 a# L( ^: o9 B# @2 \
B. Debenture bonds
; A& x J q" c9 F+ _1 VC. Current portion of long-term debt: c( `% V! V( Q/ i9 l A [
D. Convertible bonds1 q0 E: T4 L6 C. q6 ~
3. Borrowers can gain access to the surplus funds of savers ______.% l, W$ j! V+ e0 Q Z
A. by issuing securities to savers
2 B/ }) |/ p* U6 u: ]/ o/ tB. through financial intermediaries
# `* W1 ~$ z9 x: m8 {C. by purchasing securities such as stocks and bonds6 {# S3 C: p, _, Q, C
D. all of the above5 }7 i" d3 f8 t/ L9 J
E. both A and B( P1 k0 ~& C/ n
4. Which of the following assets are most liquid? ______.9 E o2 q* X0 S- o
A. High grade corporate bonds; U4 F4 ^) x3 U/ Z
B. Time" deposits& E/ [2 A8 p" w( x
C. Stocks in General Electric Company/ p6 k: x7 S& c1 G
D. Passbook savings deposits, l( e4 V5 D7 q6 h+ ?& F# L% u
5. Secondary markets for securities .: X9 S( q% ^/ w. [+ M
A. deal only in bonds
3 a8 o+ V' ~' i/ BB. are markets primarily for the initial sale of new issues
7 p- K! ^! T/ h: k C+ zC. are markets for trading in outstanding debts and equity claims3 m+ ?& ^ ~ N2 L' T9 o
D. are also called "investment banks"" D7 [8 V0 Q2 _7 K5 Z% k4 g
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.1 G1 N1 S5 @" I9 P7 ]
A. future value
5 L, w. ~7 V( L8 B' }+ s* D* JB. present value
9 U u, C3 ^$ s$ Z9 [C. deflation
; x. O2 l# J) G; N% f1 j3 yD. interest
1 f7 b/ }5 ~/ l' K7. Which of the following would not result in a credit entry in the China's balance of payments? .
" I) m3 D8 H, X! a+ ]( j' IA. The sale of a piece of furniture to a business firm in Japan1 d5 i1 C; }& i. |1 K# f6 I
B. Interest and dividends paid on foreign investment in China# v( ]* _1 Q' k/ y+ h% c
C. Interests on a Chinese bank deposit in the United Kingdom
# R" r6 h$ N$ Y* J+ ~5 ]2 }D. An increase in foreign investment in China
; l- d% R& N; s4 q; P8. Futures contracts can be ______.
0 x1 X3 b+ @* F0 ]6 dA. used as protection against large price swings
. T6 G/ z; ?* J- W* r4 F) S5 LB. countered by an offsetting purchase or sale
2 h- p- Z8 ]! u8 g: |C. participated by hedgers or speculators
8 [6 x D4 ]% b, m% u) PD. all of the above
4 I3 E! j9 G: V1 k7 _: s# x9. Suppose that you own a business and are considering expanding your productive capital through an increase in investment spending. You will invest only if ______.
8 _; @1 I" v9 g/ I BA. you are able to obtain the necessary funds at a low nominal interest rate% a$ P4 p7 r+ b6 ^, Z6 o
B. the investment does not affect your cost of production0 o+ Q% q" z9 t# v2 j( P) ^/ o
C. the present value of future income exceeds the cost of the investment plus interest on any money that you must borrow
- ~; P4 R: K I2 {) SD. you observe that your competitors are expanding their productive capital
3 c r- W2 m5 ]' g7 b6 s% [% A0 L2 g& K- N! k) h
10. If Y and V are constant, and M doubles, the quantity equation implies that the price level .
5 I3 m* v$ u3 ^. q( C4 E# gA. more than doubles
7 d H0 X) l5 U( @! s$ `0 p5 bB. less than doubles
# A* u0 r& k( u. f/ F# S& o, \# } a& ?8 DC. doubles
/ `" L5 O" _. e c# kD. might do any of the above: \2 l! i! `3 w5 S- _# U( S2 Y2 Q
E. more information is needed
' E3 i. Y/ D2 N: c11. Posting is the process of transferring information from the ______. @: t$ r' Z. \$ Q; `3 _ ]
A. journal to the trial balance7 A3 h8 U4 Y; x( w: K9 H' T
B. ledger to the financial statements" N. G. N0 F) G3 S; [
C. ledger to the trial balance
. Q6 U& F9 k' p( K/ H1 A" L2 rD. journal to the ledger
, \3 x/ H5 z. E; V8 ?12. A long call option is ______.
1 t2 {5 o/ T1 ~/ UA. the right to buy the underlying instrument
) b0 G' z3 ~* } M9 mB. the right to sell the underlying instrument
+ ]% L# k4 _, a9 y( g1 n- `C. the obligation to buy the underlying instrument
) J2 H1 `! `" v) |D. the obligation to sell the underlying instrument
/ r. L% i5 _+ w* O9 w4 N13. Which of the following $1 000 face-value securities has the highest yield to maturity? ______.
9 _# N& ^# {! b) qA. A 5% coupon bond selling for $10009 M4 u- g& ]' H! @6 x# E
B. A 15% coupon bond selling for $1000
: e- V8 i6 I# v9 l5 LC. A 10% coupon bond selling for $1000' M$ z% G$ o$ b
D. A 15% coupon bond selling for $900
x$ i% z1 Y j# g- G; R! D0 |5 |" |14. When the price of a bond is ______ the equilibrium price, there is an excess demand of bonds and the price will ______.
6 V: `! k2 R; h# {5 j" d/ ]+ H5 }) DA. above...rise
. s2 W$ A8 T1 ~+ X: xB. above...fall% c( B/ I1 o) K+ m0 f* @
C. below...fall% @: \* W8 k q) M1 L9 D/ u
D. below...rise
: l6 D( r3 ]; A. @: {5 j V, N+ z15. Which of the following accounts is not closed? ______./ l- z* ~9 H( Z7 f1 S$ Z! a
A. Supplies Expense# V' U" b6 I. T+ \
B. Prepaid Insurance
8 L' G6 ?1 z' Q7 |# Q1 [$ ?# AC. Interest Revenue
, q( E, c6 Z' a/ T. X- nD. Dividends
5 @$ y* Y. s$ i% H- d i16. Which of the following instruments is traded in a capital market? ______.7 X% G; l- H4 T* w" P9 M# R
A. Bankers acceptance& Q F2 O! V- X( {
B. S. Treasury Bill
$ a/ y+ x9 i* J' F% T. T7 k6 L4 ]C. Eurodollar
1 v3 E. M5 V) u R: a% o" eD. Commercial paper3 S+ D) Y- k* z
E. None of the above
; G2 o8 @, T0 R
8 m1 h: m& H/ G5 Y% D0 P- v* }8 k17. Which of the following is generally true of all bonds? ______.- m3 p" l; W8 p1 `3 {
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 l3 z1 S4 g/ c2 c7 f
B. Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise
% g5 g5 l! R P6 s7 NC. Prices and returns for long-term bonds are more volatile than those for shorter-term bonds |