Practice test

A person will receive $132 in 2 years while the prevailing interest rate is 15%. What is the present value of the payment? a) $100 b) $115 c) $132 d) $175

A

A person will receive $144 in 4 years (future value) from a business investment, while the rate of return, r is 7%. The present value today is closest to... a) $110 b) $150 c) $160 d) $170

A

According to the chart shown in class in lectures 6 and 7, what type of investment has shown the highest return over the last 100 years? a. Equities (Common stocks) b. Bonds (Treasury bonds) c. Bills (Treasury bills) d. Real Estate

A

As common practice, an individual investor doing research to decide whether to buy stock in a firm may receive information... A) ...from the firm's financial accounting system. B) ...from the firm's managerial accounting system. C) ...from both the firm's managerial accounting system and its financial accounting system. D) ...from the firm's investment accounting system.

A

At the start of 2019 a company had stockholders equity of $80,000. It received new investments in stockholders equity of $40,000 during the year and paid $20,000 of dividends. If stockholders equity at the end of the year was $150,000, what was the net income? (there were no stock repurchases) A) $50,000 B) $70,000 C) $150,000 D) $230,000

A

Average stockholders' equity: $15,000 Net income: $ 4,500 Average total assets: $30,000 Net sales (current year): $60,000 Current assets: $6,000 Net sales (previous year): $50,000 Current liabilities: $2,000 What is the financial leverage ratio for Toliara? a) 2 or 200% b) 1/3 or 33% c ) 7.5% d) 3 or 300%

A

Cheeseman Inc finds some excellent cheese from Italy called Pecorino. In January 2020 it buys and receives $2000 of the cheese and will pay the suppliers in February (30 day credit terms). In each month of February and March it sells half of the cheese to customers for cash. The markup in February is 100%. In March, to ensure to sell all the cheese, Cheeseman decreases the markup to 75%. What is the Revenue, Income and Cash flow for Cheeseman Inc for the 1st quarter of 2020 (i.e. January to March)? (Revenue, Income, Cash flow) a) 3750, 1750, 1750 b) 3750, 1750, 0 c) 4000, 2000, 250 d) 1750, 1500, 0

A

Determine which one of the following expressions are accurate: A) Income = Revenue - expenses B) Revenue = cash flow - cash expenditures C) Expenses = Costs - other income D) Income = Profit - dividends

A

During our discussion of Netflix in lectures 4-5, four issues were identified. Which of the four can be seen as positive for Netflix? a. Business viability: Contribution margin of Netflix b. Possible limits to growth for Netflix c. Threat of new entrants d. Competitor behavior and possible strategic behavior of suppliers

A

In April 2018 the US dollar was equivalent to 6.3 Chinese Yuan, while today the dollar is equivalent to 6.8 Chinese Yuan. Ceteris paribus (all other things being equal), what is the most likely effect of this change in the exchange rate? A) US Exports to China will decrease B) Vacationers from China will benefit if they take a vacation in the United States. C) US Exports to China will increase D) Both A and B are true.

A

Mark Carney is the governor of the Bank of England. The Bank of England is the central bank of the UK (Britain) which manages the UK currency, the pound sterling. The Bank and Carney have publicly warned about the negative consequences of "Brexit". What is "Brexit"? a. Brexit is Britain leaving the European Union (EU) b. Brexit is Britain leaving the European Currency (The Euro) c. Brexit is Britain leaving the Transatlantic Union (TU) d. Brexit is the breakup of the UK into a federation of states such as Scotland and London

A

Matt's Pizza pays $1600 fixed rent per month and each pizza costs $3 in ingredients and hourly paid labor. Pizzas sell for $7 per pizza - what is the break even number of pizzas for Matt's pizza? a) 400 pizzas b) 534 pizzas c) 229 pizzas d) 500 pizzas

A

Mick's Pizza pays $1200 fixed rent per month and each pizza costs $2 in ingredients and hourly paid labor. Pizzas sell for $5 per pizza - what is the break even number of pizzas for Mick's pizza? a) 400 pizzas b) 267 pizzas c) 667 pizzas d) 500 pizzas

A

One purpose of tracking money supply is... a. As an indicator of inflation risk, as rapid growth in the money supply may erode the value of money b. Because high money supply always causes unemployment c. As an indicator of government spending (fiscal policy) d. Because excessive money supply causes deflation

A

The Federal Reserve has a dual mandate, based on law passed by the US Congress in 1977. What is the meaning of the words dual mandate, in this context? A) A broad statement of the two main policy goals of the Fed B) A periodic evaluation by Congress of the Fed's performance on two parameters C) The mandate to maximize unemployment D) The fact that the Fed has two main decision makers on the board (mandaters), the Chairman and the New York Fed Director

A

What is the best explanation for the extremely high Price earnings ratio of Netflix when compared to a competitor such as Disney? a) Netflix has higher recent and expected revenue growth than Disney b) Netflix has a more stable cash flow than Disney c) Netflix has a better relationship with its suppliers than Disney and there are fewer conflicts of interest between suppliers and competitors for Netflix d) Netflix has a higher current profit margin than Disney

A

What type of retirement scheme provides a known and more stable income in retirement, with less reliance on the employee's savings and investment choices? A) Defined benefit pension B) 401K scheme C) IRA D) Independent contractor model such as driving for Uber

A

Which of the following describes an expansionary fiscal policy? A) The government spends more money than it takes in as taxes B) The government taxes more than it spends C) The money supply is increasing D) The money supply is decreasing

A

Which of the following statements is TRUE? A) As common practice, a prospective equity investor in a firm receives information from the firm's financial accounting system. B) As common practice, a prospective equity investor in a firm receives information from the firm's managerial accounting system. C) As common practice, a prospective equity investor in a firm receives information from both the firm's managerial accounting system and its financial accounting system. D) As common practice, a prospective equity investor in a firm receives information from the firm's revenue accounting system. E) As common practice, a prospective equity investor in a firm does not receive any information from the firm's accounting system.

A

Which of the following statements is TRUE? A) As common practice, a union representative for the workers at a firm receives information from the firm's financial accounting system. B) As common practice, a union representative for the workers at a firm receives information from the firm's managerial accounting system. C) As common practice, a union representative for the workers at a firm receives information from both the firm's managerial accounting system and its financial accounting system. D) As common practice, a union representative for the workers at a firm receives information from the firm's forensic accounting system. E) As common practice, a union representative for the workers at a firm does not receive any information from the firm's accounting system.

A

Which of the following terms refers to any economic resource that is expected to benefit a firm or individual who owns it? A) asset B) liability C) equity D) account E) deposit

A

Which of the following terms refers to the sum of all money invested in the business, including debts, other liabilities, common stock and retained earnings? A) Assets B) Owners' equity C) Inventory D) Liability E) Credit

A

Who is the President of the European Central Bank? a) Mario Draghi b) Angela Merkel c) Silvio Berlusconi d) Jacob Lew

A

"I am a chemist with the nation's largest chemical company. We have secretly developed a cure for three of the world's most serious epidemics. Before this news breaks out, I'm going to buy as many shares of stock in my company as I can get my hands on. Then I'll sit back and watch the stock price head for the sky." What is the person making this statement about to engage in? A) selling shares of stock B) insider trading C) blue-sky trading D) open-market operations E) investment banking

B

According to the standard rule of thumb of asset allocation, as investors near retirement they should have A) An increasing proportion of their investments in stocks B) A decreasing proportion of their portfolio in stocks C) A constant dollar amount of their portfolio in stocks D) A constant percentage of their portfolio in stocks

B

Andersen Cheese is a cheese shop. In January, Andersen's finds some excellent cheese called Emmentaler from Germany. They buy $1200 worth for cash (immediate payment to suppliers in January), taking delivery in January. In February they start to sell the cheese, and deliver half of the cheese to selected customers for a 150% markup in February. The customers pay cash in March. What is the Revenue, Income and Cash flow for Andersen in February? (Revenue, Income, Cash flow) a) 1500, 500, 1500 b) 1500, 900, 0 c) 0, 900, -1200 d) 3000, 1800, 0

B

Average stockholders' equity: $50,000 Net income: $10,000 Average total assets: $100,000 Net sales: $100,000 Current assets: $30,000 Current liabilities: $10,000 What is the return on equity of Skywalker? A. 10% B. 20% C. 50% D. 200%

B

Darthvader Inc is a competitor of Skywalker Inc. Darthvader Inc reports Current Assets of $50,000 and current liabilities of $20,000. Which of the two companies have the best liquidity as measured by the current ratio? A. Darthvader Inc B. Skywalker Inc C. Their liquidity is equal D. Neither have acceptable liquidity as they both fall below the rule of thumb of 2

B

In terms of GDP, how does the US Economy compare? a) The US economy is larger than all of the other economies combined and constitutes 80% of World GDP b) The US economy is the largest in the world, and is 80% larger than its nearest competitor c) The US economy was the largest in the world but is now 2nd with 80% of the size of China d) The US economy is about half the size of the Chinese economy

B

Jose is a recent college graduate who has been hired for an entry-level professional position in the accounting department of a large corporation. Which of the following terms BEST describes Jose's capacity as an accountant? A) public accountant B) private accountant C) forensic accountant D) advisory accountant E) management accountant

B

Martha's Pizza pays $1000 fixed rent per month and each pizza costs $5 in ingredients and hourly paid labor. Pizzas sell for $10 per pizza - what is the break even number of pizzas for Martha's pizza? a) 100 pizzas b) 200 pizzas c) 300 pizzas d) 400 pizzas

B

Martin Bobson has a total of $1m of financial assets. He has common stock in Tesla of $400,000 and savings accounts at Wells Fargo of $300,000 and $150,000 at Citibank. He also has a checking account of $150,000 at Wells Fargo. He owns an apartment which is worth $800,000 (non financial asset). How much of the assets are insured by the FDIC, if the FDIC insurance limitations are $250,000 per account owner, per bank? A. $250,000 B. $400,000 C. $550,000 D. $650,000 E. $900,000

B

Roberts Corporation Inc has a current stock price of $120, annual earnings per share of $12 and annual dividends per share of $4. What is Robert's price earnings ratio? a) 5 b) 10 c) 15 d) 30

B

Suppose General Motors owns an automobile plant in Brazil. How much of the total value of goods and services produced by the plant will be included in US GNP? a) All of the value of goods and services produced b) The profits earned by the plant c) The salaries paid to the Brazilian workforce d) None of the value

B

The Federal Reserve has a Dual Mandate as discussed in lecture, meaning it has two main goals in conducting monetary policy. Which one of the following is not part of the "Fed's" dual mandate? a) to limit inflation b) to increase stock prices c) to minimize unemployment d) All of the above are included in the Fed's dual mandate

B

The most recent estimate of the US unemployment rate is closest to.... A) 0% B) 4% C) 8% D) 12%

B

What type of economy is the United States reflective of? A) Planned B) Mixed C) Market D) Private E) Socialist

B

Which of the following is the name for a portion of the ownership of a corporation? A) Schedule C B) Share of stock C) Partnership D) LLC E) Dividend

B

Which of the following terms refers to a bundling of stocks, bonds, and other securities? A) Blue-chips B) Mutual funds C) Exchanges D) Commodities

B

Which of the following terms refers to the comprehensive system for collecting, analyzing, and communicating financial information? A) bookkeeping B) accounting C) controlling D) auditing E) budgeting

B

A customer has a bond fund which returns 1% before fees, and the fees/charges for the fund are 1.5% of the investment per year. In 2009, the customer invests $10,000 in the fund. After three years, the customer's funds would be closest to: a) $9550 b) $9700 c) $9850 d) $10,150

C

A farmer trades 600 eggs for one cow. This is an example of what? a. Medium of exchange b. Durability c. Barter d. Debt or duty based transaction

C

Andrews Cheese is a cheese shop. In January, Andrews Cheese finds some excellent cheese called Camembert. They buy $800 worth, taking delivery and paying in cash in January. In February they start to sell the cheese, and deliver half of the cheese to their favorite customers for a 50% markup (earning revenue of $600) in February. The customers must pay in 30 days (so they will pay Andrews Cheese in March). What is the Revenue, Income and Cash flow for Andrews Cheese in February? (Revenue, Income, Cash flow) a) 0, -200, 0 b) 600, 400, -800 c) 600, 200, 0 d) 600, 200, -200

C

Assume that 10% reserve requirement has been imposed on banks. A client of Bank of America discovers a $20 bill that has been lost for 80 years and therefore was not included in the money supply statistics. He deposits the $20 in a checking account, which the bank relends to a new client (minus the reserve requirement) in cash. What is the total effect on the M-1 money supply? a) There is no change in the M-1 Money supply b) The M-1 Money supply increases by $20 c) The M-1 Money supply increases by $38 d) The M-1 Money supply increases by $40

C

Average stockholders' equity: $10,000 Net income: $1,500 Average total assets: $15,000 Net sales: $30,000 Current assets: $10,000 Total liabilities: $5,000 Current liabilities: $2,000 What is the Net profit margin for Peters? a) 2 b) 15% c) 5% d) 5

C

Bonds are an example of a fixed income security. The concept of the inverse relation between bond prices and market interest rates means that... a) A rise in market interest rates leads to a rise in bond prices b) The fluctuations in bond prices limit the ability of bonds to provide a fixed income to people who hold the bonds to maturity c) A rise in market interest rates leads to a fall in bond prices d) A fall in bond prices is indicative of a fall in market interest rates

C

If the US dollar buys a low and decreasing number of Euros (weak dollar), what is the effect on the business competitiveness of US importers and exporters? (US importers of Euro-zone Goods, US exporters to Euro-zone buyers) A) positive effect on business, positive effect B) positive effect, negative effect C) negative effect, positive effect D) negative effect, negative effect on business

C

Many, but not all, mutual funds are managed by experts who select the fund's stocks and other securities. Despite this fact... A) All mutual funds adopt a passive strategy B) 100 percent of mutual funds do not perform as well as the average return of the overall stock market C) Up to 80 percent of mutual funds do not perform as well as the average return of the overall stock market D) Approximately half of all mutual funds do not perform as well as the average return of the overall stock market, and half perform better E) Management expenses are low and do not decrease returns in the long term

C

Margaret bought $1000 value of 10 year T-bonds (fixed income) at par when issued by the US treasury. Interest rates on that day were 2.9% and that was the yield on the bond Margaret bought ($29 interest on each $1000 of bonds). Next year market interest rates rise to 4%. Describe the likely outcome. a) The treasury will increase the interest on Margaret's T-bonds to 4% ($40) b) The treasury will use monetary policy to force market interest rates back to 2.9% c) The value of Margaret's T-bonds will fall, due to the rise in prevailing interest rates d) The value of Margaret's T-bonds will rise, due to the rise in prevailing interest rates

C

Scott Teslaman has $200,000 in a savings account at Wells Fargo Bank in Berkeley, $75,000 in a checking account at Wells Fargo in Emeryville and $250,000 in a checking account at the Bank of America in Oakland. How much of it is insured by the FDIC, if the FDIC insurance limitations are $250,000 per account owner, per bank? a) Zero b) $250,000 c) $500,000 d) $525,000

C

The most recent estimate of the US inflation rate is closest to.... A) -2% (deflation) B) 0% C) 2% D) 4%

C

The study.net article "Take Netflix's Earnings With a Grain of Salt" discusses how Netflix amortizes its investments in content, such as licenses to stream TV programs. Amortization allows Netflix to spread out the upfront cost on an accounting basis over multiple years, because people want to watch the programs then. However, the management chooses the number of years, which can directly affect earnings. The article makes all of the following points about Netflix's earnings except A. Netflix doesn't disclose the amortization schedules for its various types of content B. Netflix's amortization schedules are a black box Module 3 Exam Spring 2019 10 C. Netflix earnings are fuzzy because Netflix has low revenue growth D. When Netflix reports earnings, that number is a function of choices management has

C

Those accountants who are hired by firms as salaried employees to carry out day-to-day financial activities (including bookkeeping) are called A) forensic accountants. B) personal tax accountants. C) private accountants. D) independent certified public accountants. E) fraud examiners.

C

Tonio has some stocks and is carefully watching the stock market. Which of the following should he pay attention to in order to find out the performance of the largest companies? A) Standard & Poor's 500 B) the NYSE index C) Dow Jones Industrial Average (Dow 30) D) Moody's Stock List E) the NASDAQ

C

What is the main difference between a commercial bank and a mutual savings bank? A) The Commercial Bank is a non-deposit institution B) The Mutual Savings Bank is not permitted to deal with the public C) The Commercial Bank aims to generate profits for stockholders D) The Mutual Savings Bank would usually not offer mortgages

C

What is the meaning of "bank run" (sometimes called "run on the bank"), in the context of finance and economics? a. Regular messenger or courier traffic between bank branches, because some legal documents can't be emailed b. The process of traveling to the bank to withdraw money c. A phenomenon where erosion of confidence in a bank causes many depositors to panic and try and withdraw their money from the bank all at once d. An increase in lending by a bank, often caused by healthy GDP growth

C

What is the price at which the quantity of goods demanded and the quantity of goods supplied are equal? A) the going rate B) the margin rate C) the market price D) the optimum price E) the cost price

C

What part of economic policy does Congress have most control over? A) Monetary policy B) Stock market policy C) Fiscal policy D) Judiciary policy

C

When thinking about exchange rates, an expensive dollar relative to the Euro is best for a) European tourists visiting the USA b) US exporters selling into the Euro Zone c) Euro zone companies seeking to sell imports into the USA d) Japanese tourists visiting the United States

C

Which economic system emphasizes the private ownership of most factors of production? A) Socialism B) Communism C) Capitalism D) Marxism E) Federalism

C

Which of the following are considered to be one of the least risky of all investments? A) Blue-chip stock B) Mutual funds C) Treasury bills D) Common stock

C

Which of the following are not classified as "Tools of the Fed"? A) Reserve requirements. B) Interest rate controls. C) Government spending controls. D) Open market operations.

C

Which of the following describes assets such as goodwill, patents and trademarks? A) liquid assets B) fixed assets C) intangible assets D) current assets E) limited assets

C

Which of the following exists when an industry or market has only one producer? A) competition B) oligopoly C) monopoly D) communism E) socialism

C

Which of the following is a use of cash on the Capsim finance screen? a) Promo budget b) Selling unwanted plant and equipment c) Retiring Long term Debt d) Issuing Stock

C

Which of the following is an example of a psychological bias known to be a problem for investors a) profit affection b) market fluctuation effect c) loss aversion d) lack of liquidity

C

Which of the following is the most typical example of a barter transaction? A) A tribesperson shares out the meat of a mammoth that s/he has hunted B) A farmer gives his friend 100 eggs and will get 10 pounds of wheat in 6 months C) A farmer trades one cow in exchange for 600 eggs D) A farmer accepts one cow and will supply 10 eggs per week for a year in return

C

Which of the following refers to the financial statement detailing a firm's assets, liabilities, and owners' equity? A) income statement B) statement of cash flows C) balance sheet D) expense report E) annual budget

C

Which of the following statements BEST explains how financial institutions create money? A) By opening new checking accounts and giving more people access to readily available cash, financial institutions expand the money supply. B) By issuing money through government contracts, financial institutions expand the money supply. C) By taking deposits and loaning out these funds (net of the reserve requirement), financial institutions expand the money supply. D) By paying interest on its accounts and investments, financial institutions expand the money supply.

C

Who is the President of the European Central Bank? a) Jerome Powell b) Jeffrey Sessions c) Mario Draghi d) Emmanuel Macron

C

A company holding a large proportion of cash will most likely have which of the following characteristics a) It will have little money available for investment b) It will have a higher asset turnover than a similar company with no cash c) The cash will tend to increase the company's return on assets d) The cash will tend to decrease the company's return on assets

D

A company's owners established a company on January 1, investing $10,000 total into the stockholders equity of the company. The company then made net income of $3,500 in the first year. No dividends were paid. Its total liabilities stand at $7,000 on December 31 of the first year. What is the value of the total assets of this company? A) $500 B) $6,500 C) $13,500 D) $20,500 E) $27,500

D

A customer has a bond fund which returns 2% before fees, and the fees/charges for the fund are 1.5% of the investment per year. In 2009, the customer invests $10,000 in the fund. After three years, the customer's funds would be closest to: a) $9550 b) $9700 c) $9850 d) $10,150

D

A customer has a bond fund which returns 2.5% per year before fees, and the fees/charges for the fund are 1.5% of the investment per year. In 2015, the customer invested $10,000 in the fund. After three years, the customer's funds would be closest to: a) $9700 b) $9850 c) $10,150 d) $10,300

D

All of the following are non-tariff barriers except... a) Import quotas b) Additional inspections for imported goods c) Buy American program d) Special taxes on imports

D

Alonzo is an experienced CPA who has been hired for a professional position at PWC to advise corporations on mergers. Which of the following terms BEST describes Jose's capacity as an accountant? A) noncertified public accountant B) private accountant C) forensic accountant D) accountant providing management advisory services E) management accountant

D

An individual invests $100 (present value) in a project that returns 20% per year, what is the future value after two years? A) $69.44 B) $100 C) $140 D) $144

D

Average stockholders' equity: $10,000 Net income: $1,500 Average total assets: $15,000 Net sales: $30,000 Current assets: $10,000 Total liabilities: $5,000 Current liabilities: $2,000 What is the Current ratio for Peters? a) 2 b) 15% c) 5% d) 5

D

Average stockholders' equity: $15,000 Net income: $ 4,500 Average total assets: $30,000 Net sales (current year): $60,000 Current assets: $6,000 Net sales (previous year): $50,000 Current liabilities: $2,000 What are the total liabilities of Toliara? a) $2,000 b) $4,000 c) $13,000 d) $15,000

D

Average stockholders' equity: $15,000 Net income: $ 4,500 Average total assets: $30,000 Net sales (current year): $60,000 Current assets: $6,000 Net sales (previous year): $50,000 Current liabilities: $2,000 What is the current ratio for Toliara? a) 2 or 200% b) 1/3 or 33% c) 7.5% d) 3 or 300%

D

Average stockholders' equity: $50,000 Net income: $10,000 Average total assets: $100,000 Net sales: $100,000 Current assets: $30,000 Current liabilities: $10,000 What is the financial leverage or equity multiplier of Skywalker? A. 10% B. 20% C. 50% D. 20%

D

David is saving $25 a week toward getting a new truck. Which function of money does this illustrate? A) stabilization of value B) foundation of banking C) medium of exchange D) store of value E) measure of worth

D

If the Federal reserve wishes to decrease the money supply, it is most likely to do what? A) Buy common stocks. B) Sell common stocks. C) Buy bonds. D) Sell bonds.

D

In the field of personal financial planning, asset allocation refers to an investor's decision on what proportion of their total portfolio (funds) is invested in different alternatives, for example stocks vs bonds. In saving for retirement, which of the following asset allocation guidelines are true for a 60 year old investor as compared to a 30 year old investor? a) The 60 year old investor should hold a higher proportion of her total portfolio in stocks than the 30 year old b) The 60 year old investor should hold a lower $ value of bonds in her portfolio than the 30 year old c) The 60 year old investor should have a lower total $ value total portfolio than the 30 year old d) The 60 year old investor should hold a higher proportion of her total portfolio in bonds than the 30 year old

D

M-1 money supply includes all of the below forms of money except... a. Coins b. Notes c. Checking account deposits d. Time deposits

D

Martha's Pizza pays $1000 fixed rent per month and each pizza costs $5 in ingredients and hourly paid labor. Pizzas sell for $10 per pizza. If Martha's sells 500 pizzas, what is the total contribution margin and what is the profit (ignore taxes)? (Contribution, margin, Profit) a) $5000, $2500 b) $5000, $4000 c) $1500, $2500 d) $2500, $1500

D

Matt's Pizza pays $1600 fixed rent per month and each pizza costs $3 in ingredients and hourly paid labor. Pizzas sell for $7 per pizza. All sales and costs are in cash. If Matt's sells 300 pizzas, what is the total revenue and what is the profit (ignore taxes)? (Revenue, Profit) a) $2100, $1200 b) $1200, $400 LOSS c) $1200, $1200 d) $2100, $400 LOSS

D

What is the term for the proportion of funds invested in each of several investment alternatives or asset classes? A) spreading B) shorting C) margin buying D) asset allocation E) diversification

D

Which of the following agencies guarantees the safety of all of its members' bank accounts? A) Internal Revenue Service B) Federal Open Market Committee C) Federal Reserve Bank D) Federal Deposit Insurance Corporation E) Federal Exchange Commission

D

Which of the following international financial institutions is most associated with funding improvements in underdeveloped countries? a) Federal Reserve b) Bank of International Settlements c) Bank of England d) World Bank

D

Which of the following is an appropriate expression of the accounting equation? A) Assets + Liabilities = Stockholders Equity B) Stockholders Equity + Assets = Liabilities C) Liabilities = Stockholders Equity - Assets D) Assets - Liabilities = Stockholders Equity

D

Which of the following is the most important tool of fiscal policy? a) Federal Funds Rate b) Open market operations c) Control of the Reserve Requirement d) Spending and Taxation decisions by Congress e) All of the above are tools of fiscal policy

D

Which of the following statements is NOT true about dividend payments? A) Many companies distribute between 30 and 70 percent of their profits to shareholders. B) Some firms, especially fast-growing companies, do not pay dividends. C) Many fast-growing companies use cash earnings for expanding the company so that future earnings can grow even faster. D) During unprofitable years, companies are still required by law to pay dividends to their stockholders. E) Dividend payments are made to stockholders on a per-share basis.

D

Planned economy, mixed economy and market economy are examples of? A) Degrees of competition in a market system B) National organization operations C) Institutional capital D) Factors of production E) Economic systems

E

Twenty-six-year-old Lisa Lamont became an investor one day after a friend explained that there was a much better way to make her money work for her than by letting it sit in a savings account earning a very low rate of interest. Lisa decided to withdraw $10,000 from her savings account and invest it in stocks. She wanted to invest it in such a way as to minimize her risk. Which one of the following strategies makes the MOST sense for a new investor like Lisa? A) Invest all $10,000 in a small fast-growing computer company. B) Invest $5,000 in a gold mining company and $5,000 in a silver mine. C) Invest the $10,000 in four different home builders. D) Invest $10,000 in ten different oil companies. E) Invest $10,000 in a large-cap mutual fund.

E

Which of the following BEST describes the portability characteristic of money? A) If it wears out, it can be replaced. B) Units of money can be matched with the value of goods. C) It can be exchanged across national borders. D) It allows people to measure the relative value of goods and services. E) It is light and easy to handle.

E

Which of the following BEST describes what are called the "open-market operations" of the Federal Reserve System? A) the development of new financial opportunities for banks B) the minting of new money to disperse into the money market C) the control of interest rates among banks D) the maintenance of a well-functioning lending system among banks E) the buying and selling of securities

E

Which of the following refers to the rules and procedures governing the content and form of financial reports? A) National bookkeeping standards B) Core competencies for accounting C) Accounting and financial rules D) National guidelines of accounting principles E) Generally accepted accounting principles

E