DECA Finace Study guide Q; 1-50

When a nation can produce a product for less than other nations, it is said to have a(n)

Absolute advantage. Countries should specialize in and trade those products in which they have an absolute advantage. Comparative advantage is achieved by a nation from specializing in and producing goods and services at which it is relatively most efficient. Trade surplus occurs when a nation's exports are greater than its imports. A quota is a trade restriction that limits the quantity of goods which can move in and out of a country.

Financial managers who are legally responsible for their clients' investments must demonstrate fiduciary responsibility, which involves

Acting in the best interests of their clients. In the financial industry, a fiduciary is a financial professional who has been given legal authority to make financial transactions on behalf of an individual or business— the owner of the financial product (e.g., stock). Because the fiduciary has been given legal authority to act on behalf of a client, s/he must act in the best interest of the client. Fiduciary responsibility involves making wise financial decisions and obtaining financial products that will help the client achieve his/her financial goals. A fiduciary does not focus on selling products that generate the highest commissions or make risky investments without the client's knowledge. A responsible, ethical fiduciary is transparent and trustworthy and continuously communicates with her/his clients rather than communicating with them only once a year.

What type of law is intended to enforce the rules and regulations of governmental agencies:

Administrative. Administrative law deals with the rules and regulations that have been established by governmental agencies. Most governmental agencies have an effect on business in some manner, such as issuing licenses or prohibiting unfair trade practices. Administrative law implements the rules and regulations, which also involves resolving disputes. Statutory, commercial, and procedural are not types of law that enforce the rules and regulations of governmental agencies.

Which of the following is an example of unethical behavior in the workplace that involves confidential information:

An employee tells a coworker how much the sales manager earned in bonuses last year. It is unethical for employees to discuss their own or anyone else's salaries with coworkers. Employees might become upset if they find out that other employees make a lot more money than they do. Discussing salaries can result in bad feelings, resentment, low morale, and reduced productivity. Providing an aging-accounts report and advising staff about an extended leave of absence are not unethical behaviors in relation to confidential information. While it is difficult to lay off staff during difficult financial times, it is often done, and it is not an unethical activity that relates to confidential information.

Samantha has been chosen by her boss to participate in a group discussion on a topic she knows very little about. Her lack of knowledge in the subject makes her feel like she has little to contribute to the group. Which of the following should she do to become a valuable participant:

Ask questions to clarify other participants' comments. Asking clarifying questions assists the entire group in learning about the topic. No one in the group knows everything about the topic. Talking together through tough subjects and sharing diverse viewpoints is the purpose of working as a group. Similarly, she should attempt to assist the group that she has been chosen for instead of asking to be removed. This is not the right time to take a leadership role, which should be assumed by the person who knows the most about—or has the most experience with—the subject.

Which of the following would most benefit from a customer-service mindset that helps to reduce complaints and increase profits:

Businesses. Reduced complaints, repeat business, and greater profits are normally the results of having a customer-service mindset. Benefits to the employees may include promotions or raises. Benefits to the customers would include having a more satisfactory experience with the business. Competitors would not benefit from another business practicing a customer-service mindset.

Which of the following is a tax-deductible gift:

Charitable donation. Gifts are money, financial products, or property given to an individual or organization. Some gifts, such as charitable donations, are tax deductible. This means that the donor pays a reduced amount of tax or is exempt from paying the tax, depending on the type and value of the gift. Vacation homes, stocks, and inherited items are taxable gifts.

A business's philanthropic responsibility involves its contributions to

Charity. A business's philanthropic responsibility involves its contributions to charity. Philanthropic responsibility is part of a business's overall social responsibility. It does not relate to political campaigns, scientific research, or the economy.

Accountants are legally required to follow established guidelines when preparing financial documents to ensure that the information presented is

Clear and consistent. The accounting function is responsible for collecting and reporting the business's financial information. Governments require businesses to provide certain types of financial information to regulatory agencies and shareholders in specific ways. By requiring businesses to follow the same standards and rules, financial reports are prepared in a consistent way, so the information is clear, objective, and transparent to all people who read and work with financial information. Subjective information is open for interpretation. Irrational information is not logical or meaningful to the reader. In other words, it is unclear.

Which of the following are characteristics of a well-written executive summary:

Clear, concise, and error free. An executive summary is a section of a formal report that highlights the most important information that appears in the body of the document. A well-written executive summary should be clear, concise, and error free. An executive summary should be easy to read and simple to understand. Because an executive summary is part of a formal report, it should follow a formal format. An executive summary does not need to be creative—its primary purpose is to inform the reader about essential facts.

Which of the following reasoning processes does a virtual auditor use to identify financial system transactions that are very similar to each other but are not exactly alike:

Comparative reasoning. A virtual auditor, which is a type of compliance technology, uses multiple reasoning processes to continuously review financial transactions and processes to identify errors and/or compliance violations. Comparative reasoning is used to identify financial system transactions that are very similar to each other but not exactly alike. For example, after identifying two close matches, comparative reasoning is used to determine if one transaction was entered multiple times or if the two entries in the system are for two separate transactions. Contextual reasoning is used to consider each financial transaction's circumstances and how they compare to historical patterns in the system. Temporal reasoning involves considering the timing of a financial transaction. Cross-source reasoning is used to compare financial transactions and processes in multiple financial systems.

What is a common course of action for small banking institutions interested in competing globally and improving their efficiencies, viability, and profitability?

Consolidating with larger banks. In recent years, many small banking institutions have consolidated or merged with larger banks in efforts to compete globally and improve efficiencies, viability, and profitability. Rapidly expanding operations without consolidating with a larger bank is usually not conceivable for a small banking institution. Following global regulations is important but not necessarily enough to compete successfully on a global level. A financial holding company is a large organization that owns most or all of the shares of individually incorporated subsidiaries that engage in other types of financial activities. Small banking institutions aren't likely to have the resources to be financial holding companies.

According to the classical theory of unemployment, the best solution for unemployment is to

Cut wages. According to the classical theory of unemployment, the best solution for unemployment is to cut wages. If wages aren't allowed to rise too high, the cycle of unemployment will be stopped in its tracks. For classical economists, increasing prices, encouraging spending, and decreasing inflation are not preferred solutions for unemployment.

The section of the SEC website that houses companies' filings is called

EDGAR. The section of the SEC website that houses companies' filings is called EDGAR, which stands for Electronic Data Gathering and Retrieval. EDWIN, EDMUND, and EDWARD are not acronyms for anything on the SEC website

You have a big paper due for your marketing class, and you're almost finished! All you have left to do is check your grammar, punctuation, and spelling. Which step of the writing process do you have left to complete?

Editing. During the editing stage of the writing process, you give your words and sentences a close look and correct any grammar, punctuation, and spelling mistakes. Revising comes before editing and involves making bigger changes, such as rearranging or removing whole sections of writing.

A business might conduct a compliance audit to

Ensure that it is following government regulations. Government regulations affect the way that businesses record and report financial data. To ensure that the business is following all of the regulations, it should conduct a compliance audit. Because a comprehensive compliance audit can detect discrepancies, it can help a business determine what it needs to do to correct a problem, so it can comply with regulations. It is unethical and often illegal to manipulate financial data in ways that aim to mislead the audience. Developing efficient production processes and evaluating vendors' performance are not reasons for conducting a compliance audit.

Chris asks his coworker, Ali, for help on his project. She agrees to help him, but she is frowning, crossing her arms, and avoiding eye contact. Ali most likely

Feels uncomfortable or unhappy with the idea of helping Chris. People's nonverbal communication is often just as important as their verbal communication. This is especially true in business. Ali may say that she will help Chris with his project, but he should also note the cues she is sending him with her body language. Even though she agrees verbally, the body language she's using (a frown, crossed arms, and no eye contact) likely means that she does not want to help him. She is probably not happy or comfortable with the idea of helping Chris. Chris should not assume that Ali's body language isn't communicating any message.

An increase in free-flowing capital is a benefit of

Financial globalization. Globalization is the rapid and unimpeded flow of capital, labor, and ideas across national borders. Free-flowing capital on an international level has led to the integration of financial markets, offering equal access to market participants, regardless of their home countries. Liberalization and financial product innovation (rather than investor innovation) are factors that have fueled the movement to financial globalization. Protectionism refers to government policies that aim to protect domestic industries and businesses against foreign competition. Protectionism hinders the free flow of capital across national borders.

What is a primary responsibility of an investment bank?

Help firms raise funds by issuing securities. Investment banks locate outside sources of money for firms. In most cases, investment banks help these businesses to raise funds by issuing securities (e.g., stocks and bonds). An investment company pools investors' funds and invests the funds based on the needs of the investors. Insurance companies collect premiums for their insurance products. A deposit-taking institution (e.g., bank, credit union) accepts deposits from savers and uses the deposits to offer loans to borrowers.

What do bond yields typically do during an economic expansion?

Increase. During an economic expansion, production, employment, income, sales, the demand for money, and interest rates rapidly increase. As a result, businesses borrow more money (at higher rates) to expand their operations. And, when businesses borrow more at higher interest rates, bond yields go up.

Which of the following characteristics tends to have a close relationship with initiative:

Industriousness. People who are industrious are energetic and hardworking on the job. This is closely related to their willingness to look for jobs to do. Rudeness and insecurity are negative characteristics that tend to prevent individuals from possessing initiative. Truthfulness is a good characteristic to possess, but it is not necessarily tied to initiative

Which of the following statements regarding international trade is true:

Internet-based companies can easily become involved in international trade. A company that has a website can easily be found by people in foreign countries, and online services like eBay make international transactions easy to conduct. Small businesses represent a large majority of international trade. Freight-forwarding services are often used by companies, but they are not required. Foreign language skills may be helpful, but they are not required to conduct international trade since people in many countries speak more than one language and translation services exist.

A country is experiencing civil unrest. What is likely to happen to the value of its currency?

It will decrease. A country's economic and political stability can affect the value of its currency. If a country is experiencing civil unrest, its political environment is volatile. Because foreign business partners and investors are uncertain about the country's future, they are likely to decrease their business activities, causing the country's currency value to decrease. The value of the currency in a politically unstable environment is not likely to increase, stabilize, or remain unaffected.

If Fiona has a fatal accident or gets a terminal disease, she wants to make sure that her children's financial needs are met until they finish college. What type of insurance should Fiona purchase?

Life. An individual purchases life insurance to protect others (e.g., family members) from financial losses related to his/her death. Death benefits are often used to cover the beneficiaries' living expenses, education, etc. Worker's compensation insurance is insurance purchased by employers to provide benefits to employees who are injured on the job. An individual purchases liability insurance to cover costs associated with potential property losses or injuries due to negligence on the part of the insurance owner. Property insurance covers land and building losses.

When sharing ideas, consensus-building group members should

Listen actively to other group members. When sharing ideas, consensus-building group members should listen actively to other group members. This way, they can understand what's being discussed and may even build upon their own ideas. It's better to consider too many rather than too few ideas in the beginning. Group members shouldn't automatically reject ideas they don't understand—they may like the idea after it's explained to them. Group members shouldn't eliminate any ideas during the initial brainstorming and sharing session.

A potential investor can assess a stock's volatility by comparing the highest paid price in the past 52 weeks with the A. price-ea

Lowest paid price in 52 weeks. A securities or stock table is a format used to list stock quotes in newspapers and on websites. The table helps people monitor the performance of a company's stock. To analyze the volatility of stock, an investor or potential investor can compare the highest price paid with the lowest price paid within a 52-week period. If a stock's price rises or falls sharply, it is said to be volatile, which means investors can earn or lose a great deal of money by owning the stock. Rate of return is the reward or benefit received in return for an investment, recorded as a percentage of the investment. Price-earning ratio (PE) is the financial ratio that shows how much investors are willing to pay for each dollar of earnings. A dividend is a portion of a company's profits, paid to shareholders, usually on a quarterly basis. The rate of return, price-earnings ratio, and estimated dividends would not give investors enough information to analyze the stock's volatility.

The nature of an agent's work and the level of an agent's control are factors that determine if a

Master-servant. In legal terms, the master-servant relationship refers to the amount of control that a principal (e.g., employer or client) has over an agent (e.g., employee or attorney). Determining if a master-servant relationship exists is an important consideration when addressing a business's legal issues and disputes, especially in cases that involve liability questions. Factors that determine if a master-servant relationship exists include the nature of the agent's work, the level of the agent's control (e.g., decision making), and the agent's level of supervision. Tutor-student, principal-collaborator, and controller-associate are not terms that are widely used to describe agency relationships in law.

Qualified employees who behave unethically on the job may harm themselves by being

Passed over for promotions. Most businesses try to act in an ethical manner, and they expect their employees to also behave ethically. Employees who behave unethically on the job may harm themselves by being passed over for promotions even if they are well qualified. Coworkers and supervisors often notice other employees' unethical behavior and may lose respect for them because of it. These employees may be passed over for promotions because their supervisors do not trust them to do the right thing, particularly in higher level positions that give them more authority. Employees are not harmed by attending training programs or being rotated to similar positions. Unethical behavior is not necessarily illegal.

What do environmental distractions to active listening include?

Poor lighting and noise. Environmental distractions, such as poor lighting or noise, are aspects of the setting that take away from a listener's ability to listen. The speaker's appearance, manner, and personal matters that cause us to worry may also be distractions, but they are not part of the environment.

The two basic types of business risk are

Pure and speculative. Pure risks are risks that carry with them the possibility of loss or no loss. Speculative risks are those risks that may result in a loss, no change, or a gain. Fires and floods are two types of natural risks. Theft and death are types of human risks. Incompetence and carelessness of workers are also human risks.

Employees from different departments participate in a group to solve problems related to the company's production processes. This is an example of a

Quality circle. A quality circle is a problem-solving group of coworkers who are given work situations or problems to study and discuss in order to recommend solutions to management. A standing committee works together for a common purpose over a long period of time (e.g., three years). A short-term committee has an immediate goal, such as planning a social event for employees. A product team consists of individuals who work together to develop, improve, and/or market a product.

Why is it important for speakers to rehearse an oral presentation?

Rehearsing helps the speaker improve the delivery of the message. Rehearsing the presentation provides the speaker with an opportunity to make sure that s/he is speaking at the appropriate pitch. It is also a chance to monitor nonverbal behavior such as distractive gestures or mannerisms (e.g., swaying). Presentation rehearsal allows the speaker to time the presentation and decide what revisions are needed before the final event. Presentation notes are developed before rehearsal. The accuracy of the message content should be verified at the time the presentation is developed. Verbal feedback from the intended audience is provided at the final event, not at the rehearsal.

Usually during an economic recession, the prices of goods and services will rise very high while the value of money decreases. At the same time, many workers receive an increase in their nominal wages. These workers will be willing to pay the rising prices because their wages are rising by the same amount. This is a good example of the effects of _________ prices.

Relative. Relative prices come into play when both wages and prices rise or fall at the same rate, so that consumers are willing to pay the new price. Competitive prices are about equal to or lower than those of a business's competitors. Unfair prices are either too high for the good or service provided, or too low in comparison to those of competitors. Objective prices are fair and reasonable, relating strictly to the value of the product.

Sara doesn't take responsibility for her decisions and actions, and she often feels bitter because she thinks others have treated her unfairly. She is experiencing

Resentment. Sara is experiencing resentment, or a feeling of bitterness that other people have treated her unfairly. People often become resentful when they fail to take responsibility for their decisions and actions because they have relinquished control of their lives to other people or outside circumstances. Denial is a refusal to accept the truth. Guilt or remorse is a negative feeling people experience when they've done something they shouldn't or not done something they should.

A credit plan that allows customers to make purchases that are within their credit limit and pay all or part of the balance due each month is referred to as a(n) __________ credit plan.

Revolving. A revolving credit account limits the total amount of money that may be owed. Revolving account customers who do not pay the full amount each month are charged interest on the unpaid balance. A budget credit plan is a short-term credit plan, typically for two to three months. An open (account) credit plan is a regular credit plan requiring payment in full at the end of each credit period. A coupon credit plan issues coupons to be paid for over a period of time and to be used by customers in making purchases.

In most cases, the person who initially listens to customer complaints is the

Salesperson. The salesperson is the point of contact for customers in most situations. If the problem originated on the sales floor, the salesperson would be the person most likely to be approached by the customer about the problem. The sales manager might help the salesperson, if necessary, but the store owner would seldom be involved. The buyer would be familiar with the merchandise but would not be likely to come into contact with the customer. All complaints should be handled with the customer in mind.

George has decided to purchase a dishwasher. He is checking the newspaper ads for the best place to get quality goods and services at a reasonable price. What type of product is the dishwasher?

Shopping. Shopping goods are consumer products that are purchased by consumers after comparing products and stores to get the best quality, price, and/or service. Capital goods are manufactured or constructed items used in the production of goods and services. Convenience goods and services are purchased quickly and without much thought or effort by ultimate consumers. Specialty goods are consumer products with special or unique characteristics that consumers are willing to exert special efforts to obtain

In which of the following types of business ownership does the owner bear the entire risk of loss:

Sole proprietorship. One of the disadvantages of a sole proprietorship is that the owner is personally responsible for all the debts of the business. Two or more people share the risk of loss in a general partnership, and corporations spread the risk of loss among many investors. Private enterprise is not a form of business ownership. It is an economic system in which individuals and groups, rather than government, own or control the means of production.

Randall is working extra hours this week at his after-school job, and now he's not sure if he'll have enough time to study for his finals. He's starting to feel a lot of pressure and tension, also known as

Stress. Randall has a mental, physical, or emotional feeling of pressure or tension, also known as stress. Stress is the feeling you get when you're overwhelmed, overworked, or worried. Productivity is the amount of work employees perform in a given period, usually their output per hour. Employee turnover is the rate at which a business gains and loses employees. Randall is not experiencing job satisfaction.

Which of the following is not a key factor involved with compounding growth:

The risk of the stock market. The risk of the stock market is not a key factor involved with compounding growth. Compounding growth is earning interest upon interest. The three key factors involved with compounding growth are the amount of money you invest, how long your money is invested, and how much your investment grows each year.

What is the primary purpose of data-cleansing processes?

To maintain a useful customer database. The data-cleansing process removes duplicate records, updates expired data, and completes incomplete data fields. An effective data cleansing will result in a database that contains useful, relevant, and accurate data. Having a "clean" database helps the organization process good information to make sound business decisions. Businesses use a variety of security software and procedures to control employees' access to their intranets and to monitor security breaches. Businesses do not use data-cleansing processes to correct non-response errors on surveys.

To make sure he develops a realistic personal budget, Marcel should always

Track and record his expenses. Realistic personal budgets involve two important considerations—income (money Marcel receives) and expenses (money Marcel spends). It is important for Marcel to track his expenses because he needs to make sure that he has enough income to pay for his bills (e.g., rent, utilities, car). To track his spending, Marcel should record his expenses in a central location so he can see bill amounts and bill due dates. Recording and keeping receipts is also important for tax reporting purposes and for tax auditing situations. Developing a realistic budget does not always involve verifying a past credit rating or consulting with a bookkeeper. Marcel should develop a budget that will support his ability to pay his bills on time.

One way a company can reinforce its image is by

Training its employees. A company's image, or brand, is the way a person or group views the company; it's the combined impressions and experiences associated with the company. The manner in which employees perform their tasks affects the way people view the company. For example, a business that wants to portray an upscale image might train its employees to respond and service customers in a specific way or by following a set of procedures. To reinforce the upscale image, the business might require an employee to greet the customer in a certain way, provide extra amenities, wear certain apparel, or follow certain cleaning procedures to maintain the facility. Although it is important for a business to develop a financial plan, conduct a competitive analysis, and identify necessary resources, these activities do not directly affect how employees convey a certain image.

When Armand is comparing his checkbook balance with his bank statement, he must make sure that he has subtracted the __________ from his checkbook.

Transaction fees. Reconciling bank statements involves comparing the entries in a checkbook with the entries listed on the bank statement. It is important to make these comparisons to determine inconsistencies and mistakes. If a check is not recorded correctly, and if the mistake is not caught, the individual runs the risk of having insufficient funds in his/her checking account, which results in bounced checks. Some financial institutions charge transaction fees for checking accounts, so it is important to make sure that those fees are subtracted from the checking account balance. Accumulated interest and payroll deposits are added to the checking account balance rather than subtracted from it. Check numbers are not subtracted from the checkbook when reconciling bank statements and checkbook balances.

What should you do when you become annoyed with coworkers or customers?

Treat them the way you want them to treat you. Regardless of where you are, your interactions should be respectful and kind. Sometimes coworkers, customers, and even managers can get on your nerves. It's part of human nature to get annoyed with others. Regardless, you should always treat the people around you the way you would want them to treat you—with dignity, care, and respect. Even if you're annoyed with some coworkers or customers, it would be unprofessional for you to avoid talking with them whenever possible, tell them to be quiet and stop bothering you, or complain about them during a staff meeting.

An important aspect of ethical behavior by financial services providers is ensuring that their clients

Understand the potential risks and rewards of different financial products. Ethical financial services providers act in the best interest of their clients. To act in the best interest of their clients, financial services providers consider their clients' individual financial needs, wants, capabilities, and limitations and present appropriate investment options to them. Financial services providers also should communicate the rewards and risks associated with various financial instruments so their clients fully understand their options. It is unethical to suggest that clients make a high-risk investment if they cannot afford it. A diversified portfolio does not invest over half of a person's money in one financial product. Hedge funds are exclusive investment partnerships that typically require a large minimum investment. Because markets are constantly changing, it is not feasible to plan future investments for money that is not available.

When giving verbal directions to employees about how to complete a task, it is often helpful to

Use visuals. It is often more difficult to give verbal directions than to provide written directions unless the information is fairly simple or familiar to the audience. To overcome the problem of giving verbal directions, it is often helpful to use visuals such as diagrams or charts. The visuals reinforce the verbal directions and help the audience to understand the explanation. It is not helpful to speak softly, use complex words, or limit body language when giving verbal directions. These actions may make it more difficult for the audience to understand the directions.

Writing a letter to your grandmother is an example of

Verbal communication. Writing a letter to your grandmother is an example of verbal communication. Verbal communication is the exchange of information through the use of words, including writing and speech. Writing a letter to your grandmother is different from speaking to her. Nonverbal communication is the exchange of information without the use of words, including body language, eye contact, and gestures. Writing a letter is not nonverbal communication because it involves the use of words.

Which of the following are examples of agricultural products that are traded on commodity market exchanges:

Wheat, livestock, and corn. Commodities are raw, primary products which are typically categorized as energy, metals, and agricultural products. Agricultural products such as livestock (e.g., sheep, hogs, and cattle) and grains (e.g., wheat and corn) are agricultural products that are traded on commodity market exchanges. Grains are used to make cereal and bread; therefore, these items are not traded on commodity market exchanges.

To expand into foreign markets, an American business owner acquires a small manufacturing plant in Thailand. Which of the following entry modes is the business owner using to expand the company internationally?

Wholly owned subsidiary. There are many ways to enter foreign markets. In the example, the business owner found an opportunity to expand by purchasing a small manufacturing plant in Thailand. By purchasing the plant, the business owner can produce goods at the plant and sell them in nearby foreign markets. The manufacturing plant is owned and controlled by the American parent company, so it is a wholly owned subsidiary. A joint venture or strategic alliance is an arrangement that involves two or more businesses entering into a short-term relationship by combining complementary resources such as technology, skills, capital, or distribution channels for the benefit of all parties. A franchise is a contractual agreement between a parent company and a franchisee (separate entity or company) to distribute the parent company's goods or services. The manufacturing company is an intermediary used to move goods and services; however, it isn't independent because it is owned by the parent company.