Question 1

A motivation for holding stock is

Accepted Answer

A) To receive interest payments on the firm's debt. 
B) The anticipation of capital gains. 
C) To have a direct role in the operation of the corporation. 
D) To own a low-risk,illiquid asset. 
A) To receive interest payments on the firm's debt. 
B) The anticipation of capital gains. 
C) To have a direct role in the operation of the corporation. 
D) To own a low-risk,illiquid asset.

Question 2

The primary economic role of financial markets is to

Accepted Answer

A) Gain profits for investors. 
B) Allocate resources to profitable businesses and away from businesses with losses. 
C) Earn dividends for shareholders. 
D) Provide the federal government with a source of loanable funds when it has a budget deficit. 
A) Gain profits for investors. 
B) Allocate resources to profitable businesses and away from businesses with losses. 
C) Earn dividends for shareholders. 
D) Provide the federal government with a source of loanable funds when it has a budget deficit.

Question 3

The present discounted value of a future payment will decrease when the

Accepted Answer

A) Interest rate increases. 
B) Future payment is closer to the present. 
C) Risk of nonpayment increases. 
D) Opportunity cost of money decreases. 
A) Interest rate increases. 
B) Future payment is closer to the present. 
C) Risk of nonpayment increases. 
D) Opportunity cost of money decreases.

Question 4

The expected value of a future payment differs from the present discounted value in that the expected value

Accepted Answer

A) Takes into account the possibility of nonpayment. 
B) Uses a lower interest rate in its calculation. 
C) Uses a higher interest rate in its calculation. 
D) Assumes that future payments take place over a longer period of time. 
A) Takes into account the possibility of nonpayment. 
B) Uses a lower interest rate in its calculation. 
C) Uses a higher interest rate in its calculation. 
D) Assumes that future payments take place over a longer period of time.

Question 5

Expected value refers to the

Accepted Answer

A) Future value of a current payment. 
B) Present value of a future payment. 
C) Probable value of a future payment,including the risk of nonpayment. 
D) Difference in the rates of return on risky and safe investments. 
A) Future value of a current payment. 
B) Present value of a future payment. 
C) Probable value of a future payment,including the risk of nonpayment. 
D) Difference in the rates of return on risky and safe investments.

Question 6

Financial intermediaries make the allocation of resources more efficient by

Accepted Answer

A) Transferring purchasing power from savers to dissavers. 
B) Lending or investing the savings they hold. 
C) Reducing search and information costs in the financial markets. 
D) Spreading risk out over many individuals. 
A) Transferring purchasing power from savers to dissavers. 
B) Lending or investing the savings they hold. 
C) Reducing search and information costs in the financial markets. 
D) Spreading risk out over many individuals.

Exam 32: Financial Markets

A motivation for holding stock is

The primary economic role of financial markets is to

The present discounted value of a future payment will decrease when the

The expected value of a future payment differs from the present discounted value in that the expected value

Expected value refers to the

Financial intermediaries make the allocation of resources more efficient by

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

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