Question 1

Which of the following factors would be considered by a fundamental analyst when predicting a firm's stock price?

Accepted Answer

A) recent changes in the stock's price 
B) the knowledge and skills of the firm's current management 
C) the marketing strategies of the firm's competitors 
D) a "head and shoulders" shape in a line graph of the firm's stock price 
E) both b and c 
A) recent changes in the stock's price 
B) the knowledge and skills of the firm's current management 
C) the marketing strategies of the firm's competitors 
D) a "head and shoulders" shape in a line graph of the firm's stock price 
E) both b and c

Question 2

The supply curve for a particular bond is vertical.

Accepted Answer

A) True 
 B)False

Question 3

The efficient markets theory of stock prices,says that new information

Accepted Answer

A) is quickly and completely incorporated into stock prices 
B) is incorporated into stock prices only when discovered by fundamental analysis 
C) causes stock prices to increase 
D) has little impact on stock prices 
E) is incorporated into stock prices with a time lag of a few days 
A) is quickly and completely incorporated into stock prices 
B) is incorporated into stock prices only when discovered by fundamental analysis 
C) causes stock prices to increase 
D) has little impact on stock prices 
E) is incorporated into stock prices with a time lag of a few days

Question 4

A financial asset is

Accepted Answer

A) a unit of physical capital with a positive market value 
B) any asset that generates a stream of income 
C) a share in the ownership of a productive enterprise 
D) a form of money 
E) a promise to pay future income in some form 
A) a unit of physical capital with a positive market value 
B) any asset that generates a stream of income 
C) a share in the ownership of a productive enterprise 
D) a form of money 
E) a promise to pay future income in some form

Question 5

Which of the following is not a financial asset?

Accepted Answer

A) a corporate bond 
B) a piece of real estate 
C) an IOU 
D) a share of Coca-Cola stock 
E) a Treasury bond 
A) a corporate bond 
B) a piece of real estate 
C) an IOU 
D) a share of Coca-Cola stock 
E) a Treasury bond

Question 6

A new file cabinet will generate $300 in net revenue each year for a Data Storage Co.The file cabinet has a useful life of two years.At the end of the second year,the cabinet will be sold as scrap metal for $200.If the interest rate is 10 percent (0.10)per year,what is the present value of the file cabinet to Data Storage Co.? (Assume that each year's revenue is received at the end of the year. )

Accepted Answer

A) $500 
B) $600 
C) $800 
D) $1,000 
E) none of the above 
A) $500 
B) $600 
C) $800 
D) $1,000 
E) none of the above

Question 7

When the demand for alternative investments decreases,the market for a particular bond adjusts by

Accepted Answer

A) having the supply of that bond increase. 
B) having the supply of that bond decrease. 
C) having the demand for that bond increase. 
D) having the demand for that bond decrease. 
A) having the supply of that bond increase. 
B) having the supply of that bond decrease. 
C) having the demand for that bond increase. 
D) having the demand for that bond decrease.

Question 8

The table below shows the present value of additional revenue from cash registers at a fast food restaurant.If the price of a cash register is $700,what will be the restaurant's total investment expenditure on cash registers?

Accepted Answer

A) $3,500.00 
B) $4,545.93 
C) $1,400.00 
D) $3,409.45 
E) $2,100.00 
A) $3,500.00 
B) $4,545.93 
C) $1,400.00 
D) $3,409.45 
E) $2,100.00

Question 9

A corporation that specializes in owning shares of stock in other corporations is called a

Accepted Answer

A) secondary market 
B) mutual fund 
C) stock broker 
D) second hander 
E) day trader 
A) secondary market 
B) mutual fund 
C) stock broker 
D) second hander 
E) day trader

Question 10

What would you pay for a newly issued 10-year bond with face value of $10,000 and no coupon payments? Assume the interest rate is 5 percent (0.05)per year.

Accepted Answer

A) $0 
B) $6,139.13 
C) $10,000 
D) $95,632.41 
E) $100,000.00 
A) $0 
B) $6,139.13 
C) $10,000 
D) $95,632.41 
E) $100,000.00

Question 11

The relationship between the marginal product of capital (MPK),the product price (P),and marginal revenue product of capital (MRPK)in a perfectly competitive market is

Accepted Answer

A) MPK = P × MRPK 
B) MPK = P + MRPK 
C) MRPK = P/MPK 
D) MRPK = P × MPK 
E) MRPK = P + MPK 
A) MPK = P × MRPK 
B) MPK = P + MRPK 
C) MRPK = P/MPK 
D) MRPK = P × MPK 
E) MRPK = P + MPK

Question 12

A pizza shop owner needs to buy a pizza oven and is deciding between a new one and a used one.If he buys an older used one it will generate $4,000 of net income for 3 years.If he buys a new one it will generate $5,000 of net income for 4 years.If the interest rate is 10%,what is the difference in value between the two ovens? (Assume that each year's revenue is received at the end of the year. )

Accepted Answer

A) $793.83 
B) $2,577.10 
C) $6,252.25 
D) $2,777.78 
E) $1,000 
A) $793.83 
B) $2,577.10 
C) $6,252.25 
D) $2,777.78 
E) $1,000

Question 13

In New York City,you need a license to drive a taxicab.Each license is valid for three years,and then it expires.The holder of a license can expect to earn $10,000 in profit each year.If the interest rate is 5 percent (0.05)per year,what is the value of a newly issued taxicab license? (Assume that each year's profit is received at the end of the year. )

Accepted Answer

A) $1,990.74 
B) $10,000.00 
C) $14,074.07 
D) $27,232.48 
E) $30,000.00 
A) $1,990.74 
B) $10,000.00 
C) $14,074.07 
D) $27,232.48 
E) $30,000.00

Question 14

Xanadu Corp.has issued 90 million shares of stock,and it has no plans to issue any more in the near future.If the demand for Xanadu stock increases,

Accepted Answer

A) the price and quantity of Xanadu stock will both increase 
B) the price and quantity of Xanadu stock will both decrease 
C) the price will remain constant,and the quantity of Xanadu stock will increase 
D) the quantity of Xanadu stock will remain constant,and the price will increase 
E) the price will increase,and the quantity of Xanadu stock will decrease 
A) the price and quantity of Xanadu stock will both increase 
B) the price and quantity of Xanadu stock will both decrease 
C) the price will remain constant,and the quantity of Xanadu stock will increase 
D) the quantity of Xanadu stock will remain constant,and the price will increase 
E) the price will increase,and the quantity of Xanadu stock will decrease

Question 15

The marginal revenue product of capital is

Accepted Answer

A) the increase in output that results from employing one more unit of capital 
B) the increase in profit that results from employing one more unit of capital 
C) the increase in revenue that results from employing one more unit of labor 
D) the increase in revenue that results from employing one more unit of capital 
E) the increase in profits that results from employing one less unit of labor 
A) the increase in output that results from employing one more unit of capital 
B) the increase in profit that results from employing one more unit of capital 
C) the increase in revenue that results from employing one more unit of labor 
D) the increase in revenue that results from employing one more unit of capital 
E) the increase in profits that results from employing one less unit of labor

Question 16

The amount of money that someone would pay today for the right to receive a future payment is called

Accepted Answer

A) the present value of the future payment 
B) the determinate value of the future payment 
C) the interest rate 
D) the principal 
E) the time discount 
A) the present value of the future payment 
B) the determinate value of the future payment 
C) the interest rate 
D) the principal 
E) the time discount

Question 17

The payments made to shareholders from a firm's profits are called

Accepted Answer

A) owner subsidies 
B) principal 
C) coupon payments 
D) retained earnings 
E) dividends 
A) owner subsidies 
B) principal 
C) coupon payments 
D) retained earnings 
E) dividends

Question 18

Consider three bonds,from Corporation X,Corporation Y,and Corporation Z.The X and Y bonds mature in 1 year,while the Z bond matures in 2 years.The Y and Z bonds have face values of $5,000,while the X bond has a face value of $4,000.If the interest rate is 10 percent (0.10)per year,rank the three bonds from highest present value to lowest present value.

Accepted Answer

A) X,Y,Z 
B) Z,Y,X 
C) Y,Z,X 
D) Z,X,Y 
E) Y,X,Z 
A) X,Y,Z 
B) Z,Y,X 
C) Y,Z,X 
D) Z,X,Y 
E) Y,X,Z

Question 19

What is the value of a newly issued 3-year bond with a face value of $5,000 and no coupon payments? Assume the interest rate is 8 percent (0.08)per year.

Accepted Answer

A) $4,629.63 
B) $5,000.00 
C) $3,969.16 
D) $3,756.57 
E) $4,545.45 
A) $4,629.63 
B) $5,000.00 
C) $3,969.16 
D) $3,756.57 
E) $4,545.45

Question 20

When the demand for alternative investments increases,the market for a particular bond adjusts by

Accepted Answer

A) having the supply of that bond increase. 
B) having the supply of that bond decrease. 
C) having the demand for that bond increase. 
D) having the demand for that bond decrease. 
A) having the supply of that bond increase. 
B) having the supply of that bond decrease. 
C) having the demand for that bond increase. 
D) having the demand for that bond decrease.

Which of the following factors would be considered by a fundamental analyst when predicting a firm's stock price?

The supply curve for a particular bond is vertical.

The efficient markets theory of stock prices,says that new information

A financial asset is

Which of the following is not a financial asset?

When the demand for alternative investments decreases,the market for a particular bond adjusts by

The table below shows the present value of additional revenue from cash registers at a fast food restaurant.If the price of a cash register is $700,what will be the restaurant's total investment expenditure on cash registers?

A corporation that specializes in owning shares of stock in other corporations is called a

What would you pay for a newly issued 10-year bond with face value of $10,000 and no coupon payments? Assume the interest rate is 5 percent (0.05)per year.

The relationship between the marginal product of capital (MPK),the product price (P),and marginal revenue product of capital (MRP_K)in a perfectly competitive market is

Xanadu Corp.has issued 90 million shares of stock,and it has no plans to issue any more in the near future.If the demand for Xanadu stock increases,

The marginal revenue product of capital is

The amount of money that someone would pay today for the right to receive a future payment is called

The payments made to shareholders from a firm's profits are called

What is the value of a newly issued 3-year bond with a face value of $5,000 and no coupon payments? Assume the interest rate is 8 percent (0.08)per year.

When the demand for alternative investments increases,the market for a particular bond adjusts by

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 14: Capital and Financial Markets

Which of the following factors would be considered by a fundamental analyst when predicting a firm's stock price?

The supply curve for a particular bond is vertical.

The efficient markets theory of stock prices,says that new information

A financial asset is

Which of the following is not a financial asset?

When the demand for alternative investments decreases,the market for a particular bond adjusts by

The table below shows the present value of additional revenue from cash registers at a fast food restaurant.If the price of a cash register is $700,what will be the restaurant's total investment expenditure on cash registers?

A corporation that specializes in owning shares of stock in other corporations is called a

What would you pay for a newly issued 10-year bond with face value of $10,000 and no coupon payments? Assume the interest rate is 5 percent (0.05)per year.

The relationship between the marginal product of capital (MPK),the product price (P),and marginal revenue product of capital (MRPK)in a perfectly competitive market is

Xanadu Corp.has issued 90 million shares of stock,and it has no plans to issue any more in the near future.If the demand for Xanadu stock increases,

The marginal revenue product of capital is

The amount of money that someone would pay today for the right to receive a future payment is called

The payments made to shareholders from a firm's profits are called

What is the value of a newly issued 3-year bond with a face value of $5,000 and no coupon payments? Assume the interest rate is 8 percent (0.08)per year.

When the demand for alternative investments increases,the market for a particular bond adjusts by

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

The relationship between the marginal product of capital (MPK),the product price (P),and marginal revenue product of capital (MRP_K)in a perfectly competitive market is