Question: On a Statement of Cashflows, which of the following is a cash inflow?
Answer Choices: A. a decrease in inventory B. a decrease in long-term debt C. distributing cash dividends D. an increase in accounts receivable
Answer: A – a decrease in inventory
Question: If the shares of a closed-end investment company sell for a discount,
Answer Choices: A. the shares are undervalued B. the net assets exceed the price of the shares C. the value of the assets have declined more than the price of the stock D. the price of the stock is less than the company’s liabilities
Answer: B – the net assets exceed the price of the shares
Question: Operating income does not consider
Answer Choices: A. depreciation B. cost of goods sold C. salaries D. taxes paid
Answer: D – taxes paid
Question: Advantages of investing in mutual funds include
Answer Choices: A. tax avoidance B. diversification C. avoiding brokerage fees D. capital losses
Answer: B – diversification
Question: Penny sold 400 shares short of Bloomingdales Corp. at $30 a share. The price of the stock then fell to $28 before rising to $34 at which time Penny covered her position. What is the percentage gain or loss on this position?
Answer Choices: A. Gain of 16.67% B. Gain of 13.33% C. Loss of 13.33% D. Loss of 16.67%
Answer: C – Loss of 13.33%
Question: An investor may place a limit order that
Answer Choices: A. establishes the exchange on which the security is to be bought or sold B. limits the amount of commissions C. specifies when the stock will be purchased D. states a price at which the investor seeks to buy or sell a stock
Answer: D – states a price at which the investor seeks to buy or sell a stock
Question: The larger the debt ratio
Answer Choices: A. the larger are the firm’s total assets B. the smaller is the firm’s use of financial leverage C. the riskier the firm becomes D. the more equity the firm is using
Answer: C – the riskier the firm becomes
Question: An increase in the days sales outstanding implies
Answer Choices: A. receivables turn into cash more slowly B. an increase in inventory C. receivables turn into cash more rapidly D. the price of the product has been reduced
Answer: A – receivables turn into cash more slowly
Question: Short-term government debt secured by expected tax revenues is referred to as:
Answer Choices: A. Collateral Tax Securities B. Tax Anticipatory Notes C. Tax Revenue Neutral Bills D. Treasury Bond
Answer: B – Tax Anticipatory Notes
Question: Assets equal
Answer Choices: A. liabilities minus equity B. equity C. liabilities plus equity D. liabilities
Answer: C – liabilities plus equity
Question: The current ratio excludes
Answer Choices: A. accrued interest B. cash C. inventory D. retained earnings
Answer: D – retained earnings
Question: On a Statement of Cashflows, which of the following is a cash outflow?
Answer Choices: A. a decrease in inventory B. a new issue of bonds C. an increase in accounts payable D. an increase in plant expenditures
Answer: D – an increase in plant expenditures
Question: When an asset is depreciated,
Answer Choices: A. the cost of the asset is increased to reflect appreciation in its value B. its cost is allocated over a period of time C. the firm’s earnings and taxes are increased D. the cash flow from an investment is reduced
Answer: B – its cost is allocated over a period of time
Question: A short-term security issued by the federal government (also considered to be the safest short-term security) is called a:
Answer Choices: A. Federal Debt Deposit B. Negotiable Certificate of Deposit (CD) C. Banker’s Acceptance D. Treasury Bill
Answer: D – Treasury Bill
Question: Efficient securities markets imply that
Answer Choices: A. there is little risk of loss over an extended investment horizon B. security prices are randomly determined C. investors cannot expect to outperform the market D. investors cannot outperform the market
Answer: C – investors cannot expect to outperform the market
Question: Leverage ratios measure
Answer Choices: A. sales relative to some base such as equity B. the extent to which the firm uses debt financing C. the speed with which the firm sells inventory D. capacity of the firm to meet current obligations
Answer: B – the extent to which the firm uses debt financing
Question: Federally insured investments include
Answer Choices: A. savings accounts in national commercial banks B. certificates of deposit in excess of $500,000 C. commercial bank assets D. life insurance policies
Answer: A – savings accounts in national commercial banks
Question: _______ is the price quoted by a market maker at which he is willing to sell
Answer Choices: A. Ask B. Bid C. Low D. High
Answer: A – Ask
Question: Banks and Thrifts are regulated by the
Answer Choices: A. Federal Reserve B. Securities and Exchange Commission C. Federal Deposit Insurance Corporation D. Federal Home Loans Association
Answer: A – Federal Reserve
Question: Equity includes
Answer Choices: A. cash B. investments C. assets D. retained earnings
Answer: D – retained earnings