BCOR 3100- ALL QUIZZES

According to the BLS, $10,000 in January 1985 would have the same buying power as __________ exactly 35 years later.

$24,452.23

If a bond has a coupon rate of 6%, the market rate is 8%, and the face value of the bond is $1,000. How much can someone expect to earn in interest each year from that bond?

$60

Which of the following is not correct about a bond investment?

- An investor can make money from capital appreciation. - An investor can make money from interest. - Bond investors are paid before stock investors during a company liquidation.

For currency to work, it must:

- Be a medium of exchange - Be a unit of account - Be a store of value - Be a standard for deferred payment

When the FOMC votes on interest rates, the vote includes votes from:

- Board of Governors - President of the New York Federal Reserve Bank

Commercial banks offer which of the following:

- Checking, savings, and money market accounts. - Intermediary exchange (ease of transactions) - Liquidity and access to capital. - Safety

The FED/FOMC set which rates?

- Discount - Federal Funds Rate

The New Deal included which of the following:

- Ended Prohibition - Allowed Employee Unions - Passed Social Security Act - Founded the SEC - Created the WPA

Which of the following can be dictated by the FED to affect the economy?

- Interest Rates - Money Supply - Bank Reserves

When a corporate Board of Directors meet and discuss Net Income on the Income Statement, they have the following choices:

- Pay dividends - Retain earnings and reinvest into the organization - Buy back stock shares

Dealers (also known as specialists or market makers) do which of the following:

- Post bid and ask prices - Set the allotment - Trade in round lots - Make money based on the spread

If you cash out your retirement savings early (before age 59 1/2), which of the following will you have to pay?

- State tax - Federal tax - Early withdrawal penalty

According to your reading, who calculates GDP?

- The World Bank - IMF (International Monetary Fund) - OECD (Organization for Economic Cooperation) - BEA (Bureau of Economic Analysis)

Pensions were not optimal because:

- Withdrawal payments were taxed. - Funds were managed by the company. - They terminated with termination in employment before retirement.

Today, there is about _____% of U.S. Currency in actual bill and coin form being circulated.

10%

Using the expenditure approach, what is GDP if: consumption = 8, investment = 2, government spending = 3, imports = 4, and exports = 3

12

What year was the federal reserve founded?

1913

What decade is considered to be the depression decade?

1929-1939

The Fed meets how often per year?

8 (twice per quarter)

What is a public company?

A publicly listed or traded company with stock shares that trade on secondary exchanges.

What was the special word?

Aardvark

From last week's discussion, Uber bought Drizzle to enter into the ___ market.

Alcohol Delivery

Negative inflation is _____, steady inflation of 2-3% is _____, high inflation is ______.

Bad, good, bad

Which of the following is most likely not found in the DJIA?

Bitcoin

An example of quantitative easing would be:

Buying long-term debt securities from open market.

The Federal Reserve is an example of what kind of bank?

Central Bank

The FED dual mandate is to:

Control inflation and Unemployment

From the reading, which of the following is NOT one of the most liquid markets?

Cryptocurrency

Post Great _____, the FDIC was created to protect bank deposits; the amount currently being up to _____ per person, per insured banking institution.

Depression, $250,000

The ________ is the rate the FED charges banks for overnight loans, whereas the _______ is the rate banks charge each other.

Discount Rate, Federal Funds Rate

With equity investments, you can make money from which of the following?

Dividends and Capital Gains

What is the dividend conundrum?

Double taxation on dividends

According to The Economist and Burgernomics, using PPP principles, the "correct" price of a Big Mac in Costa Rica should be higher. It is undervalued by approx. 28%.

FALSE

An investor can place a limit order to buy or sell a stock at a specific price. When the market price of the stock matches the limit price, the order is guaranteed to be executed and the trader is guaranteed to receive the specified limit buy or sell price of the stock.

FALSE

Dealers (also known as specialists or market makers) sell to investors at the Bid price and buy from investors at the Ask price.

FALSE

Segmentation Theory determines the slope of the yield curve.

FALSE

Investment bankers spread the risk of funding, marketing, and underwriting an IPO by forming a synthesis group.

FALSE (syndicate group)

Central Banks insure deposits up to $250,000 per person per bank account.

FALSE (that's the FDIC)

Banking, especially investment banking, offers typical 9-5 workday hours and skill learned "on the job."

FALSE!

In a MARGINAL tax system, if a person makes enough income to get taxed at the highest rate, they will be taxed a flat 37% on ALL their income.

FALSE!

Investing in stock is an equity investment; so the company pays the investor back in interest payments.

FALSE!

You can earn a return from an investment in a debt security through all three of the following: interest, dividends, and capital gains.

FALSE!

In reference to capital structure, debt is higher risk, ALLOWS ownership rights and has higher return.

FALSE!!!

Businesses generally react favorably and make more money when interest rates rise.

FALSE!!!!

Treasury bond yields went down and the stock market went up on March 18th, after the Fed's latest meeting.

FALSE.

Algorithmic trades are generally small value, easy (not complex) trades.

False

Circuit breakers happen often in the stock market and when enacted, always halt trading for the rest of the day.

False

Lower interest rates discourage spending and trading.

False

Martha Stewart was found guilty of insider trading.

False

The DJIA is a good tool to measure bond returns.

False

Central Banks are motivated by profit.

False.

The COVID-19 pandemic has led to lower interest rates, thus creating more equality and making it easier for lower-income individuals to save.

False.

The Fed was created in the aftermath and in response to the Great Depression.

False.

The OECD points to wearing masks as the number 1 way to eradicate COVID-19 and experience global economic recovery.

False.

According to the Khan Academy video, when the bond price goes up, the yield ___?

Goes down

TIPS protect against?

Inflation

What does the abbreviation "IPO" stand for?

Initial Public Offering

Which of the following is NOT one of the functions of money?

Interest Bearing

Which kind of banker is brought in to help a company raise capital for growth and expansion as well as manage initial public offerings?

Investment Banker

In order to short stock, an investor must have a(n) ______ account set up with a(n) ______.

Margin; Brokerage

If you are a small company and have a hard time paying off your debt, you are likely?

Over-leveraged

Consumption Smoothing refers to:

Saving moderate amounts of income at all stages of life.

An inverted yield curve means that:

Short-term rates > (are greater) Long-term rates

According to the Khan academy video, what was the original dollar backed by?

Silver

A ___ order to buy or sell a stock becomes a ___ order once the specified price occurs.

Stop, Market

Investment bankers spread the risk of funding, marketing, and underwriting an IPO by forming a _______.

Syndicate

Equity = Assets - Liabilities

TRUE

M1, M2, & M3 are measurements of the United States' money supply and are important indicators to the FED because higher money aggregates suggest more money flowing in the market which in turn should spur spending and economic activity.

TRUE

The GameStop saga was fueled by Reddit users shorting en masse GameStop stock.

TRUE

The SEC was established post Great Depression to ensure that all investors are privy to pertinent public information and that it is illegal to profit off of inside information and/or market manipulation.

TRUE

A commercial bank investment is generally seen as low risk due to FDIC insurance that insured up to $250,000 per person.

TRUE!

According to the Forbes article, investment banks such as Goldman Sachs seeks people with math, technology, software and data analytics skills over well rounded trading skills.

TRUE!!

A change in the market price of stock changed the company's market capitalization value often, but the range (small-cap, mid-cap, large-cap) for a company does not change often.

TRUE!!!

Every single investment has risk.

TRUE!!!

Investing in debt means that you are loaning money and in turn will receive interest for the use of your money.

TRUE!!!

Using the income approach to GDP, one would adjust for sales taxes.

TRUE!!!

When transaction costs are reduced/eliminated the economy becomes more efficient.

TRUE!!!!

The federal reserve is a central bank.

TRUE.

Roth IRA contributions are _____ and subsequent withdrawals (at retirement age) are _____.

Taxable, Not taxed

From the reading, you found that Nasdaq follows the ___ industry?

Tech

What does the term "time value of money" mean?

The concept that the money you have now is worth more than the identical sum in the future.

Which of the following is not considered to be a "use" of index?

To increase your portfolio in the most quick and effective manner.

Generally speaking, an investor can have a higher future value in their retirement account by starting to save in their 20s and depositing small amounts rather than starting in their 40s, after establishing a career, and depositing larger amounts.

True

U.S. Treasury Debt securities include T-Bills, T-Notes, and T-Bonds. Selling these takes money out of circulation and tightens the economy while buying these puts money into circulation and loosens the economy.

True

Using time value of money principles, the price (present value) of a bond can be determined by discounting and then summing all future income generated by the bond (interest and principal payments).

True

After doing analysis, an investor with a bullish attitude would be inclined to buy shares long.

True.

In a non-liquid market, a seller will likely have to cut the price of the asset to make it more attractive.

True.

Lower reserve requirements, in a fractional reserve banking environment, means there is more money to be loaned out, thus increasing the money supply by "creating" new loans.

True.

Microfinance companies essentially bring banking functions to underdeveloped areas of the world, thus enabling economic activity and money flow to occur.

True.

Nearly all of mortgage payment in the first 120 months is paid toward interest.

True.

The GameStop article discussed the sell-side analyst dropping coverage.

True.

The U.S. Treasury is in charge of printing money and collecting tax revenue, but the FED is in charge of actually "creating" money via open market operations and fractional reserve banking.

True.

You can write checks through a money market account.

True.

Noted that the US GDP for Q4 2020 was ____ by ____ and the deficit went _____ by ____.

Up 4.1%, Up 4.2%

Capital Structure refers to the amount of debt and equity used to finance operations. Optimal Capital Structure is one that focuses on reducing:

WACC