Question 1

Rational investors would consider an investment in a risky business venture only if they feel the expected return is high enough to justify the

Accepted Answer

A)  greater risk. 
B)  higher cost. 
C)  longer useful life. 
D)  more complex designs. 
A)  greater risk. 
B)  higher cost. 
C)  longer useful life. 
D)  more complex designs.

Question 2

Intermediaries that help the financial system operate efficiently and transfer funds from savers and investors to individuals, businesses, and governments that seek to spend or invest the funds are known as:

Accepted Answer

A)  banks 
B)  financial institutions 
C)  securities markets 
D)  government organizations 
A)  banks 
B)  financial institutions 
C)  securities markets 
D)  government organizations

Question 3

Involves analyzing real estate loan applications and assisting in the arranging of mortgage financing.

Accepted Answer

A)  Insurance broker 
B)  Research analyst 
C)  Real estate broker 
D)  Mortgage analyst 
A)  Insurance broker 
B)  Research analyst 
C)  Real estate broker 
D)  Mortgage analyst

Question 4

Receiving one dollar today has the same value as receiving one dollar in one year.

Accepted Answer

A) True 
 B)False

Question 5

The primary goal of the financial manager of a profit-seeking organization is to:

Accepted Answer

A)  maximize market share 
B)  maximize the owners' wealth 
C)  increase sales and profit 
D)  have healthy cash flow 
A)  maximize market share 
B)  maximize the owners' wealth 
C)  increase sales and profit 
D)  have healthy cash flow

Question 6

An efficient ______________ that is comprised of a central bank and a banking system that is able to create and transfer a stable medium of exchange called money.

Accepted Answer

A)  allocation system 
B)  banking system 
C)  monetary system 
D)  market system 
A)  allocation system 
B)  banking system 
C)  monetary system 
D)  market system

Question 7

The primary securities markets are

Accepted Answer

A)  the markets for previously issued securities such as the New York Stock Exchange 
B)  the markets where financial assets such as stocks and bonds are initially issued 
C)  the three most important financial markets in any economy 
D)  the markets for stocks and bonds only 
A)  the markets for previously issued securities such as the New York Stock Exchange 
B)  the markets where financial assets such as stocks and bonds are initially issued 
C)  the three most important financial markets in any economy 
D)  the markets for stocks and bonds only

Question 8

Larger businesses or corporations divide their finance activities into treasury and monitoring functions, whereas smaller firms often combine these functions.

Accepted Answer

A) True 
 B)False

Question 9

The riskier the investment, the lower the return.

Accepted Answer

A) True 
 B)False

Question 10

If the interest rate is equal to 0%, then a dollar today is worth

Accepted Answer

A)  more than a dollar tomorrow 
B)  the same as a dollar tomorrow 
C)  less than a dollar tomorrow 
D)  there is not sufficient information to tell 
A)  more than a dollar tomorrow 
B)  the same as a dollar tomorrow 
C)  less than a dollar tomorrow 
D)  there is not sufficient information to tell

Question 11

Two risky assets can be combined to lower the overall risk of a portfolio. This principle is commonly referred to as

Accepted Answer

A)  blending 
B)  asset allocation 
C)  diversification 
D)  portfolio segmentation 
A)  blending 
B)  asset allocation 
C)  diversification 
D)  portfolio segmentation

Question 12

This is the study of how individuals prepare for financial emergencies, protect against premature death and property losses, and accumulate wealth.

Accepted Answer

A)  Corporate finance 
B)  Business finance 
C)  Entrepreneurial finance 
D)  Personal finance 
E)  None of the above 
A)  Corporate finance 
B)  Business finance 
C)  Entrepreneurial finance 
D)  Personal finance 
E)  None of the above

Question 13

Financial markets encourage investment by:

Accepted Answer

A)  providing capital at lower rates than provided by banks 
B)  providing electronic execution of transactions which are faster and cheaper than other methods 
C)  providing the means for savers to easily and quickly convert financial assets into cash when needed 
D)  encouraging people not to buy goods and services 
A)  providing capital at lower rates than provided by banks 
B)  providing electronic execution of transactions which are faster and cheaper than other methods 
C)  providing the means for savers to easily and quickly convert financial assets into cash when needed 
D)  encouraging people not to buy goods and services

Question 14

Checks:

Accepted Answer

A)  are orders to depository institutions to transfer money to the party who received the check 
B)  may be safely sent in the mail 
C)  provide a record of payment 
D)  all of the above 
A)  are orders to depository institutions to transfer money to the party who received the check 
B)  may be safely sent in the mail 
C)  provide a record of payment 
D)  all of the above

Question 15

A basic requirement for an effective financial system is a monetary system that performs which of the following financial functions?

Accepted Answer

A)  formation and transferring of money 
B)  storing gold and silver to back up money 
C)  creating jobs 
D)  transferring real assets 
A)  formation and transferring of money 
B)  storing gold and silver to back up money 
C)  creating jobs 
D)  transferring real assets

Question 16

Involves assisting customers with their day-to-day checking and banking transactions.

Accepted Answer

A)  Loan analyst 
B)  Bank teller 
C)  Investments research analyst 
D)  Bank manager 
A)  Loan analyst 
B)  Bank teller 
C)  Investments research analyst 
D)  Bank manager

Question 17

__________ are where debt securities with longer-term maturities are originated and traded.

Accepted Answer

A)  Debt securities markets 
B)  Bond markets 
C)  Mortgage markets 
D)  Equity Securities markets 
E)  Derivative securities markets 
A)  Debt securities markets 
B)  Bond markets 
C)  Mortgage markets 
D)  Equity Securities markets 
E)  Derivative securities markets

Question 18

An effective financial system is a complex mix of government and policy makers, a monetary system, financial institutions, and financial markets that interact to expedite the flow of financial capital from savings into investment.

Accepted Answer

A) True 
 B)False

Question 19

__________ are where debt securities with maturities longer than one year and corporate stocks are issued or traded.

Accepted Answer

A)  Money markets 
B)  Capital markets 
C)  Primary markets 
D)  Secondary markets 
A)  Money markets 
B)  Capital markets 
C)  Primary markets 
D)  Secondary markets

Question 20

Involves evaluating credit applications and collecting amounts owed by credit customers.

Accepted Answer

A)  Cash management analyst 
B)  Capital expenditures analyst 
C)  Credit analyst 
D)  Cost analyst 
E)  Tax analyst 
A)  Cash management analyst 
B)  Capital expenditures analyst 
C)  Credit analyst 
D)  Cost analyst 
E)  Tax analyst

Rational investors would consider an investment in a risky business venture only if they feel the expected return is high enough to justify the

Intermediaries that help the financial system operate efficiently and transfer funds from savers and investors to individuals, businesses, and governments that seek to spend or invest the funds are known as:

Involves analyzing real estate loan applications and assisting in the arranging of mortgage financing.

Receiving one dollar today has the same value as receiving one dollar in one year.

The primary goal of the financial manager of a profit-seeking organization is to:

An efficient ______________ that is comprised of a central bank and a banking system that is able to create and transfer a stable medium of exchange called money.

The primary securities markets are

Larger businesses or corporations divide their finance activities into treasury and monitoring functions, whereas smaller firms often combine these functions.

The riskier the investment, the lower the return.

If the interest rate is equal to 0%, then a dollar today is worth

Two risky assets can be combined to lower the overall risk of a portfolio. This principle is commonly referred to as

This is the study of how individuals prepare for financial emergencies, protect against premature death and property losses, and accumulate wealth.

Financial markets encourage investment by:

Checks:

A basic requirement for an effective financial system is a monetary system that performs which of the following financial functions?

Involves assisting customers with their day-to-day checking and banking transactions.

__________ are where debt securities with longer-term maturities are originated and traded.

An effective financial system is a complex mix of government and policy makers, a monetary system, financial institutions, and financial markets that interact to expedite the flow of financial capital from savings into investment.

__________ are where debt securities with maturities longer than one year and corporate stocks are issued or traded.

Involves evaluating credit applications and collecting amounts owed by credit customers.

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 1: The Financial Environment

Rational investors would consider an investment in a risky business venture only if they feel the expected return is high enough to justify the

Intermediaries that help the financial system operate efficiently and transfer funds from savers and investors to individuals, businesses, and governments that seek to spend or invest the funds are known as:

Involves analyzing real estate loan applications and assisting in the arranging of mortgage financing.

Receiving one dollar today has the same value as receiving one dollar in one year.

The primary goal of the financial manager of a profit-seeking organization is to:

An efficient ______________ that is comprised of a central bank and a banking system that is able to create and transfer a stable medium of exchange called money.

The primary securities markets are

Larger businesses or corporations divide their finance activities into treasury and monitoring functions, whereas smaller firms often combine these functions.

The riskier the investment, the lower the return.

If the interest rate is equal to 0%, then a dollar today is worth

Two risky assets can be combined to lower the overall risk of a portfolio. This principle is commonly referred to as

This is the study of how individuals prepare for financial emergencies, protect against premature death and property losses, and accumulate wealth.

Financial markets encourage investment by:

Checks:

A basic requirement for an effective financial system is a monetary system that performs which of the following financial functions?

Involves assisting customers with their day-to-day checking and banking transactions.

__________ are where debt securities with longer-term maturities are originated and traded.

An effective financial system is a complex mix of government and policy makers, a monetary system, financial institutions, and financial markets that interact to expedite the flow of financial capital from savings into investment.

__________ are where debt securities with maturities longer than one year and corporate stocks are issued or traded.

Involves evaluating credit applications and collecting amounts owed by credit customers.

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters