Reference no: EM13743146

Question 1: A basic requirement for an effective financial system is a monetary system that performs which of the following financial functions?

• Formation and transferring of money
• Storing gold and silver to back up money
• Creating jobs
• Transferring real assets

Question 2: ____________________ in business involves making decisions relating to the efficient use of financial resources in the production and sale of goods and services.

• Financial management
• Financial economics
• Investment management
• Asset allocation

Question 3: An area of finance that refers to the physical locations or electronic forums that facilitate the flow of funds among investors, businesses, and governments is called:

• Financial management
• Investments
• Financial institutions
• Financial markets

Question 4: The financial environment:

• Encompasses the financial markets and global interactions that contribute to an efficiently operating economy.
• Encompasses the financial institutions and financial markets that contribute to an efficiently operating economy.
• Encompasses the financial system, financial institutions, financial markets, business firms, individuals, and global interactions that contribute to an efficiently operating economy.
• None of the above.

Question 5: The theory of ___________________ implies that information is quickly embedded in prices making it difficult for investors to "beat the market."

• Stock investing
• Efficient markets
• Portfolio management
• Asset allocation

Question 6: ________________ involves making decisions relating to issuing and investing in stocks and bonds.

• Financial economics
• Financial management
• Investment management
• Asset allocation

Question 7:

The primary goal of the financial manager of a profit-seeking organization is to:

• Maximize market share
• Maximize the owners' wealth
• Increase sales and profit
• Have healthy cash flow

Question 8: An area of finance that involves the study of organizations or intermediaries that help the financial system operate efficiently and transfer funds from savers and investors to individuals, businesses, and governments that seek to spend or invest the funds in physical assets (inventories, buildings, and equipment) is called:

• Financial management
• Investments
• Financial institutions
• Financial markets

Question 9: ____________________ provide the record-keeping mechanism for showing ownership of the financial instruments used in the flow of financial funds between savers and borrowers and record revenues, expenses, and profitability of organizations that produce and exchange goods and services.

• Financial Managers
• Accountants
• Operations Managers
• Statisticians

Question 10: Rational investors would consider an investment in a risky business venture only if they feel the expected return is high enough to justify the

• Greater risk.
• Higher cost.
• Longer useful life.
• More complex designs.

Question 11: The U.S. bimetallic standard was based on:

• Gold and platinum
• Silver and gold
• Gold and copper
• Silver and copper

Question 12: The only paper money of significance in the economy today is:

• Silver certificates
• Demand deposits
• Greenbacks
• Federal reserve notes

Question 13: _____________ is a promise of future payment issued by a firm and guaranteed by a bank that is used to finance international trade with typical maturities ranging from one to six months.

• A negotiable certificate of deposit (NCD)
• A repurchase agreement
• Commercial paper
• A banker's acceptance

Question 14: When it is a means of paying for goods and services and discharging debts, money is referred to as a:

• Store of purchasing power
• Medium of exchange
• Standard of value
• Liquid asset

Question 15: Inflation is:

• An increase in the purchasing power of money
• A decrease in the quality of goods and services
• An increase in the prices of goods and services not offset by increases in the quality of those goods and services
• A measure of the money supply

Question 16: The supply of a currency in international markets depends largely on the:

• Federal reserve system
• Imports of the issuing country
• Amount of exports that currency will buy from the issuing country
• Confidence of market participants in the restraint and ability of the monetary authority issuing the currency

Question 17: Paper money fully backed by a precious metal and issued by the government is called:

• Fiat money
• Representative full-bodied money
• Full-bodied money
• Credit money

Question 18: Deposit money is backed by:

• Gold
• Silver
• Creditworthiness of the issuer
• Creditworthiness of the depository institution

Question 19: Which of the following describes the basic function of money?

• Store of purchasing power
• Standard of value
• Medium of exchange
• Liquidity

Question 20: A ____________ is a short-term debt instrument issued by commercial banks in denominations of $100,000 or more with typical maturities ranging from one month to one year that have an active secondary market that allows short-term investors to easily match their cash or liquidity needs when they arise.

• Negotiable certificate of deposit (NCD)
• A repurchase agreement
• Government bond
• Money market security