Question 1

Economic conditions exert a profound impact on the financial markets.

Accepted Answer

A) True 
 B)False

Question 2

Please explain what is meant by the term social accounting.

Accepted Answer

Social Accounting is a system

Question 3

The basic premise of the asymmetric information hypothesis is that

Accepted Answer

A)  Some individuals and institutions have access to pockets of information concerning the true value and risk of financial assets that others do not 
B)  All individuals and institutions have access to pockets of information concerning the true value and risk of financial assets 
C)  Is the same as the efficient markets hypothesis 
D)  None of the above 
E)  All of the above 
A)  Some individuals and institutions have access to pockets of information concerning the true value and risk of financial assets that others do not 
B)  All individuals and institutions have access to pockets of information concerning the true value and risk of financial assets 
C)  Is the same as the efficient markets hypothesis 
D)  None of the above 
E)  All of the above

Question 4

The Sarbanes Oxley Accounting Practices Act (SARBOX) was in response to the trouble that Enron and other widely publicized corporate scandals caused, was

Accepted Answer

A)  Signed into law in 2002 
B)  Signed into law in 2007 
C)  Signed into law in 1995 
D)  None of the above 
E)  All of the above 
A)  Signed into law in 2002 
B)  Signed into law in 2007 
C)  Signed into law in 1995 
D)  None of the above 
E)  All of the above

Question 5

Two of the most respected sources of information on major security issues and issuers are Standard & Poor's Corp. and the Federal Reserve.

Accepted Answer

A) True 
 B)False

Question 6

The additional stocks in the S&P 500 are the shares at 40 utility, 40 transportation and 40 financial company stocks not included in the S&P 400.

Accepted Answer

A) True 
 B)False

Question 7

Using each of the following description, identify which key term or concept presented in this chapter matches them.
a. A system of recordkeeping covering economic and/or financial activity for the whole economy or for major sectors of the economy. 
b. A system of accounts reporting on a nation's total production, spending, consumption and savings. 
c. The price for selling securities to the public as published by dealers.
d. A debt obligation issued by a business or governmental unit usually lasting more than 5 years. 
e. A short-term IOU usually with a maturity of less than 5 years.

Accepted Answer

a. Social accounting

Question 8

Several types of financial statements are presented in the Flow of Funds Accounts. Which item below is not a financial statement presented in the Federal Reserve's Flow of Funds Accounts?

Accepted Answer

A)  Balance sheet for each sector 
B)  Sector Statement of Revenues and Expenses 
C)  Sector Sources and Uses of Funds Statement 
D)  Flow of Funds Matrix for the Entire Economy 
E)  All of the above statements are prepared and presented in the Flow of Funds Accounts 
A)  Balance sheet for each sector 
B)  Sector Statement of Revenues and Expenses 
C)  Sector Sources and Uses of Funds Statement 
D)  Flow of Funds Matrix for the Entire Economy 
E)  All of the above statements are prepared and presented in the Flow of Funds Accounts

Question 9

Before the Great Depression of the 1930s, the public was often victimized by misinformation about the true condition and intent of companies coming to market with new stock and bond issues.

Accepted Answer

A) True 
 B)False

Question 10

All of the following items but one are limitations of the Flow of Funds Accounts mentioned in the text. Which limitation was not mentioned in the text?

Accepted Answer

A)  No information on transactions among economic units within each sector 
B)  Purchases of securities are reported, but net sales are not 
C)  Changes in account values reflect capital gains and losses as well as savings flows 
D)  Unreported transactions 
E)  All of the above are limitations mentioned in the text 
A)  No information on transactions among economic units within each sector 
B)  Purchases of securities are reported, but net sales are not 
C)  Changes in account values reflect capital gains and losses as well as savings flows 
D)  Unreported transactions 
E)  All of the above are limitations mentioned in the text

Question 11

Please complete the following statement: Net Investment in Plant and Equipment = Net Increase in Liabilities + ___ - ____. The items which correctly complete the above statement in proper order are:

Accepted Answer

A)  Net real investment, net current saving 
B)  Net financial investment, net borrowing 
C)  Net current saving, net acquisitions of financial assets 
D)  Net financial investment, net current saving 
E)  None of the above correctly complete the statement in proper order 
A)  Net real investment, net current saving 
B)  Net financial investment, net borrowing 
C)  Net current saving, net acquisitions of financial assets 
D)  Net financial investment, net current saving 
E)  None of the above correctly complete the statement in proper order

Question 12

The Flow of Funds Matrix reminds us that, for all sectors of the economy combined into one, the amount of saving must equal:

Accepted Answer

A)  The amount of financial investment in the economy 
B)  The total amount of real investment in the economy 
C)  The total amount of borrowing in the economy 
D)  The total amount of consumption spending in the economy 
E)  None of the above 
A)  The amount of financial investment in the economy 
B)  The total amount of real investment in the economy 
C)  The total amount of borrowing in the economy 
D)  The total amount of consumption spending in the economy 
E)  None of the above

Question 13

To improve the flow of information about securities offered for public sale and prohibit misinformation and securities fraud, the United States Congress passed the Securities Act of 2003.

Accepted Answer

A) True 
 B)False

Question 14

To counter the lemons and adverse selection problems in its lending activity, a bank can:

Accepted Answer

A)  Raise interest rates to compensate for the risk it assumes 
B)  Invest in credit reports 
C)  Require collateral 
D)  Charge different interest rates to different borrowers 
E)  All of the above 
A)  Raise interest rates to compensate for the risk it assumes 
B)  Invest in credit reports 
C)  Require collateral 
D)  Charge different interest rates to different borrowers 
E)  All of the above

Question 15

In addition to the Standard & Poor's 400, the Standard & Poor's 500 Index contains

Accepted Answer

A)  40 utility stocks 
B)  20 transportation stocks 
C)  40 financial companies stocks 
D)  None of the above 
E)  All of the above 
A)  40 utility stocks 
B)  20 transportation stocks 
C)  40 financial companies stocks 
D)  None of the above 
E)  All of the above

Question 16

Moral hazard is an information asymmetry problem that arises after contracts are signed.

Accepted Answer

A) True 
 B)False

Question 17

While the Beta measurements of individual securities can vary widely, the Beta of the whole market's portfolio of securities is always equal to 1.0.

Accepted Answer

A) True 
 B)False

Question 18

To improve the flow of information about securities offered for public sale and prohibit misinformation and securities fraud, the United States Congress passed the

Accepted Answer

A)  Securities Act in 2003 
B)  Securities Act in 1933 
C)  Securities and Exchange Commission Honesty Act 
D)  None of the above 
E)  All of the above 
A)  Securities Act in 2003 
B)  Securities Act in 1933 
C)  Securities and Exchange Commission Honesty Act 
D)  None of the above 
E)  All of the above

Question 19

Combining the financial and real assets of US households total is around $15 trillion.

Accepted Answer

A) True 
 B)False

Question 20

In the Flow of Funds Accounts net current savings for a sector of the economy equals net real investment.

Accepted Answer

A) True 
 B)False

Exam 3: Financial Indices, Market Information, and Economic Data

Economic conditions exert a profound impact on the financial markets.

Please explain what is meant by the term social accounting.

The basic premise of the asymmetric information hypothesis is that

The Sarbanes Oxley Accounting Practices Act (SARBOX) was in response to the trouble that Enron and other widely publicized corporate scandals caused, was

Two of the most respected sources of information on major security issues and issuers are Standard & Poor's Corp. and the Federal Reserve.

The additional stocks in the S&P 500 are the shares at 40 utility, 40 transportation and 40 financial company stocks not included in the S&P 400.

Several types of financial statements are presented in the Flow of Funds Accounts. Which item below is not a financial statement presented in the Federal Reserve's Flow of Funds Accounts?

Before the Great Depression of the 1930s, the public was often victimized by misinformation about the true condition and intent of companies coming to market with new stock and bond issues.

All of the following items but one are limitations of the Flow of Funds Accounts mentioned in the text. Which limitation was not mentioned in the text?

Please complete the following statement: Net Investment in Plant and Equipment = Net Increase in Liabilities + ___ - ____. The items which correctly complete the above statement in proper order are:

The Flow of Funds Matrix reminds us that, for all sectors of the economy combined into one, the amount of saving must equal:

To improve the flow of information about securities offered for public sale and prohibit misinformation and securities fraud, the United States Congress passed the Securities Act of 2003.

To counter the lemons and adverse selection problems in its lending activity, a bank can:

In addition to the Standard & Poor's 400, the Standard & Poor's 500 Index contains

Moral hazard is an information asymmetry problem that arises after contracts are signed.

While the Beta measurements of individual securities can vary widely, the Beta of the whole market's portfolio of securities is always equal to 1.0.

To improve the flow of information about securities offered for public sale and prohibit misinformation and securities fraud, the United States Congress passed the

Combining the financial and real assets of US households total is around $15 trillion.

In the Flow of Funds Accounts net current savings for a sector of the economy equals net real investment.

Understanding the Financial System and Its Impact on the Economy and Markets

Financial Systems, Monetary Units, and the Role of Money in the Economy

The Financial Crisis and Its Impact on the Mortgage Market and Economy

Understanding Interest Rates, Savings, and the Wealth Effect

Financial Concepts and Interest Rates

Effects of Inflation and Yield Curves on Stock Prices and Investments

Understanding Risk and Market Factors in Financial Securities

Exploring Financial Markets and Hedging Strategies

Factors Affecting the Volume of CDs

Exploring the Reserve Accounting System, Money Markets, and Financial Instruments

Exploring Central Banks and Their Impact on the Economy and Financial System

Central Banking and Monetary Policy: Exploring Tools and Strategies

Banking and Financial Services: Regulations, Operations, and Trends

Comparative Analysis of Financial Institutions and Their Operations

Exploring Various Aspects of Pension Funds, Finance Companies, and Insurance Industry

The Impact of Deregulation and Regulation on Financial Institutions and Banking Industry in the United States

Treasury Auctions, Public Debt, and Government Borrowing: Exploring the Us Treasury System

Corporate Bond Pricing, Market Development, and Financing Strategies

The Truth About Regulation Fd and Stock Holdings: Debunking Common Myths in the Financial Market

Flexible Savings Account Options

Mortgage Market and Mortgage Instruments

International Financial Transactions and Balance of Payments

International Banking and Financial Regulations

Exploring the Complexities of Financial Services and Regulation

Filters

Please complete the following statement: Net Investment in Plant and Equipment = Net Increase in Liabilities + _ - __. The items which correctly complete the above statement in proper order are: