Question 1

Which of the following is not true about venture capitalists?

Accepted Answer

A)  They provide financial support for entrepreneurial ideas.
B)  They share in the risks and rewards of entrepreneurial ideas.
C)  They are a critical link between entrepreneurial ideas and market reality.
D)  They issue shares of the IPO.

Question 2

If Shoffner Inc. ,a publicly traded corporation,has a share price of $125,revenues of $15.35 per share,and profits of $5.25 per share,what is the P/E ratio for Shoffner Inc.shares?

Accepted Answer

A)  23.81.
B)  0.04.
C)  8.14.
D)  0.12.

Question 3

As the prevailing interest rate increases,all of the following occur except

Accepted Answer

A)  Quantity demanded of loanable funds decreases.
B)  Quantity supplied of loanable funds increases.
C)  Cost of borrowing rises.
D)  Supply curve for loanable funds shifts to the right.

Question 4

A corporation can elect to allocate corporate profits into either

Accepted Answer

A)  Interest payments or dividends.
B)  Bonds or stocks.
C)  Dividends or retained earnings.
D)  Capital gains or dividends.

Question 5

The price paid for the use of money is defined as the

Accepted Answer

A)  Rental rate.
B)  Interest rate.
C)  Profit rate.
D)  Inflation rate.

Question 6

As interest rates decline,all of the following will result except

Accepted Answer

A)  Quantity demanded of loanable funds increases.
B)  Quantity supplied of loanable funds decreases.
C)  Cost of borrowing diminishes.
D)  Demand curve for loanable funds shifts to the left.

Question 7

Dividends are

Accepted Answer

A)  The amount of corporate profit paid out for each share of stock.
B)  Profits used for investment in new plants and equipment.
C)  An increase in the market value of an asset.
D)  The only motive for purchasing stock.

Question 8

The primary economic function of financial intermediaries is to help allocate scarce resources to desired uses.

Accepted Answer

A) True 
 B)False

Question 9

The quantity of loanable funds available to a corporation depends on the

Accepted Answer

A)  Dividends the company is willing to pay.
B)  Present worth of the company's dividends.
C)  Price of its stock.
D)  Interest rate the company is willing to offer.

Question 10

The owners of which type of firm have the least liability?

Accepted Answer

A)  Corporation.
B)  Partnership.
C)  Proprietorship.
D)  Limited partnership.

Question 11

In the loanable funds market,

Accepted Answer

A)  The price is the interest rate.
B)  The demand curve reflects the behavior of lenders.
C)  The supply curve reflects the behavior of borrowers.
D)  If interest rates rise,firms borrow more.

Question 12

Retained earnings are

Accepted Answer

A)  The only motive for purchasing stock.
B)  Equal to corporate profits.
C)  Direct increases to shareholder wealth.
D)  The amount of corporate profit not paid out in dividends.

Question 13

Which of the following will cause the demand for loanable funds to increase?

Accepted Answer

A)  The expected profitability of a project declines.
B)  The cost of funds increases.
C)  The expected rate of return increases.
D)  Households increase their rate of savings.

Question 14

Suppose a company's bond sold for $900 last month and this month the price is $750.The annual interest payment is $60.The current yield on this bond is

Accepted Answer

A)  8.0 percent.
B)  6.7 percent.
C)  11.11 percent.
D)  60.0 percent.

Question 15

An increase in the value of an asset,such as a stock,is called

Accepted Answer

A)  Interest.
B)  Profit.
C)  A capital gain.
D)  A dividend.

Question 16

If the expected rate of return decreases

Accepted Answer

A)  The demand for loanable funds will increase.
B)  The demand for loanable funds will decrease.
C)  Market participants will save less money.
D)  The time value of money will increase.

Question 17

The function of financial intermediaries is to transfer purchasing power from

Accepted Answer

A)  Dissavers to consumers.
B)  Consumers to savers.
C)  Savers to dissavers.
D)  Dissavers to savers.

Question 18

Dividends are equal to

Accepted Answer

A)  Capital gains minus retained earnings.
B)  Corporate profits.
C)  Corporate profits plus retained earnings.
D)  Corporate profits minus retained earnings.

Question 19

As long as interest-earning opportunities exist,present dollars are worth

Accepted Answer

A)  More than future dollars.
B)  Less than future dollars.
C)  More than previous periods' dollars.
D)  Less than inflation-adjusted dollars.

Question 20

What does a price/earnings ratio measure? What does a price/earnings ratio of 33.4 imply?

Accepted Answer

A price/earnings ratio measures the pric...

Exam 32: Financial Markets

Retained earnings are

Correct AnswerverifiedShow Answer

In the loanable funds market,

Correct AnswerverifiedShow Answer

A corporation can elect to allocate corporate profits into either

Correct AnswerverifiedShow Answer

The owners of which type of firm have the least liability?

Correct AnswerverifiedShow Answer

The function of financial intermediaries is to transfer purchasing power from

Correct AnswerverifiedShow Answer

The quantity of loanable funds available to a corporation depends on the

Correct AnswerverifiedShow Answer

If Shoffner Inc. ,a publicly traded corporation,has a share price of $125,revenues of $15.35 per share,and profits of $5.25 per share,what is the P/E ratio for Shoffner Inc.shares?

Correct AnswerverifiedShow Answer

Dividends are

Correct AnswerverifiedShow Answer

As the prevailing interest rate increases,all of the following occur except

Correct AnswerverifiedShow Answer

Dividends are equal to

Correct AnswerverifiedShow Answer

An increase in the value of an asset,such as a stock,is called

Correct AnswerverifiedShow Answer

If the expected rate of return decreases

Correct AnswerverifiedShow Answer

Which of the following will cause the demand for loanable funds to increase?

Correct AnswerverifiedShow Answer

Suppose a company's bond sold for $900 last month and this month the price is $750.The annual interest payment is $60.The current yield on this bond is

Correct AnswerverifiedShow Answer

As interest rates decline,all of the following will result except

Correct AnswerverifiedShow Answer

The price paid for the use of money is defined as the

Correct AnswerverifiedShow Answer

Which of the following is not true about venture capitalists?

Correct AnswerverifiedShow Answer

The primary economic function of financial intermediaries is to help allocate scarce resources to desired uses.

Correct AnswerverifiedShow Answer

What does a price/earnings ratio measure? What does a price/earnings ratio of 33.4 imply?

Correct AnswerverifiedA price/earnings ratio measures the pric...View AnswerShow Answer

As long as interest-earning opportunities exist,present dollars are worth

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A price/earnings ratio measures the pric...
View Answer

Correct Answer
verified