Section 10 and 11 Practice Quiz Questions

What is the balance sheet equation? A) Assets = liabilities - shareholders' equity B) Assets = net worth C) Assets = shareholders' equity - liabilities D) Assets = liabilities + shareholders' equity

Assets = liabilities + shareholders' equity

Final approval of the annual operating budget for the United States is given by the: A) President B) Congress C) Cabinet D) Conference of Governors

Congress

The prospectus for a fund states that the minimum initial investment is $500,000. This is most likely what type of fund? A) Specialized B) Small-cap growth C) Hedge D) Balanced

Hedge

When reading the prospectus for a fund, you notice that it states that the fund may make portfolio purchases on margin, take short positions, and use arbitrage techniques. This is most likely what type of fund? A) Exchange traded B) Closed end C) Index D) Hedge

Hedge

Among the effects of a country devaluating its currency is that there will probably be: I. a credit to that nation's trade account balance II. a debit to that nation's trade account balance III. an increase in the nation's exports IV. an increase in that nation's imports

I and III

Which of the following industries' performance is least likely to track the business cycle? A) Automobiles B) Financial C) Consumer durables D) Pharmaceuticals

Pharmaceuticals

As current interest rates go up, the market price of existing corporate bonds bearing lower interest rates will: A) decrease B) change in unpredictable ways C) stay the same D) increase

Decrease

The research department of an investment advisory firm forecast that the current business cycle should reach its peak within the next 2 months. Under such circumstances, which of the following portfolio adjustments would be most suitable for the firm's customers who actively invest in common stocks? A) Cyclical stocks B) Corporate stocks C) Aggressive growth stocks D) Defensive stocks

Defensive stocks

Which of the following securities are the most interest-rate sensitive? I. Utility stocks II. Growth stocks III. Preferred stocks IV. Common stock

I and III

If the value of the U.S. dollar increases against other currencies, which of the following are TRUE: I. U.S. exports are more competitive in foreign countries. II. U.S. exports are less competitive in foreign countries. III. Foreign imports into the U.S. are more competitive in U.S. markets. IV. Foreign imports into the U.S. are less competitive in U.S. markets.

II and III

An analyst attempting to determine the extent to which financial leverage is being employed by a company would examine the company's A) book value per share B) working capital C) acid-test ratio D) debt-to-equity ratio

debt-to-equity ratio

All of the following actions will increase the deficit in the U.S. balance of payments EXCEPT: A) investments by U.S. firms abroad B) Americans buying Japanese cars C) U.S. foreign aid D) purchase by foreigners of U.S. securities

purchase by foreigners of U.S. securities