Question: A law firm specializes in registering copyrights of novelists decides to place on their stationery just below the firm name “Copywriters for Authors.” This would be an example of:
Answer Options:
A service mark.
A trademark.
A copyright.
A design patent.
Answer: A service mark.
Question: A voting proxy is which of the following?
Answer Options:
A type of stock.
Authority granted by a shareholder to another person to vote at a shareholder’s meeting.
A trust.
A type of corporate debt.
Answer: Authority granted by a shareholder to another person to vote at a shareholder’s meeting.
Question: Which of the following statements is CORRECT?
a. If the Federal Reserve unexpectedly announces that it expects inflation to increase, then we would probably observe an immediate decrease in bond prices.
b. The total yield on a bond is derived from dividends plus changes in the price of the bond.
c. Bonds are generally regarded as being riskier than common stocks, and therefore bonds have higher required returns.
d. Bonds issued by larger companies always have lower yields to maturity (due to less risk) than bonds issued by smaller companies.
e. The market price of a bond will always approach its par value as its maturity date approaches, provided the bond’s required return remains constant.
Answer Options:
a. False
b. False
c. False
d. False
e. True
Answer: e. True
Question: If an individual files for bankruptcy, which court is the case filed in?
Any state court.
Any federal court.
Any of the courts listed.
U.S. Bankruptcy Court.
Answer: U.S. Bankruptcy Court.
Question: Three $1,000 face value, 10-year, noncallable, bonds have the same amount of risk, hence their YTMs are equal. Bond 8 has an 8% annual coupon, Bond 10 has a 10% annual coupon, and Bond 12 has a 12% annual coupon. Bond 10 sells at par. Assuming that interest rates remain constant for the next 10 years, which of the following statements is CORRECT?
a. Bond 8’s current yield will increase each year.
b. Since the bonds have the same YTM, they should all have the same price, and since interest rates are not expected to change, their prices should all remain at their current levels until maturity.
c. Bond 12 sells at a premium (its price is greater than par), and its price is expected to increase over the next year.
d. Bond 8 sells at a discount (its price is less than par), and its price is expected to increase over the next year.
e. Over the next year, Bond 8’s price is expected to decrease, Bond 10’s price is expected to stay the same, and Bond 12’s price is expected to increase.
Answer Options:
a. False
b. False
c. False
d. True
e. False
Answer: d. True
Question: When the quantity supplied is greater than quantity demanded in the market, what happens?
Answer Options:
Prices drop until quantity demanded is equal to quantity supplied
Prices rise until quantity demanded is equal to quantity supplied
Shortage
Prices do not change, and a surplus will always exist
Answer: Prices drop until quantity demanded is equal to quantity supplied
Question: If investors are risk averse and hold only one stock, we can conclude that the required rate of return on a stock whose standard deviation is 0.21 will be greater than the required return on a stock whose standard deviation is 0.10. However, if stocks are held in portfolios, it is possible that the required return could be higher on the stock with the lower standard deviation.
a. True
b. False
Answer:
Question: Which of the following is true with respect to a caregiver who enters a contract with a patient?
Answer Options:
Due to the fiduciary relationship between the caregiver and the patient, there is a presumption of undue influence that can be overcome if the caregiver takes certain steps.
Under no circumstances can a caregiver enter into a contract with a patient.
Freedom of contract principles apply.
Whether a caregiver can contract with a patient is dependent on whether the patient is mentally competent.
Answer: Due to the fiduciary relationship between the caregiver and the patient, there is a presumption of undue influence that can be overcome if the caregiver takes certain steps.
Question: Which of the following is not an estate planning document?
Health care proxy
Durable power of attorney
An IRA
Living will
Answer:
Question: If property on which there is a distribution center needs access to a road that cuts through another tract of land owned by another person in order to get to a highway. What would you advise the owner of the distribution center to do?
Answer Options:
There is nothing the owner can do.
Obtain an easement.
Obtain a license.
Obtain an easement called profit in gross.
Answer: Obtain an easement.
Question: Which of the following statements is CORRECT?
a. The yield to maturity for a coupon bond that sells at a premium consists entirely of a positive capital gains yield; it has a zero current interest yield.
b. The market value of a bond will always approach its par value as its maturity date approaches. This holds true even if the firm has filed for bankruptcy.
c. Rising inflation makes the actual yield to maturity on a bond greater than a quoted yield to maturity that is based on market prices.
d. The yield to maturity on a coupon bond that sells at its par value consists entirely of a current interest yield; it has a zero expected capital gains yield.
e. The expected capital gains yield on a bond will always be zero or positive because no investor would purchase a bond with an expected capital loss.
Answer Options:
a. False
b. False
c. False
d. True
e. False
Answer: d. True
Question: Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.
Answer Options:
a. A project’s regular IRR is found by compounding the initial cost at the WACC to find the terminal value (TV), then discounting the TV at the WACC.
b. A project’s regular IRR is found by compounding the cash inflows at the WACC to find the present value (PV), then discounting the TV to find the IRR.
c. If a project’s IRR is smaller than the WACC, then its NPV will be positive.
d. A project’s IRR is the discount rate that causes the PV of the inflows to equal the project’s cost.
e. If a project’s IRR is positive, then its NPV must also be positive.
Answer: d
Question: Which of the following is true with respect to a mortgage?
Answer Options:
It relates to an unsecured loan.
It relates to a secured loan.
It is a type of easement.
Answer: It relates to a secured loan.
Question: At a fancy smancy party, you are asked to explain the meaning of an S Corporation. Dismissing a frivolous comment that it is a shell corporation created by Clark Kent, you respond…
It is a special state law corporation.
It is a tax status that requires the entity to pay tax on its income.
It is a tax status only available to state law corporations.
It is a tax status available to state law corporations and LLCs.
Answer: It is a tax status that requires the entity to pay tax on its income.
Question: When Asher was sixteen, he purchased a motorcycle that he financed entirely with the motorcycle dealer. The monthly payment was $250. After Asher turned 18, he continued to make the monthly payments. Just before Asher turned 19, he was in an accident and totaled the motorcycle. Asher then disaffirms the contract. What is the likely outcome?
Answer Options:
The contract will be disaffirmed because Asher was a minor when the contract was consummated.
The contract will not be disaffirmed because it became enforceable when Asher purchased the motorcycle.
The contract will be disaffirmed because motorcycles are dangerous.
The contract will not be disaffirmed because by making payments after he became an adult, Asher affirmed the contract.
Answer: The contract will not be disaffirmed because by making payments after he became an adult, Asher affirmed the contract.
Question: Comparing patents to copyrights, which of the following is true?
Answer Options:
Both patents and copyrights provide exclusive rights for the same period of time.
Copyrights must be registered – whereas patents do not have to be registered.
Patents must be registered – copyrights do not have to be registered.
Both copyrights and patents have to be registered.
Answer: Patents must be registered – copyrights do not have to be registered.
Question: Which of the following is not an attribute of a general partnership?
Participation in the management of the business.
Two or more persons doing business.
Unlimited liability.
Division of profits.
Answer: Division of profits.