Question 1

A credit score is a number that indicates the creditworthiness or likelihood that a borrower will make loan payments when due

Accepted Answer

A) True 
 B)False

Question 2

A mortgage-back security is an investment created by using a house as collateral for a loan.

Accepted Answer

A) True 
 B)False

Question 3

The principle of finance that "money has a time value" implies Money in hand today is worth less than the promise of receiving the same amount in the future because a sum of money today could be invested and grow over time.

Accepted Answer

A) True 
 B)False

Question 4

_______________ is the study of how individuals prepare for financial emergencies,protect against premature death and the loss of property,and accumulate wealth over time.

Accepted Answer

A) Personal finance 
B) Corporate finance 
C) Entrepreneurial finance 
D) Investment banking 
E) none of the above 
A) Personal finance 
B) Corporate finance 
C) Entrepreneurial finance 
D) Investment banking 
E) none of the above

Question 5

____________________ provide the record-keeping mechanism for showing ownership of the financial instruments used in the flow of financial funds between savers and borrowers and record revenues,expenses,and profitability of organizations that produce and exchange goods and services.

Accepted Answer

A) Financial Managers 
B) Accountants 
C) Operations Managers 
D) Statisticians 
E) none of the above 
A) Financial Managers 
B) Accountants 
C) Operations Managers 
D) Statisticians 
E) none of the above

Question 6

A prime mortgage is a home loan to a borrower with relatively high credit worthiness indicating a relatively high likelihood that mortgage payments will be made when due;scores above 900 reflect the highest credit quality classification.

Accepted Answer

A) True 
 B)False

Question 7

The principle of finance that "reputation sometimes matters" implies that businesses do not necessarily require the trust and confidence of their customers,employees,and owners,as well as the community and society within which they operate,to be successful.

Accepted Answer

A) True 
 B)False

Question 8

Primary securities markets are markets where the transfer of existing debt and equity securities between investors occurs.

Accepted Answer

A) True 
 B)False

Question 9

Major participants in the secondary mortgage markets include all of the following except:

Accepted Answer

A) mortgage companies 
B) depository institutions such as banks and credit unions 
C) Ginnie Mae 
D) Fannie Mae 
E) all of the above are participants 
A) mortgage companies 
B) depository institutions such as banks and credit unions 
C) Ginnie Mae 
D) Fannie Mae 
E) all of the above are participants

Question 10

$1,000 invested today at 6% interest would be worth ________ one year from now

Accepted Answer

A) $1,600 
B) $1,066 
C) $1,160 
D) $1,006 
E) none of the above 
A) $1,600 
B) $1,066 
C) $1,160 
D) $1,006 
E) none of the above

Question 11

Which of the following financial institutions market "seasoned" instruments and securities?

Accepted Answer

A) brokerage firms 
B) finance companies 
C) mortgage lenders 
D) none of the above 
A) brokerage firms 
B) finance companies 
C) mortgage lenders 
D) none of the above

Question 12

Crucial elements of well-developed financial systems include:

Accepted Answer

A) financial management 
B) financial intermediaries 
C) financial markets 
D) all of the above 
A) financial management 
B) financial intermediaries 
C) financial markets 
D) all of the above

Question 13

An effective financial system must have

Accepted Answer

A) financial markets that facilitate the transfer of financial assets among individuals,institutions,businesses,and governments. 
B) financial institutions or intermediaries that support capital formation either by channeling savings into investment in physical assets or by fostering direct financial investments by individuals in financial institutions and businesses. 
C) an efficient monetary system 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. 
D) several sets of policy makers who pass laws and make decisions relating to fiscal and monetary policies. 
E) all of the above are required 
A) financial markets that facilitate the transfer of financial assets among individuals,institutions,businesses,and governments. 
B) financial institutions or intermediaries that support capital formation either by channeling savings into investment in physical assets or by fostering direct financial investments by individuals in financial institutions and businesses. 
C) an efficient monetary system 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. 
D) several sets of policy makers who pass laws and make decisions relating to fiscal and monetary policies. 
E) all of the above are required

Question 14

A sub-prime mortgage is a home loan made to a borrower with a relatively low credit score indicating the likelihood that loan payments might be missed when due.

Accepted Answer

A) True 
 B)False

Question 15

An area of finance that involves the sale or marketing of securities,the analysis of securities,and the management of investment risk through portfolio diversification is referred to as:

Accepted Answer

A) financial management 
B) investments 
C) financial institutions 
D) financial markets 
E) none of the above 
A) financial management 
B) investments 
C) financial institutions 
D) financial markets 
E) none of the above

Question 16

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. 
E) none of the above. 
A) greater risk. 
B) higher cost. 
C) longer useful life. 
D) more complex designs. 
E) none of the above.

Question 17

The possible conflict between managers and owners is sometimes called the

Accepted Answer

A) principal-subordinate problem 
B) principal-agent problem 
C) boss-subordinate problem 
D) boss-agent problem 
E) none of the above 
A) principal-subordinate problem 
B) principal-agent problem 
C) boss-subordinate problem 
D) boss-agent problem 
E) none of the above

Question 18

A sub-prime mortgage is a home loan made to a borrower with a relatively high credit score indicating the likelihood that loan payments might be missed when due.

Accepted Answer

A) True 
 B)False

Question 19

All of the following are true regarding mortgage backed securities except:

Accepted Answer

A) A mortgage-back security is a debt security created by pooling together a group of mortgage loans whose periodic payments belong to the holders of the security. 
B) Some mortgage-back securities "pass through" the interest and principal payments to the owners of the securities. 
C) Payments on the underlying mortgages are made to the financial institution that created the mortgage-backed security,and the institution,in turn,pays or passes through the payments to the investors or owners of the securities. 
D) In some mortgage-backed securities,the issuer separates or "strips" the interest and principal payment streams into separate securities. 
E) all of the above statements are true 
A) A mortgage-back security is a debt security created by pooling together a group of mortgage loans whose periodic payments belong to the holders of the security. 
B) Some mortgage-back securities "pass through" the interest and principal payments to the owners of the securities. 
C) Payments on the underlying mortgages are made to the financial institution that created the mortgage-backed security,and the institution,in turn,pays or passes through the payments to the investors or owners of the securities. 
D) In some mortgage-backed securities,the issuer separates or "strips" the interest and principal payment streams into separate securities. 
E) all of the above statements are true

Question 20

Which of the following statements is most correct?

Accepted Answer

A) Capital markets include short-term and long-term debt securities such as Treasury bills,notes,and bonds. 
B) Money market instruments include commercial paper,federal funds,repurchase agreements,and Treasury notes. 
C) Real estate mortgages are money market instruments. 
D) Federal agencies,and state and local governments,generally issue longer-term financial claims which trade in the capital market. 
A) Capital markets include short-term and long-term debt securities such as Treasury bills,notes,and bonds. 
B) Money market instruments include commercial paper,federal funds,repurchase agreements,and Treasury notes. 
C) Real estate mortgages are money market instruments. 
D) Federal agencies,and state and local governments,generally issue longer-term financial claims which trade in the capital market.

A credit score is a number that indicates the creditworthiness or likelihood that a borrower will make loan payments when due

A mortgage-back security is an investment created by using a house as collateral for a loan.

The principle of finance that "money has a time value" implies Money in hand today is worth less than the promise of receiving the same amount in the future because a sum of money today could be invested and grow over time.

_______________ is the study of how individuals prepare for financial emergencies,protect against premature death and the loss of property,and accumulate wealth over time.

____________________ provide the record-keeping mechanism for showing ownership of the financial instruments used in the flow of financial funds between savers and borrowers and record revenues,expenses,and profitability of organizations that produce and exchange goods and services.

A prime mortgage is a home loan to a borrower with relatively high credit worthiness indicating a relatively high likelihood that mortgage payments will be made when due;scores above 900 reflect the highest credit quality classification.

The principle of finance that "reputation sometimes matters" implies that businesses do not necessarily require the trust and confidence of their customers,employees,and owners,as well as the community and society within which they operate,to be successful.

Primary securities markets are markets where the transfer of existing debt and equity securities between investors occurs.

Major participants in the secondary mortgage markets include all of the following except:

$1,000 invested today at 6% interest would be worth ________ one year from now

Which of the following financial institutions market "seasoned" instruments and securities?

Crucial elements of well-developed financial systems include:

An effective financial system must have

A sub-prime mortgage is a home loan made to a borrower with a relatively low credit score indicating the likelihood that loan payments might be missed when due.

An area of finance that involves the sale or marketing of securities,the analysis of securities,and the management of investment risk through portfolio diversification is referred to as:

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

The possible conflict between managers and owners is sometimes called the

A sub-prime mortgage is a home loan made to a borrower with a relatively high credit score indicating the likelihood that loan payments might be missed when due.

All of the following are true regarding mortgage backed securities except:

Which of the following statements is most correct?

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 Valuation

Securities 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

A credit score is a number that indicates the creditworthiness or likelihood that a borrower will make loan payments when due

A mortgage-back security is an investment created by using a house as collateral for a loan.

The principle of finance that "money has a time value" implies Money in hand today is worth less than the promise of receiving the same amount in the future because a sum of money today could be invested and grow over time.

_______________ is the study of how individuals prepare for financial emergencies,protect against premature death and the loss of property,and accumulate wealth over time.

____________________ provide the record-keeping mechanism for showing ownership of the financial instruments used in the flow of financial funds between savers and borrowers and record revenues,expenses,and profitability of organizations that produce and exchange goods and services.

A prime mortgage is a home loan to a borrower with relatively high credit worthiness indicating a relatively high likelihood that mortgage payments will be made when due;scores above 900 reflect the highest credit quality classification.

The principle of finance that "reputation sometimes matters" implies that businesses do not necessarily require the trust and confidence of their customers,employees,and owners,as well as the community and society within which they operate,to be successful.

Primary securities markets are markets where the transfer of existing debt and equity securities between investors occurs.

Major participants in the secondary mortgage markets include all of the following except:

$1,000 invested today at 6% interest would be worth ________ one year from now

Which of the following financial institutions market "seasoned" instruments and securities?

Crucial elements of well-developed financial systems include:

An effective financial system must have

A sub-prime mortgage is a home loan made to a borrower with a relatively low credit score indicating the likelihood that loan payments might be missed when due.

An area of finance that involves the sale or marketing of securities,the analysis of securities,and the management of investment risk through portfolio diversification is referred to as:

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

The possible conflict between managers and owners is sometimes called the

A sub-prime mortgage is a home loan made to a borrower with a relatively high credit score indicating the likelihood that loan payments might be missed when due.

All of the following are true regarding mortgage backed securities except:

Which of the following statements is most correct?

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 Valuation

Securities 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