exam 3- bus.
In its role as lender to member banks, the Federal Reserve is called the:
banker's bank
The Federal Deposit Insurance Corporation (FDIC) insures deposits in commercial banks. The FDIC was created by the:
banking act of 1933
TD Ameritrade is a company that buys and sells stocks and bonds as well as providing its customers with advice on when to buy and when to sell. TD Ameritrade is an example of a _____, a type of nondepository financial institution.
brokaerage firm
Financial managers focus on _____, the inflow and outflow of cash.
cash flows
In the accounting field, CMA stands for:
certified managerial accountant
State banks are:
chartered by the state in which they are based
The Federal Deposit Insurance Corporation (FDIC):
oversees the National Credit Union Share Insurance Fund; insures deposits in commercial banks and thrift institutions up to a ceiling of $250000 per account; is an independent, quasi-public corporation; and is backed by the full faith and credit of the United States government
The three main types of unsecured short-term loans are:
trade credit, bank loans, and commercial paper
Tracy Lefteroff is the global managing partner for PricewaterhouseCoopers. She said that her company is eager to invest in newly created biotech companies because the U.S. has an aging population that will need new medications and treatments. What kind of equity capital would Lefteroff be likely to provide?
venture capital
The Banking Act of 1933 gave the Federal Reserve System the authority to:
regulate interest rates on time deposits; tell banks how much reserve to maintain; ban interest on demand deposits; keep banks from investing in specific securities; and ban interest on demand deposits
What is the name of the SEC regulation that requires public companies to share information with all investors at the same time?
regulation FD
Which of the following is an example of an asset that might be owned by a minor league baseball team?
reputation as a winning team
The Securities Act of 1933:
requires full disclosure of information about new securities issues
The three principal tools of the Federal Reserve System are:
reserve requirements, discount rate, and open market operations
The funds that are reinvested in the firm out of profits and after dividends are paid are called:
retained earnings
In finance, the opportunity for profit is called:
return
In finance, _____ is the potential for loss.
risk
_____ are two types of thrift institutions.
savings banks and savings and loan associations
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
_____ are investment certificates that represent either ownership of a corporation or a loan to the corporation.
securities
The _____ is a law that requires full disclosure of information on new issues and registration statements of financial information.
securities act of 1933
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
_____ invest in new businesses in return for part of the ownership, sometimes as much as 60 percent.
venture capitalists
Thrift institutions:
were formed specifically to encourage household savings
Organized stock exchanges operate like a(n):
auction company
ATMs let customers of banks make deposits and withdrawals while in a shopping center or supermarket 24 hours a day. The letters ATM stand for:
automated teller machine
Adam Hassib works for the Federal Deposit Insurance Corporation. He arrives unannounced at member banks where he conducts audits of managerial and financial practices. Hassib is a:
bank examiner
An accountant who has a bachelor's degree, passes a test prepared by the professional organization AICPA, and has a certain number of years of on-the-job training becomes a:
certified public accountant
Finance companies make loans to people who could not get credit anywhere else. To compensate for taking this extra risk, finance companies:
charge higher interest rates than commercial banks do
_____ are profit-oriented depository financial institutions that accept deposits, make business and consumer loans, invest in government and corporate securities, and provide other financial services.
commercial banks
The two types of finance companies are:
commercial finance companies and consumer finance companies
_____ stock is a security that represents an ownership interest in a corporation and has voting rights.
common
When Hadley Jones wanted to buy a truck so he could get to and from his job in a nearby community, his credit rating was poor. Jones found that the only place he could get a loan was from a(n) _____ finance company.
consumer
The Securities Exchange Act of 1934 gave the SEC the power to:
control the organized exchanges
_____ are specific repayment conditions as to how long customers have to pay bills and the amount of cash discount allowed.
credit terms
A _____ is a nonprofit, member-owned financial cooperative.
credit union
Which of the following financial institutions is a not-for-profit institution?
credit union
Which of the following is an example of a depository financial institution?
credit union
The U.S. money supply is composed of:
currency, demand deposits, and time deposits
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
Financial institutions can be divided into two broad categories. These are ______ institutions.
depository and nondepository
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
Which of the following is an activity performed by the Federal Reserve System as it carries out its monetary policy?
distributing currency
The _____ characteristic of money is revealed by the fact that a dollar can be converted into four quarters or ten times.
divisibility
Cupcakes, hamburgers, and cut flowers would not make good mediums of exchange because they lack the key characteristic of:
durability
Which of the following services would you expect a depository institution to offer?
electronic funds transfer
Thrift institutions were formed specifically to make home mortgage loans and to:
encourage household savings
Which federal agency is responsible for processing and clearing checks between financial institutions?
federal reserve
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)
A _____ makes short-term loans for which the borrower puts up tangible assets (such as an automobile, inventory, machinery, or property) as security.
finance company
_____ management is the art and science used to determine the most effective ways to acquire and use funds to achieve the firm's goals.
financial
_____ deals with reporting to outsiders. _____ accounting deals with the internal operations of the firm.
financial accounting; managerial accounting
Financial intermediation is the process in which:
financial institutions act as intermediaries between the suppliers and demanders of funds
Financial institutions act as intermediaries between suppliers and demanders of funds. They accept savers' deposits and invest them in such things as business loans or mortgages. This process is called:
financial intermediation
Dakota Mining Company pays its bills and employees with checks drawn on a bank from another part of the country. Checks usually take about three days to clear the firm's account. _____ is the advantage gained during the check-clearing time.
float
_____ benefits the check writer by allowing it to retain the funds until the funds are actually withdrawn from its account.
float
Competing against foreign banks can be difficult for U.S. banks because:
foreign banks are subject to fewer regulations than U.S. banks
To ensure accuracy and consistency in the way financial information is reported, accountants follow rules known as:
generally accepted accounting principles
Electronic communications networks (ECNs):
have permitted the creation of the fourth market
Managerial accounting provides all of the following financial information EXCEPT:
income statements
Toys "R" Us was founded in 1948. The iconic mascot Geoffrey the Giraffe was introduced in February 1960. Geoffrey used in all ads and promotions used by the retail toy chain is an example of a(n) _____ because it does not have a physical existence.
intangible asset
A bank charter:
is an operating license for a commercial bank
For which of the following assets would a wholesale company use depreciation?
its warehouses
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
The primary goal of the financial manager is to:
maximize the value of the firm to its owners
For a college student who needs to buy an $80 textbook, the money she received from her parents for the purchase of school supplies would be used as a:
medium of exchange
The most important function of the Federal Reserve System is carrying out ______ policy.
monetary
______ is anything (regardless of form) that is acceptable as payment for goods and services.
money
A(n) _____ loan is a long-term loan using real estate or other assets as collateral.
mortgage
National banks:
must carry insurance on their deposits from the federal deposit insurance corporation; are more closely regulated than state charted banks; are chartered by the comptroller of the currency; and must belong to the federal reserve system
A bank chartered by the Comptroller of Currency, a branch of the U.S. Treasury Department, is called a _____ bank.
national
After all expenses have been subtracted from revenues on an income statement, the final figure or bottom line is called the _____ when it is a negative number.
net loss
Accounting provides a framework for looking at:
past performance; current financial health; possible future performance
Which of the following is NOT one of the six steps in the accounting cycle?
paying accounts payable
Dividends are:
payments to the shareholders from company earnings
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
_____ are large pools of money set aside by corporations, unions, and governments for later use in paying retirement benefits to their employees or members.
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
_____ are independent accountants who serve organizations and individuals on a fee basis.
public accountants
_____ involves calculating and interpreting financial ratios taken from the firm's financial statements in order to assess its condition and performance.
ratio anaylsis
Insurance policyholders make premium payments to buy financial protection. Insurance companies invest the premiums in:
real estate; stocks; business loans; and bonds
When bank examiners conclude that a bank has serious financial problems, the FDIC can:
recommend that the bank merge with a stronger bank; provide the bank with extra equity capital; require the bank to use new management practices or replace its managers; and lend money to the bank
Things of value owned by a firm are called its:
assets
Money is used as:
a means of payment; a store of value; a standard of value; a medium of exchange
Managerial accounting provides information that would probably be most beneficial to:
a middle manager of the company
Which of the following is an example of an intangible asset for a manufacturer of padlocks?
a patent on titanium lock mechanism
Secured short-term loans are usually secured by:
accounts receivable and inventory
The purchase or sale of U.S. government bonds by the Federal Reserve to stimulate or slow down the economy is called:
an open marker operation
Savings banks:
are a type of thrift institution
A checking account is also commonly referred to as a:
demand deposit
Which of the following statements about international banking is true?
foreign banks are subject to fewer regulations than U.S. banks; international banking is a high-risk business; U.S. banks play an important role in global business by providing loans to foreign governments and businesses; some governments protect their banks against foreign competitors; and competing against foreign banks can be difficult for U.S. banks because the U.S. banks are subject to many more regulations
About two-thirds of all U.S. commercial banks are chartered by the state in which they are based. The banks are called _____ banks.
state
A(n) _____ is a summary of the money flowing into and out of a firm.
statement of cash flows
Ruth Hu recently inherited $200,000. She has invested the inherited money in real estate and government securities. Hu is using her money as a:
store of value
Which of the following statements about the Federal Deposit Insurance Corporation (FDIC) is true?
the ceiling on the size account insured by the FCID is $250000; all member banks in the Federal Reserve must be insured by the FDIC; the FDIC reviews the financial records and management practices of banks it insures at least once a year; and each bank insured by the FDIC pays a fixed percentage of the bank's domestic deposit as it premium
Money market deposit accounts and certificates of deposit are officially called ______ deposits.
time
_____ are deposits at a bank or other financial institution that pay interest but cannot be withdrawn on demand without penalty.
time deposits
