BUSN602 Midterm Exam
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Part 1 of 1 - 100.0
Points
Question 1 of 20 5.0
Points
As interest rates fall, the prices of existing
bonds will:
A.rise
B.stay
the same
C.fall
D.either
a or b, depending on the state of the economy
E.none
of the above
Question 2 of 20 5.0
Points
You need to have $35,000 on hand to buy a new
Lexus five years from today. To achieve that goal, you want to know how much
you must invest today in a certificate of deposit guaranteed to return you 3%
per year. To help determine how much to investment today, you will use:
A.present
value factors
B.annuity
value factors
C.present
value factors of an annuity
D.future value factors of
an annuity
Question 3 of 20 5.0
Points
If you expect the inflation premium to be 2%, the
default risk premium to be 1% and the real interest rate to be 4%, what
interest would you expect to observe in the marketplace under the simplest form
of market interest rates?
A.4%
B.7%
C.2%
D.1%
Question 4 of 20 5.0
Points
The price level of goods and services may be
expressed as the ratio of _____________.
A.GDP
to GNP
B.real output to GDP
C.Velocity
to GDP
D.real
output to velocity
E.none
of the above
Question 5 of 20 5.0
Points
John deposits $2,000 per year at the end of the
year for the next 20 years into an IRA account that pays 6%. How much will John
have on deposit at the end of 20 years?
A.$67,520
B.$73,572
C.$81,990
D.$75,686
Question 6 of 20 5.0
Points
The most important savings surplus unit in the
economy is:
A.the savings of
individuals
B.corporate
savings
C.U.S.
government savings
D.state
and local government savings
Question 7 of 20 5.0
Points
Economists use a ___________________ framework to
explain how the prices and quantities of goods and services are determined in a
free-market economic system.
A.opportunity
B.marginal
cost
C.supply-and-demand
D.anti-monopoly
E.none
of the above
Question 8 of 20 5.0
Points
The Second Bank of the United States was created
to:
A.replace
the First Bank of the United States
B.appease
political interests
C.restore order to chaotic
banking conditions
D.all
the above
Question 9 of 20 5.0
Points
The _________ value of a savings or investment is
its amount or value at the current time.
A.present
B.future
C.book
D.none
of the above
Question 10 of 20 5.0
Points
As interest rates rise, the prices of existing
bonds will:
A.rise
B.stay
the same
C.fall
D.either
a or b, depending on the state of the economy
Question 11 of 20 5.0
Points
Which of the following are not included in M1?
A.negotiable
orders of withdrawal
B.automatic transfer
service accounts
C.money
market deposit accounts
D.credit
union share draft accounts
Question 12 of 20 5.0
Points
Continuing federal programs that stabilize
economic activity are called
A.transfer
payments
B.automatic stabilizers
C.social
insurance programs
D.none
of the above
Question 13 of 20 5.0
Points
______________ is the tendency of prices, aided
by union-corporation contracts, to rise during economic expansions and resist
declines during recessions.
A.Administrative inflation
B.Speculative
inflation
C.Cost-push
inflation
D.Demand-pull
inflation
Question 14 of 20 5.0
Points
Identify the three functions of money.
"Money must perform three basic functions:
serving as a medium of exchange, a store of value, and a standard of
value" (Melicher & Norton, 2014, p 26).
Question 15 of 20 5.0
Points
The federal government pays for the services it provides
primarily through:
A.taxation
B.creating
money
C.borrowing
D.selling
assets owned by the government
Question 16 of 20 5.0
Points
A saver who chooses securities as a savings
medium and desires maximum safety of principal buys:
A.public
utility stocks
B.corporate
stocks
C.high-grade
corporate bonds
D.government bonds
Question 17 of 20 5.0
Points
The saving-investment process involves which of
the following financial functions:
A.creating
and transferring money
B.accumulating
savings and lending and investing money
C.marketing
and transferring financial assets
D.all of the above
Question 18 of 20 5.0
Points
During the early years of the life stage of a
typical corporation, the:
A.volume
of physical assets increases slowly
B.firm is unable to
establish a strong position with respect to its financial assets
C.corporation
is a heavy provider of financial assets
D.need
for borrowed capital is small
Question 19 of 20 5.0
Points
You need $8,000 four years from now for a down
payment on your future house. How much money must you deposit today if your
credit union pays 5% interest compounded annually? Pick the closest answer.
A.$6,269.59
B.$6,578.95
C.$6,394.12
D.$6,189.83
Question 20 of 20 5.0
Points
When investors expect __________ inflation rates
they will require __________ nominal interest rates so that a real rate of
return will remain after the inflation.
A.higher, higher
B.higher,
lower
C.lower,
higher
D.none
of the above
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