1. The identity that shows that total income and total expenditure are equal is (Points : 1) GDP = Y. Y = DI + T + NX. GDP = GNP - NX. Y = C + I + G + NX. 2. Other things the same, which bond would you expect to pay the highest interest rate? (Points : 1) a bond issued by the U.S. government a bond issued by IBM a bond issued by New York State a bond issued by a new restaurant chain 3. Which of the following statements is correct? (Points : 1) The expected future profitability of a corporation influences the demand for that corporation's stock. When a corporation sells stock as a means of raising funds it is engaging in debt finance. The owners of bonds sold by the Microsoft Corporation are part owners of that corporation. All bonds are, by definition, perpetuities. 4. Use the following table to answer the following questions. Table 26-1 Stock Sym Yld % P/E Vol 100s Hi Lo Close Net Chg. GenMills GIS 2.5 35 13758 44.3 43.5 43.97 –0.63 Gillette G 2.2 31 30428 31.1 29.7 30 0.17 Graco GGG 1.2 16 705 24.2 23.1 23.95 –0.53 Hershey HSY 2.1 38 5418 63.4 61.7 62.45 0.72 Refer to Table 26-1. In dollar terms, which company paid the highest dividend per share? (Points : 1) GenMills Gillette Graco Hershey 5. At the broadest level, the financial system moves the economy's scarce resources from (Points : 1) the rich to the poor. financial institutions to business firms and government. households to financial institutions. savers to borrowers. 6. Which of the following is not correct? (Points : 1) If you buy a bond from a corporation, you can sell the bond to someone else before it matures. Term refers to the scheduling of periodic interest rate payments on a bond. A bond is an IOU. There are millions of different bonds in the U.S. economy. 7. Financial intermediaries are (Points : 1) the same as financial markets. individuals who make profits by buying a stock low and selling it high. a more general name for financial assets such as stocks, bonds, and checking accounts. financial institutions through which savers can indirectly provide funds to borrowers. 8. Which of the following is not an important stock exchange in the United States? (Points : 1) New York Stock Exchange American Stock Exchange Chicago Mercantile Exchange NASDAQ 9. The price of a stock will rise if (Points : 1) the managers of a stock exchange decide the price should be higher. the demand for the stock rises. the supply of the stock rises. None of the above are correct. 10. In a closed economy, private saving is (Points : 1) the amount of income that households have left after paying for their taxes and consumption. the amount of income that businesses have left after paying for the factors of production. the amount of tax revenue that the government has left after paying for its spending. always equal to investment. 11. Which of the following statements is correct? (Points : 1) A corporation receives a monetary payment every time its shares of stock are traded by stockholders on organized stock exchanges. When a corporation sells bonds as a means of raising funds it is engaging in debt finance. A share of stock is an IOU. The two most important financial markets in the economy are the stock market and financial intermediaries. 12. Potential buyers of ABC Corporation bonds are not concerned about ABC Corporation declaring bankruptcy. Potential buyers of XYZ Corporation bonds are concerned that XYZ Corporation may declare bankruptcy. Which of the following statements is correct? (Points : 1) Other things equal, the interest rate on XYZ Corporation bonds will be high relative to the interest rate on ABC Corporation bonds. An ABC Corporation bond is a perpetuity, whereas an XYZ Corporation bond is not a perpetuity. XYZ Corporation bonds carry more interest-rate risk than do ABC Corporation bonds. All of the above are correct. 13. It is claimed that a secondary advantage of mutual funds is that (Points : 1) an investor can avoid investment charges and fees. they give ordinary people access to loanable funds for investing. they usually outperform stock market indexes. they give ordinary people access to the skills of professional money managers. 14. The length of time until a bond matures is called the (Points : 1) perpetuity. term. maturity. intermediation. 15. Which of the following bond buyers did not buy the bond that best met his or her objective? (Points : 1) Mia wanted a bond with a high interest rate and was willing to take a lot of risk. She purchased a junk bond. Anna wanted a bond that would let her best avoid federal income taxes. She purchased a municipal bond. Bill wanted to purchase a bond whose seller was unlikely to default. He purchased a bond that Standards and Poor's rated a low credit risk. Toby held long-term bonds rather than short-term ones to avoid risk. 16. The old adage, "Don't put all your eggs in one basket," is very similar to a modern bit of advice concerning financial matters: (Points : 1) "Buy low-risk bonds." "Use a medium of exchange." "Diversify." "Intermediate." 17. After a corporation issues stock, the stock (Points : 1) can not be resold. can be resold only if the corporation wants to buy it back. can be resold on exchanges; the resale will raise additional funds for the corporation. None of the above are correct. 18. When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures (Points : 1) capital investment. investment in human capital. business consumption expenditures. personal saving. 19. In a closed economy, public saving is the (Points : 1) amount of income that households have left after paying for taxes and consumption. amount of income that businesses have left after paying for the factors of production. amount of tax revenue that the government has left after paying for its spending. sum of A, B, and C. 20. In the language of macroeconomics, investment refers to (Points : 1) saving. the purchase of new capital. the purchase of stocks, bonds, or mutual funds. All of the above are correct  |
