Question 1

Among the six principles of finance,all are included except:

Accepted Answer

A) All decisions are ultimately financial decisions. 
B) Higher returns are expected for taking on more risk 
C) Diversification of investments can reduce risk 
D) Financial markets are efficient in pricing securities 
E) all of the above are included 
A) All decisions are ultimately financial decisions. 
B) Higher returns are expected for taking on more risk 
C) Diversification of investments can reduce risk 
D) Financial markets are efficient in pricing securities 
E) all of the above are included

Question 2

The primary goal of the financial manager in a profit-seeking organization is to maximize the owners' wealth.

Accepted Answer

A) True 
 B)False

Question 3

The principle of finance that "reputation matters" implies that for institutions or businesses to be successful,they must have the trust and confidence of their customers,employees,and owners,as well as the community and society within which they operate.

Accepted Answer

A) True 
 B)False

Question 4

Three reasons we study finance include all of the following except:

Accepted Answer

A) To make informed economic decisions 
B) To make informed personal and business investment decisions 
C) To make informed career decisions based on a basic understanding of business finance 
D) all of the above 
A) To make informed economic decisions 
B) To make informed personal and business investment decisions 
C) To make informed career decisions based on a basic understanding of business finance 
D) all of the above

Question 5

A credit score measures the number of times a debtor has paid on time.

Accepted Answer

A) True 
 B)False

Question 6

Because of the financial crisis that began in 2008,by the end of 2009:

Accepted Answer

A) unemployment was in excess of 10 percent 
B) many homeowners owed more money on their mortgage loans than the their homes were worth 
C) home mortgage foreclosure rates and personal and business bankruptcies were increasing 
D) over 100 banks in the U.S.had already failed with over 500 more being considered financially weak 
E) all of the above are true 
A) unemployment was in excess of 10 percent 
B) many homeowners owed more money on their mortgage loans than the their homes were worth 
C) home mortgage foreclosure rates and personal and business bankruptcies were increasing 
D) over 100 banks in the U.S.had already failed with over 500 more being considered financially weak 
E) all of the above are true

Question 7

The six principles of finance include (1)Money has a time value,(2)Higher returns are expected for taking on less risk,(3)Diversification of investments can increase risk,(4)Financial markets are inefficient in pricing securities,(5)Manager and stockholder objectives may differ,and (6)Reputation matters.

Accepted Answer

A) True 
 B)False

Question 8

The _________________ is primarily responsible for the amount of money that is created,although most of the money is actually created by depository institutions.

Accepted Answer

A) Securities Exchange Commission 
B) Federal Treasury 
C) Federal Reserve System 
D) Financial Asset Oversight Board 
A) Securities Exchange Commission 
B) Federal Treasury 
C) Federal Reserve System 
D) Financial Asset Oversight Board

Question 9

Programs passed by the federal government in response to the financial crisis of 2007-2009 include all of the following except:

Accepted Answer

A) Economic Stabilization Act 
B) Troubled Asset Relief Program 
C) American Recovery and Reinvestment Act 
D) only a and b were passed 
E) a,b,and c were all passed 
A) Economic Stabilization Act 
B) Troubled Asset Relief Program 
C) American Recovery and Reinvestment Act 
D) only a and b were passed 
E) a,b,and c were all passed

Question 10

An adjustable-rate mortgage (ARM)has an interest rate that is usually adjusted annually to reflect changes in Treasury bill rates (or other benchmark);ARMs typically have variable interest rates for one to five years with a provision to switch to a fixed-rate over the remaining life of the ARM.

Accepted Answer

A) True 
 B)False

Question 11

An adjustable-rate mortgage (ARM)has an interest rate that is usually adjusted every five years to reflect changes in Treasury bill rates (or other benchmark);ARMs typically have variable interest rates over the 30 year life of the loan.

Accepted Answer

A) True 
 B)False

Question 12

Maximizing _____________________ is accomplished through effective financial planning and analysis,asset management,and the acquisition of financial capital.

Accepted Answer

A) the value of perquisites. 
B) the owners' wealth. 
C) the firm's profits 
D) the firm's earnings 
E) none of the above 
A) the value of perquisites. 
B) the owners' wealth. 
C) the firm's profits 
D) the firm's earnings 
E) none of the above

Question 13

________________ involves the sale or marketing of securities,the analysis of securities,and the management of risk through portfolio diversification.

Accepted Answer

A) investments 
B) financial institutions 
C) finance 
D) financial management 
A) investments 
B) financial institutions 
C) finance 
D) financial management

Question 14

______________ behavior refers to how an individual or organization treats others legally,fairly,and honestly.

Accepted Answer

A) Principal-agent 
B) Stakeholder 
C) Responsible 
D) Unethical 
E) none of the above 
A) Principal-agent 
B) Stakeholder 
C) Responsible 
D) Unethical 
E) none of the above

Question 15

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) dissection 
D) portfolio segmentation 
E) none of the above 
A) blending 
B) asset allocation 
C) dissection 
D) portfolio segmentation 
E) none of the above

Question 16

Three reasons we study finance include all of the following except:

Accepted Answer

A) To make informed economic decisions 
B) To make informed personal and business investment decisions 
C) To make informed career decisions based on a basic understanding of business finance 
D) To make informed medical decisions 
E) all of the above 
A) To make informed economic decisions 
B) To make informed personal and business investment decisions 
C) To make informed career decisions based on a basic understanding of business finance 
D) To make informed medical decisions 
E) all of the above

Question 17

In the United States,most money is created by:

Accepted Answer

A) depository institutions 
B) the United States Treasury 
C) the Federal Reserve System 
D) None of the above 
A) depository institutions 
B) the United States Treasury 
C) the Federal Reserve System 
D) None of the above

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

The principle of finance that "money has a time value" implies Money in hand today is worth more 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 20

Business finance is concerned with:

Accepted Answer

A) financial planning 
B) asset management 
C) fund raising 
D) all the above 
E) none of the above 
A) financial planning 
B) asset management 
C) fund raising 
D) all the above 
E) none of the above

Among the six principles of finance,all are included except:

The primary goal of the financial manager in a profit-seeking organization is to maximize the owners' wealth.

The principle of finance that "reputation matters" implies that for institutions or businesses to be successful,they must have the trust and confidence of their customers,employees,and owners,as well as the community and society within which they operate.

Three reasons we study finance include all of the following except:

A credit score measures the number of times a debtor has paid on time.

Because of the financial crisis that began in 2008,by the end of 2009:

The _________________ is primarily responsible for the amount of money that is created,although most of the money is actually created by depository institutions.

Programs passed by the federal government in response to the financial crisis of 2007-2009 include all of the following except:

An adjustable-rate mortgage (ARM)has an interest rate that is usually adjusted annually to reflect changes in Treasury bill rates (or other benchmark);ARMs typically have variable interest rates for one to five years with a provision to switch to a fixed-rate over the remaining life of the ARM.

An adjustable-rate mortgage (ARM)has an interest rate that is usually adjusted every five years to reflect changes in Treasury bill rates (or other benchmark);ARMs typically have variable interest rates over the 30 year life of the loan.

Maximizing _____________________ is accomplished through effective financial planning and analysis,asset management,and the acquisition of financial capital.

________________ involves the sale or marketing of securities,the analysis of securities,and the management of risk through portfolio diversification.

______________ behavior refers to how an individual or organization treats others legally,fairly,and honestly.

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

Three reasons we study finance include all of the following except:

In the United States,most money is created by:

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.

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

Business finance is concerned with:

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

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Exam 1: The Financial Environment

Among the six principles of finance,all are included except:

The primary goal of the financial manager in a profit-seeking organization is to maximize the owners' wealth.

The principle of finance that "reputation matters" implies that for institutions or businesses to be successful,they must have the trust and confidence of their customers,employees,and owners,as well as the community and society within which they operate.

Three reasons we study finance include all of the following except:

A credit score measures the number of times a debtor has paid on time.

Because of the financial crisis that began in 2008,by the end of 2009:

The _________________ is primarily responsible for the amount of money that is created,although most of the money is actually created by depository institutions.

Programs passed by the federal government in response to the financial crisis of 2007-2009 include all of the following except:

An adjustable-rate mortgage (ARM)has an interest rate that is usually adjusted annually to reflect changes in Treasury bill rates (or other benchmark);ARMs typically have variable interest rates for one to five years with a provision to switch to a fixed-rate over the remaining life of the ARM.

An adjustable-rate mortgage (ARM)has an interest rate that is usually adjusted every five years to reflect changes in Treasury bill rates (or other benchmark);ARMs typically have variable interest rates over the 30 year life of the loan.

Maximizing _____________________ is accomplished through effective financial planning and analysis,asset management,and the acquisition of financial capital.

________________ involves the sale or marketing of securities,the analysis of securities,and the management of risk through portfolio diversification.

______________ behavior refers to how an individual or organization treats others legally,fairly,and honestly.

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

Three reasons we study finance include all of the following except:

In the United States,most money is created by:

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.

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

Business finance is concerned with:

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