Question 1

There are many reasons why there was a financial crisis in 2007.The most significant event closely associated with this crisis is:

Accepted Answer

A)  the stock market crash
B)  the real estate bubble
C)  government overspending
D)  the use of financial hedging B

Question 2

Lear purchased 100 shares of Quitcha Twitchin Anti-inch Cream stock at $30 per share last year and sold them eleven months later for $24 per share.The shares split 2 for 1 shortly after Lear purchased the stock.If the stock paid $0.25 per share in dividends last year, what is Lear's holding period return?

Accepted Answer

A)  61.67%
B)  -19.17%
C)  21.67%
D)  6.17% A

Question 3

The interest rate in the Eurodollar market is related to

Accepted Answer

A)  the DOW
B)  the stock market
C)  the LIBOR
D)  interest rates in the United States C

Question 4

Changes in the tax code that slow down depreciation, the present value of investment cash flows and, therefore, make the investment desirable.

Accepted Answer

A)  decrease, more
B)  decrease, less
C)  increase, more
D)  increase, less

Question 5

If Japanese yen are deposited in a bank in Paris, the deposits would be called

Accepted Answer

A)  Eurofrancs
B)  European Currency Unit
C)  Eurobond
D)  Euroyen

Question 6

The main purpose of an economy's financial system is to facilitate the transfer of funds from

Accepted Answer

A)  financial middlemen to financial intermediaries
B)  surplus spending units to deficit spending units
C)  primary claimholders to secondary claimholders
D)  lenders to financial intermediaries

Question 7

All of the following have tax implications as it concerns financial management decisions EXCEPT:

Accepted Answer

A)  Capital structure
B)  Dividend policy
C)  Inventory control
D)  Leasing

Question 8

Foreign currency forward and future options provide a means for firms to control

Accepted Answer

A)  foreign government intervention
B)  foreign political problems
C)  foreign exchange risk
D)  the foreign transport of the goods

Question 9

In the financial crisis of 2007 there was cheap money coming from emerging markets.Examples of emerging markets are all of the following EXCEPT:

Accepted Answer

A)  South Korea
B)  Australia
C)  India
D)  China

Question 10

Maher purchased 100 shares of Chill Pill Pharmaceuticals at $30 per share last spring and sold them in six months for $36 per share.The stock paid no dividend.What was Maher's holding period return?

Accepted Answer

A)  40%
B)  20%
C)  10%
D)  5%

Question 11

Commercial banks are a major source of term loans.These loans are best used for:

Accepted Answer

A)  financing the expansion of the business.
B)  financing the establishment of overseas operations.
C)  financing current assets like inventory and accounts receivable.
D)  financing the payment of dividends.

Question 12

The interest rate at which banks in the Eurocurrency market lend to each other is known as the .

Accepted Answer

A)  Eurocurrency currency rate (ECR) 
B)  London interbank offer rate
C)  exchange rate
D)  interest rate parity

Question 13

List changes that have occurred within financial markets regulation as a result of the passage of the Sarbanes-Oxley Act of 2002.

Accepted Answer

The answer of List changes that have occurred within financial...

Question 14

There are three forms of market efficiency.All of the following statements are correct EXCEPT:

Accepted Answer

A)  The weak form efficiency states that no investor can earn excess returns based on historical price information.
B)  The strong form of efficiency states that no investor can consistently earn excess returns since all public and private information is reflected in stock prices.
C)  The semi-strong form of efficiency states that no investor can earn excess returns based on an investment strategy using public information.
D)  Market efficiency is a hard and fast rule that has been verified in real-world situations.

Question 15

Financial intermediaries are compensated for their services by

Accepted Answer

A)  the interest rate spread.
B)  salary.
C)  stock options
D)  preferred stock certificates

Question 16

As a group, net savers are:

Accepted Answer

A)  businesses
B)  households
C)  government
D)  partnerships

Question 17

Eurodollars are U.S.dollars that have been deposited in

Accepted Answer

A)  foreign banks
B)  foreign branches of U.S.banks
C)  foreign subsidiaries
D)  foreign banks and foreign branches of U.S.banks

Question 18

An example of a listed security exchange within the secondary market is:

Accepted Answer

A)  OTC
B)  NYSE
C)  NASDAQ
D)  Automated quotations

Question 19

Which of the following is not a correct statement about foreign currency futures?

Accepted Answer

A)  futures contracts have a standardized maturity date
B)  futures contracts are an exchange-traded agreement
C)  futures contracts are not liquid
D)  futures contracts are "marked to market" daily

Question 20

Money markets deal in securities having maturities of ;capital market securities have maturities .

Accepted Answer

A)  less than 18 months, greater than 18 months
B)  one year or less, greater than one year
C)  less than 9 months, greater than 9 months
D)  less than 6 months, greater than 6 months

Exam 2: The Domestic and International Financial Marketplace