Question 1

When the amount earned on a deposit has become part of the major at the end of a particular time period the concept is called

• discount interest.
• compound interest.
• primary interest.
• future value.

Question 2

The rate of interest really paid or earned, also called the yearly % rate (APR), is the ________ interest rate.

• effective.
• nominal.
• discounted.
• continuous.

Question 3

In future worth or present value problems, unless fixed otherwise, cash flows are supposed to be

• at the end of a time period.
• At the start of a time period.
• In the middle of a time period.
• Spread out evenly over a time period.

Question 4

The opportunity value of $200 received today and deposited at 8 % for three years is

• $248.
• $252.
• $158.
• $200.

Question 5

Cecilia bought 100 shares of Minnesota Mining and developed in June, 1987 for $38 a share for a total investment of $3,800. She sold the shares in June, 1996 for $8,960. What is Ceciliaâ€^TMs yearly rate of return on her investment?

• 10%
• 10.6%
• 11%
• 11.2%

Question 6

An individuality or organization that represents the bondholders to ensure the indentureâ necessities are respected by the bond issuer is called a (n)-

• trust indenture
• trustee
• investment banker
• trust organization

Question 7

To decide risks of nondomestic bonds, a multinational company must consider all but which one of the following risks?

• political and economic risks
• seizure or expropriation of assets
• stabilized currencies
• foreign exchange controls and tax regulations

Question 8

Which of the following bonds can be redeemed prior to maturity by the firm?

• callable bonds
• convertible bonds
• putable bonds
• retractable bonds

Question 9

A (n) _____________ gives the bondholder a claim to detailed property such as railroad cars or airplanes

• first mortgage bond
• equipment trust certificate
• inventory bond
• collateralized bond

Question 10
___________________ has the least claim on the resources and cash flow of the firm

• A bond
• A subordinated debenture
• Preferred stock
• Common stock

Question 11
___________________ is the maximum purchase price or minimum selling price particular by an shareholder

• A short sale
• A stop-loss order
• A limit order
• Buying on margin

Question 12

Sales of securities that the seller does not own is called a-

• stop-loss order
• short sale
• limit order
• maintenance margin

Question 13

An order for direct purchase or sale at the best possible price is called a-

• market order
• limit order
• stop loss order
• margin order

Question 14

The price for which the owner is willing to sell the protection is called the

• bid price
• spread
• ask price
• limit price

Question 15

Trades between large institutional investors that take place without the remuneration of brokers or dealers arise in the-

• primary market
• secondary market
• third market
• fourth market

Question 16

Which one of the following is not measured to be a usually familiar type of market competence?

• strong-form
• semi-strong form
• weak-form
• insider-information form

Question 17

The risk cause by variations in income previous to taxes over time because fixed interest expenses do not change when efficient income rises or falls is called

• interest rate risk
• business risk
• financial risk
• purchasing power risk

Question 18

The risk cause by changes in increase that involve revenues, expenses and prosperity is called

• interest rate risk
• business risk
• purchasing power risk
• financial risk

Question 19

The protection market line can be used to resolve the expected return on a protection based on the

• market rate of return
• slope of the line
• systematic risk of that security
• risk premium

Question 20

Portfolio risk is comprised of

• systematic and market risk
• unsystematic and microeconomic risk
• systematic and unsystematic risk
• systematic and macroeconomic risk

Question 21

On the income statement, net profit after tax is definite as

• operating profit minus operating expenses
• operating profit minus cost of goods sold
• operating profit minus interest
• operating profit minus interest minus taxes

Question 22

Which one of the subsequent financial statements conveys a connection of equality between resources and liabilities plus owner equity?

• income statement
• statement of cash flows
• balance sheet
• statement of retained earnings

Question 23

On the balance sheet, reserved earnings represent

• net profits for the current year
• net profits for the current year minus preferred stock dividends
• cash reinvested in fixed assets to support growth
• the cumulative total of earnings reinvested in the firm

Question 24

On the balance sheet, total resources minus net fixed property equals

• current assets
• current liabilities
• gross fixed assets
• total assets

Question 25

Current liabilities would not contain:

• accounts payable
• notes payable
• bonds
• accruals