Question 1

Fundamental analysis relies on forecasts of economic, industry, and company variables.

Accepted Answer

A) True 
 B)False

Question 2

The fact that many studies have found a significant relationship between the money supply and stock prices has been quite helpful to investors.

Accepted Answer

A) True 
 B)False

Question 3

In 2001, the World Trade Organization admitted:

Accepted Answer

A) China. 
B) Poland. 
C) The Czech Republic. 
D) Turkey. 
A) China. 
B) Poland. 
C) The Czech Republic. 
D) Turkey.

Question 4

Based on all recessions since 1945, contractions of economic cycles lasted an average of two years.

Accepted Answer

A) True 
 B)False

Question 5

All of the following are disadvantages of fiscal policy, except:

Accepted Answer

A) a long implementation lag. 
B) that it may be politically motivated. 
C) that it may be economically motivated. 
D) that congress must approve the budgets and develop the tax laws. 
A) a long implementation lag. 
B) that it may be politically motivated. 
C) that it may be economically motivated. 
D) that congress must approve the budgets and develop the tax laws.

Question 6

The primary purpose of fundamental stock valuation is:

Accepted Answer

A) to eliminate stocks of those companies that are potential losers from the portfolio. 
B) to identify for purchase those companies that are fundamentally undervalued. 
C) to learn to identify peaks and troughs of the business cycle. 
D) Two of the above. 
A) to eliminate stocks of those companies that are potential losers from the portfolio. 
B) to identify for purchase those companies that are fundamentally undervalued. 
C) to learn to identify peaks and troughs of the business cycle. 
D) Two of the above.

Question 7

When inflation increases over the long run (several years),

Accepted Answer

A) consumption will increase at a faster rate in real dollars. 
B) interest rates will move up with inflation. 
C) real GDP growth will stabilize at the rate of inflation plus 3% real growth. 
D) the dollar will usually rise relative to currencies of countries where inflation is growing at a slower rate. 
A) consumption will increase at a faster rate in real dollars. 
B) interest rates will move up with inflation. 
C) real GDP growth will stabilize at the rate of inflation plus 3% real growth. 
D) the dollar will usually rise relative to currencies of countries where inflation is growing at a slower rate.

Question 8

For the investor's purposes, a normal business cycle (peak to peak or trough to trough) lasts approximately ________, as reported by the National Bureau of Economic Research (based on the last eight peace time business cycles).

Accepted Answer

A) ten months 
B) eleven months 
C) forty-six months 
D) sixty-five to sixty-six months 
A) ten months 
B) eleven months 
C) forty-six months 
D) sixty-five to sixty-six months

Question 9

If the Fed buys securities, the money supply goes down, along with interest rates.

Accepted Answer

A) True 
 B)False

Question 10

Fiscal policy involves government spending and taxation policies.

Accepted Answer

A) True 
 B)False

Question 11

The most widely used tool of monetary policy is open-market operations.

Accepted Answer

A) True 
 B)False

Question 12

Between 1977 and 2007, the U.S. government budget has showed a surplus in only a few years.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not a goal of the federal government economic policy as established by the Employment Act of 1946?

Accepted Answer

A) Low inflation 
B) High levels of employment 
C) Balanced federal budgets 
D) Economic growth 
A) Low inflation 
B) High levels of employment 
C) Balanced federal budgets 
D) Economic growth

Question 14

The valuation process begins with an industry analysis.

Accepted Answer

A) True 
 B)False

Question 15

It is critical for financial analysts to specialize in a particular industry, or group of related industries, because of the large variety of factors which affect each industry significantly.

Accepted Answer

A) True 
 B)False

Question 16

Fiscal policy that results in a deficit will cause more inflation when it finances the deficit through:

Accepted Answer

A) international currency exchange. 
B) the sale of treasury securities to the Federal Reserve. 
C) the sale of treasury securities to individuals in the private sector. 
D) None of the above 
A) international currency exchange. 
B) the sale of treasury securities to the Federal Reserve. 
C) the sale of treasury securities to individuals in the private sector. 
D) None of the above

Question 17

Every year since 1980, the U.S. has imported more goods than it has exported.

Accepted Answer

A) True 
 B)False

Question 18

The National Bureau of Economic Research publishes information about economic indicators in its monthly Survey of Current Business. The most important indicators to investors are the

Accepted Answer

A) leading indicators. 
B) coincident indicators. 
C) lagging indicators. 
D) market indicators. 
E) None of the above 
A) leading indicators. 
B) coincident indicators. 
C) lagging indicators. 
D) market indicators. 
E) None of the above

Question 19

Surpluses have a tendency to reduce economic growth.

Accepted Answer

A) True 
 B)False

Exam 5: Economic Activity

Fundamental analysis relies on forecasts of economic, industry, and company variables.

The fact that many studies have found a significant relationship between the money supply and stock prices has been quite helpful to investors.

In 2001, the World Trade Organization admitted:

Based on all recessions since 1945, contractions of economic cycles lasted an average of two years.

All of the following are disadvantages of fiscal policy, except:

The primary purpose of fundamental stock valuation is:

When inflation increases over the long run (several years),

For the investor's purposes, a normal business cycle (peak to peak or trough to trough) lasts approximately ________, as reported by the National Bureau of Economic Research (based on the last eight peace time business cycles).

If the Fed buys securities, the money supply goes down, along with interest rates.

Fiscal policy involves government spending and taxation policies.

The most widely used tool of monetary policy is open-market operations.

Between 1977 and 2007, the U.S. government budget has showed a surplus in only a few years.

Which of the following is not a goal of the federal government economic policy as established by the Employment Act of 1946?

The valuation process begins with an industry analysis.

It is critical for financial analysts to specialize in a particular industry, or group of related industries, because of the large variety of factors which affect each industry significantly.

Fiscal policy that results in a deficit will cause more inflation when it finances the deficit through:

Every year since 1980, the U.S. has imported more goods than it has exported.

The National Bureau of Economic Research publishes information about economic indicators in its monthly Survey of Current Business. The most important indicators to investors are the

Surpluses have a tendency to reduce economic growth.

The Investment Setting

Security Markets

Participating in the Market

Investment Companies: Mutual Funds, Exchange-Traded Funds, Closed-End Funds, and Unit Investment Trusts

Industry Analysis

Valuation of the Individual Firm

Financial Statement Analysis

Efficient Markets and Anomalies

Behavioral Finance and Technical Analysis

Bond and Fixed-Income Fundamentals

Principles of Bond Valuation and Investment

Convertible Securities and Warrants

Put and Call Options

Commodities and Financial Futures

Stock Index Futures and Options

A Basic Look at Portfolio Management and Capital Market Theory

Duration and Bond Portfolio Management

International Securities Markets

Investments in Real Assets

Alternative Investments: Private Equity and Hedge Funds

Measuring Risks and Returns of Portfolio Managers

A Comprehensive Analysis for Real Estate Investment Decisions

The Makeup of Institutional Investors

Filters