Exam 8: Saving, Investment, and the Financial System

Longview Corporation has a stock price of $60, has issued 1,000,000 shares of stock, has retained earnings of $3 million dollars, and a dividend yield of 5 percent. The price-earnings ratio for Longview stock is

A government reduces its budget deficit, but at the same time people become concerned that the outlook for future government expenditures and revenues increase the chance it will default. Which of the following is correct?

Which of the following is true concerning interest rates on bonds?

The first three elements of a financial crisis are correctly represented as taking place in the following order:

Which of the following is a certificate of indebtedness?

Concerns about the bankruptcy of an appliance manufacturer diminish after a new CEO is appointed and some of the company's less productive factories are sold. What type of risk for bondholders falls? What happens to the interest rate on this company's bonds?

On which of these bonds is the prospect of default least likely?

Melinda buys new equipment for her dental office with funds she borrowed from a bank that raised funds from depositors. Which of the following is correct?

When tax code changes reduce saving incentives, the interest rate will _____ and investment will _____.

Which of the following people purchased the correct asset to meet his or her objective?

At the broadest level, the financial system moves the economy's scarce resources from

For an imaginary economy, when the real interest rate is 7 percent, the quantity of loanable funds demanded is $500 and the quantity of loanable funds supplied is $500. Currently, the nominal interest rate is 9 percent and the inflation rate is 4 percent. Currently,

Which of the following is not correct?

Figure 26-3. The figure shows two demand-for-loanable-funds curves and two supply-of-loanable-funds curves. -Refer to Figure 26-3. A shift of the supply curve from S1 to S2 is called

In the Coen Brothers' movie The Hudsucker Proxy the board of directors picks someone to run the company who they believe will make poor decisions. If things turn out as they plan,

What does the maturity of a bond indicate?

The length of time until a bond matures is called the

Generally, if people begin to expect a company to have higher future profits, the price of the company's stock will begin to decrease.

If an economy is closed and if it has no government, then

We interpret the term loanable funds to mean the flow of resources available to fund private investment.