business 4

Which of the following statements about international banking is true?

All of the above statements about international banking are true.

The Federal Deposit Insurance Corporation (FDIC) insures deposits in commercial banks. The FDIC was created by the:

Banking Act of 1933

_____ is a short-term unsecured debt issued by a financially strong corporation.

Commercial paper

_____ stock is a security that represents an ownership interest in a corporation and has voting rights.

Common

_____ are specific repayment conditions as to how long customers have to pay bills and the amount of cash discount allowed.

Credit terms

Investment banker is another term for stockbroker.

F

Of all the forms of equity capital, venture capital is the easiest to obtain.

F

The major disadvantage of debt financing is the inability to deduct interest expenses for income tax purposes.

False

The three tools used by the Federal Reserve to manage monetary policy are reserve requirements, the prime rate, and the discount rate.

False

The _____ is an independent, quasi-public corporation backed by the full faith and credit of the U.S. government that insures deposits in commercial banks and thrift institutions for up to a ceiling of $250,000 per account.

Federated Deposit Investment Corporation (FDIC)

Which statement describes the major drawback to the use of debt financing?

Financial risk is always a possibility with debt financing.

_____ are investment professionals who are paid to manage other people's money.

Institutional investors

Which of the following statements does NOT describe an advantage inherent in equity financing?

Interest is tax-deductible.

The _____ system is the first electronic-based stock market and the largest over-the-counter market.

NASDAQ

Which of the following statements about credit unions is true?

None of the above statements about credit unions is true.

Which of the following statements about preferred stock is true?

Preferred stockholders are paid dividends before the company can pay any dividends to common stockholders.

Money is anything that is acceptable as payment for goods and services.

True

The Federal Deposit Insurance Corporation (FDIC) is an independent, quasi-public corporation backed by the full faith and credit of the United States government.

True

_____ invest in new businesses in return for part of the ownership, sometimes as much as 60 percent.

Venture capitalists

Grainger Distribution Company sold Long Electronics ten circuit breakers for $179.00 each. Long Electronics will be allowed thirty days to pay the bill. Grainger will carry the $1790.00 on its books as a(n):

account receivable

In which of the following industries are you most likely to find factoring being used?

appliance industry

National banks:

are accurately described by all of the above

Financial managers:

are described by none of the above

are always secured

are shown as a current liability on the balance sheet

The operating license for a commercial bank is called a(n):

bank charter

Long-term debts (liabilities) for corporations and governments are called:

bonds

As the Toronto-based Four Seasons hotel chain remodels an existing hotel in Mumbai to bring it to the five-star hotel's exacting standards, it is building a magnificent revolving restaurant overlooking the Arabian Sea at World. The restaurant structure is an example of a(n):

capital expenditure

Albee Construction Company, a financially strong corporation that builds roads and bridges, finances its equipment leases by issuing unsecured short-term debt, which is called:

commercial paper

The Securities Exchange Act of 1934 gave the SEC the power to:

control the organized exchanges

A checking account is also commonly referred to as a:

demand deposit

Bo Riley pays his rent and utility bills each month by writing checks. Riley is using a _____ account.

demand deposit

In terms of financial intermediation, the couple who went to a bank and took out a $200,000 loan to buy a new house is an example of a:

demander of funds

When The Bank of Bank County borrows funds from the Federal Reserve; the rate the Fed charges the commercial bank is called the _____ rate.

discount

The _____ characteristic of money is revealed by the fact that a dollar can be converted into four quarters or ten times.

divisibility

When bank examiners conclude that a bank has serious financial problems, the FDIC can:

do any of the above

A brokerage firm is an example of a depository financial institution.

f

A term loan is a loan with a maturity of less than a year.

f

Another term for a checking account is a time deposit.

f

Dividends and interest payment are both tax-deductible.

f

Durability and simplicity are two important characteristics of money.

f

Lines of credit are short-term loans that are secured by collateral.

f

Selling a firm's accounts receivables to a financial institution at a discount is called countertrading.

f

The Federal Deposit Insurance Corporation (FDIC) only insures deposits at commercial banks.

f

Treasury bills, certificates of deposit, and mortgage loans are the most popular marketable securities.

f

Sales made, but for which payment has not yet been collected, are called accounts payable.

false

Regulation FD was designed to eliminate:

insider trading

The Federal Deposit Insurance Corporation (FDIC):

insures deposits in commercial banks

Blackwell Investments specializes in acting as an intermediary in taking companies public. This financial middleman is an example of a(n):

investment banker

A bank charter:

is an operating license for a commercial bank

Which of the following services would you NOT expect a depository institution to offer?

loans to individuals with poor credit

Chez Dove is an independent coffeehouse/bookstore that went bankrupt only eight months after opening due to an unexpected demand for cash to fix a leaking roof. Better cash _____ might have allowed the business to continue operation.

management

Making sure that enough cash is on hand to pay bills as they come due and to meet unexpected expenses is called cash:

management

One of the major financial burdens for many companies is the need to provide and maintain funds to provide benefits needed by former employees. One of the ways that Delta Airline tried to avoid bankruptcy was by reducing the payout from this fund because returns on investments were not keeping pace with the number of retirees and their benefit demands. This example reflects a problem with:

pension funds

Which of the following is NOT one of the key characteristics required in order for money to be an acceptable medium of exchange?

profitability

In finance, _____ is the potential for loss.

risk

Items that groups of people use as money must be _____ to be acceptable mediums of exchange.

scarce, divisible, portable, and durable

Weeds, sand, and paper clips would not make good mediums of exchange because they lack the key characteristic of:

scarcity

The power the Federal Reserve has to control credit terms on some loans made by banks and other lending institutions is called ______ controls.

selective credit

The cost of inventory to the firm includes all of the following EXCEPT:

selling costs

What are the broad categories of commercial banks in the United States?

state and national banks

A mortgage loan is a long-term loan that uses real estate as collateral.

t

By lowering the reserve requirement, the Federal Reserve tries to make more money available for loans and stimulate the economy.

t

Examples of time deposits are savings accounts, money market deposit accounts, and certificates of deposit.

t

Hal Silverstein has a savings account, also called a _____, at his local credit union.

time deposit

The three main types of unsecured short-term loans are:

trade credit, bank loans, and commercial paper

In finance, the opportunity for a profit is called return.

true

_____ is the process of buying securities from corporations and governments and reselling them to the public.

underwriting