Question :
51) Which of the following typically financed in a “stock : 1227809
51) Which of the following are typically financed in a “stock market”?
i)shares sold by a firm to finance its international growth plans
ii)new mortgages for home buyers
iii)credit card balances
A) i only
B) i, ii and iii
C) ii and iii
D) ii only
E) i and iii
52) Which of the following represents ownership of a firm?
A) stocks
B) bonds
C) short-term securities
D) loans
E) commodities
53) A distinction between stocks and bonds is that
A) bonds can be traded many times in the bond market, while stocks are non-transferable.
B) although the return on a bond is determined by the forces of supply and demand, the return on a stock is set by the stock exchange.
C) bonds cannot be sold to anyone other than the company that issued it while stocks can be resold to anyone.
D) stocks represent ownership claims to the company and bonds do not.
E) bonds must be held for a fixed number of years whereas stocks can be bought and sold at any time.
54) A stockholder ________ an owner of the firm and a bondholder ________ an owner of the firm.
A) is; is
B) is; is not
C) is not; is
D) is not; is not
E) might be; is not
55) Investment banks differ from commercial banks in the fact that
A) investment banks help other financial institutions and governments engage in financial markets while commercial banks work with individuals.
B) investment banks work only with wealthy customers while commercial banks work only with private firms.
C) commercial banks service the needs of local governments while investment banks work with the federal government.
D) commercial banks issue stocks and bonds while investment banks do not.
E) commercial banks sell stocks on behalf of their customers while investment banks just finance loans.
56) What do Fannie Mae and Freddie Mac have in common?
A) They are both government-sponsored mortgage lenders.
B) They are both investment banks.
C) They are both pension funds.
D) Both firms went out of business in the 2008 financial crisis.
E) Both firms issue bonds on behalf of the government.
57) Which of the following is NOT an example of physical capital?
A) a building
B) a bond
C) a dump truck
D) a lawn mower
E) a computer
58) The decrease in the value of the capital that results from its use and obsolescence is
A) appreciation.
B) deconstruction.
C) depreciation.
D) gross investment.
E) net investment.
59) Which of the following formulas is correct?
A) Net investment = gross investment + depreciation
B) Net investment = gross investment + capital
C) Net investment = gross investment – depreciation
D) Net investment = gross investment – saving
E) Net investment = gross investment – wealth
60) Intel’s capital at the end of the year equals Intel’s capital at the beginning of the year
A) minus its stock dividends.
B) plus net investment.
C) minus depreciation.
D) plus gross investment.
E) plus depreciation.
61) Economists use the term “financial markets” to mean the markets in which
A) firms purchase their physical capital.
B) firms supply their goods and services.
C) households supply their labor services.
D) firms get the funds that they use to buy physical capital.
E) the government borrows to fund any budget surplus.
62) When a student uses a credit card to buy an iPod, the student is
A) borrowing in the bond market.
B) lending in the bond market.
C) lending in the loan market.
D) borrowing in the loan market.
E) lending in the stock market.
63) Which of the following is NOT a financial institution?
A) an insurance company
B) a pension fund
C) Freddie Mac
D) a commercial bank
E) None of the above is correct because they are all financial institutions.
64) If the market value of what it has lent is less than the market value of it has borrowed, a financial institution’s net worth is ________ and it is ________.
A) negative; illiquid but not necessarily insolvent
B) negative; insolvent but not necessarily illiquid
C) positive; illiquid and insolvent
D) negative; illiquid and insolvent
E) positive; insolvent but not necessarily illiquid
65) A bond’s price is $80 and the bond pays $8 in interest every year. The bond’s interest rate is ________.
A) 8 percent
B) 10 percent
C) 4 percent
D) 80 percent
E) None of the above are correct.
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