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this is a mcq of derivatives of management kindly check and follow fore your exam and all the best for exam
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Financial derivatives and risk management
this is a mcq of derivatives of management kindly check and follow fore your exam and all the best for exam
ExamName___________________________________MULTIPLE CHOICE. Cho.docx
Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1)
The demand for an asset rises if ________ falls. 1)
A)
risk relative to other assets B) wealth C) expected return relative to other assets D) liquidity relative to other assets
2)
Banks' attempts to solve adverse selection and moral hazard problems help explain loan 2) management principles such as A) credit rationing.
B)
collateral and compensating balances.
C)
screening and monitoring of loan applicants.
D)
all of the above.
E)
only A and B of the above.
3)
When a lender refuses to make a loan, although borrowers are willing to pay the stated interest rate 3) or even a higher rate, it is said to engage in ________.
A)
credit rationing B) constrained lending C) strategic refusal D) collusive behavior
4)
If a bank has more rate
-
sensitive liabilities than rate
-
sensitive assets, then a(n) ________ in interest 4) rates will ________ bank profits.
A)
increase; increase B) increase; reduce
C) decline; not affect D) decline; reduce
First National Bank
Assets Liabilities
Rate
-
sensitive Fixed
-
rate
$20 million $50 million
$80 million $40 million
Table 23.1
5)
Referring to Table 23.1, if interest rates rise by 5 percentage points, then bank profits (measured 5) using gap analysis) will
A)
increase by $1.5 million. B) decline by $0.5 million.
C) decline by $2.5 million. D) decline by $1.5 million.
First National Bank
Assets Liabilities
Rate
-
sensitive Fixed
-
rate
$40 million $50 million
$60 million $40 million
Table 23.2
6) Refer to Table 23.2. Assuming that the average duration of the bank's assets is four years, while the average duration of its liabilities is three years, a rise in interest rates from 5 percent to 10 percent will cause the net worth of First National to ________ by ________ of the total original asset value.
A) decline; 6.2% B) increase; 5% C) decline; 5% D) decline; 1.3%
6)
7)
Measuring the sensitivity of bank profits to changes in interest rates by multiplying the gap for 7) several maturity subintervals by the change in the interest rate is called A) basic gap analysis.
B)
the maturity bucket approach to gap analysis.
C)
the segmented maturity approach to interest
-
exposure analysis.
D)
the segmented maturity approach to gap analysis.
E)
none of the above.
8)
If a decline in interest rates causes the market value of a bank's net worth to rise, then the bank 8) must have a ________.
A) positive duration gap B) positive gap
C) negative duration gap ...
Recommended
Financial derivatives and risk management
this is a mcq of derivatives of management kindly check and follow fore your exam and all the best for exam
ExamName___________________________________MULTIPLE CHOICE. Cho.docx
Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1)
The demand for an asset rises if ________ falls. 1)
A)
risk relative to other assets B) wealth C) expected return relative to other assets D) liquidity relative to other assets
2)
Banks' attempts to solve adverse selection and moral hazard problems help explain loan 2) management principles such as A) credit rationing.
B)
collateral and compensating balances.
C)
screening and monitoring of loan applicants.
D)
all of the above.
E)
only A and B of the above.
3)
When a lender refuses to make a loan, although borrowers are willing to pay the stated interest rate 3) or even a higher rate, it is said to engage in ________.
A)
credit rationing B) constrained lending C) strategic refusal D) collusive behavior
4)
If a bank has more rate
-
sensitive liabilities than rate
-
sensitive assets, then a(n) ________ in interest 4) rates will ________ bank profits.
A)
increase; increase B) increase; reduce
C) decline; not affect D) decline; reduce
First National Bank
Assets Liabilities
Rate
-
sensitive Fixed
-
rate
$20 million $50 million
$80 million $40 million
Table 23.1
5)
Referring to Table 23.1, if interest rates rise by 5 percentage points, then bank profits (measured 5) using gap analysis) will
A)
increase by $1.5 million. B) decline by $0.5 million.
C) decline by $2.5 million. D) decline by $1.5 million.
First National Bank
Assets Liabilities
Rate
-
sensitive Fixed
-
rate
$40 million $50 million
$60 million $40 million
Table 23.2
6) Refer to Table 23.2. Assuming that the average duration of the bank's assets is four years, while the average duration of its liabilities is three years, a rise in interest rates from 5 percent to 10 percent will cause the net worth of First National to ________ by ________ of the total original asset value.
A) decline; 6.2% B) increase; 5% C) decline; 5% D) decline; 1.3%
6)
7)
Measuring the sensitivity of bank profits to changes in interest rates by multiplying the gap for 7) several maturity subintervals by the change in the interest rate is called A) basic gap analysis.
B)
the maturity bucket approach to gap analysis.
C)
the segmented maturity approach to interest
-
exposure analysis.
D)
the segmented maturity approach to gap analysis.
E)
none of the above.
8)
If a decline in interest rates causes the market value of a bank's net worth to rise, then the bank 8) must have a ________.
A) positive duration gap B) positive gap
C) negative duration gap ...
Financial derivate-mcqs
this is a mcq of derivatives of management kindly check and follow fore your exam and all the best for exam
ExamName___________________________________MULTIPLE CH.docx
Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
1) Which one of these is a correct definition?
A) Long-term debt is defined as a residual claim on a firm’s assets.
B) Tangible assets are fixed assets such as patents.
C) Net working capital equals current assets plus current liabilities.
D) Current assets are assets with short lives, such as inventory.
E) Current liabilities are debts that must be repaid in 18 months or less.
1)
2) Which one of these accounts is included in net working capital?
A) inventory
B) long-term debt
C) copyright
D) manufacturing equipment
E) common stock
2)
3) The ultimate control of a corporation lies in the hands of the corporate:
A) president.
B) stockholders.
C) chairman of the board.
D) board of directors.
E) chief executive officer.
3)
4) Net working capital is defined as:
A) fixed assets minus long-term liabilities.
B) current assets plus stockholders’ equity.
C) current assets minus current liabilities.
D) total assets minus total liabilities.
E) current assets plus fixed assets.
4)
5) An asset that can be quickly converted into cash without significant loss in value is
referred to as being:
A) liquid.
B) tangible.
C) intangible.
D) fixed.
E) marketable.
5)
1
6) Noncash items refer to:
A) expenses charged against revenues that do not directly affect cash flow.
B) the costs incurred for the purchase of intangible fixed assets.
C) all accounts on the balance sheet other than cash on hand.
D) the credit sales of a firm.
E) the accounts payable of a firm.
6)
7) The cash flow resulting from a firm’s ongoing, normal business activities is referred to
as the:
A) cash flow to investors.
B) net capital spending.
C) additions to net working capital.
D) operating cash flow.
E) cash flow to retained earnings.
7)
8) Projected future financial statements are called:
A) plug statements.
B) comparative statements.
C) reconciled statements.
D) aggregated statements.
E) pro forma statements.
8)
9) Which statement expresses all accounts as a percentage of total assets?
A) common-size income statement
B) common-size balance sheet
C) pro forma balance sheet
D) pro forma income statement
E) statement of cash flows
9)
10) The quick ratio is measured as:
A) current assets minus inventory minus current liabilities.
B) current liabilities divided by current assets, plus inventory.
C) current assets minus inventory, divided by current liabilities.
D) current assets divided by current liabilities.
E) cash on hand plus current liabilities, divided by current assets.
10)
11) Ratios that measure a firm’s financial leverage are known as ________ ratios.
A) asset management
B) profitability
C) long-term solvency
D) market value
E) short-term solvency
11)
2
12) The debt-equity ratio is measured as:
A) long-term debt divided by total equity.
B) total equity divided by total debt.
C) total debt divided by total eq ...
Outline for the Diversity Management Proposal1) Problem A thoro.docx
Outline for the Diversity Management Proposal
1) Problem: A thorough description of the problem or opportunity
a. Include a summary of how your problem or opportunity is a diversity issue (written from the reader’s perspective)
b. What is being lost if you solution is not adopted?
c. An analysis of the factors contributing to the problem or opportunity should include answers to questions like:
i. Who does it affect?
ii. Where does it impact the business the most?
iii. When did the problem start and how long has it been going on?
iv. What are the business implications of the problem? (These implications should be quantifiable and affect the reader’s job.)
d. Be specific. Provide numbers or other measures to support your points.
2)
Solution
: how will your proposal solve the problem or allow the company to take advantage of the opportunity?
a. State your solution clearly.
b. Identify your top three criteria for selecting this solution as the “best” one. (Examples: Timing? Cost? Revenue?) Compare this chosen solution to other less-favorable options.
c. Consider objections and provide support for your solution before these objections are voiced/considered.
d. Who needs to be involved in the solution?
e. How will your solution make the problem you identified better, or what are the resulting benefits? (this should be specific and measurable and address the analysis in your problem statement)
f. Why must the solution be implemented now?
3) The plan:
a. Detail the plan of action or implementation
b. Set a schedule with specific deadlines.
c. What resources will you need? Where will they come from?
d. Review the challenges that must be overcome to implement this plan and make suggestions for overcoming them.
e. Suggest a control method for evaluating the success of the plan. (How will you measure success?)
4) Conclusion:
a. Briefly summarize key points focusing primarily on how the organizational will be better once they implement your solution
b. End with a call to action
Principles of Accounting 2
1) Issued stock is:
A) Authorized shares of stock that can be sold.
B) Stock only sold to another company
C) Shares sold and in stockholders’ possession
D) Stock sold to stockholders.
2) In the statement of cash flows, which event would cause net income to be increased?
A) A decrease in Inventory
B) An increase in Prepaid Insurance
C) A decrease in Accounts Payable
D) An increase in Accounts Receivable
3) Finished Goods Inventory appears on which of the following statements on the worksheet?
A) Statement of cost of goods manufactured and income statement
B) Statement of cost of goods manufactured and balance sheet
C) Income statement and balance sheet
D) Income statement and cost of goods sold statement
4) One reason a corporation might issue bonds rather than sell stock is that:
a. Bond interest is a tax-deductible expense
b. Interest rates are high
c. Dividends will lower th.
FINANCIAL MANAGEMENT,WCM MOST IMPORTANT AND EXPECTED MCQ.pptx
FINANCIAL MANAGEMENT,WCM MOST IMPORTANT AND EXPECTED MCQ.pptx
1) Which of the following statements is true about money A) Money is.pdf
1) Which of the following statements is true about money? A) Money is sometimes viewed as a
lubricant that greases the wheels of economic activity B) Without money, most transactions
would be very difficult. C) Money influences the behavior of the economy as a whole D) All of
the above are true. 2) Which of the following items are NOT considered to be money by all
economists? A) Money market accounts B) Certificates of Deposit C) Travelers\' checks D)
Stock and bonds 3) All financial securities share the characteristic that they represent a claim to
future ownership B) interest income C) cash flows D) dividend payments 4) Holders of exchange
their bonds into bonds can shares of the company\'s common stock at a predetermined price. A)
investment grade B) callable C) convertible D) junk 5) Transaction costs, portfolio
diversification, and asymmetric information all refer to A) the reasons the public prefers indirect
finance to direct finance the reasons the public prefers the primary market to the secondary
market. C) the reasons the public prefers direct finance to indirect finance D) the reasons the
public prefers the secondary market to the primary market. 6) The Glass-Steagall Act A) did not
allow commercial banks to give mortgage loans B) did not allow commercial banks to sell T-
bills did not allow commercial banks to buy T-bills D) did not allow commercial banks to engage
in investment banking
Solution
(1) (D)
Money is the medium of exchange, which impacts economic behavior and without which most
transactions will become difficult.
(2) (D)
Stocks and bonds are capital market instruments which are not included in money.
(3) (C)
Stocks represent claim in future dividends (a cash inflow) and Bonds represent a claim to future
interest payments (a cash inflow).
(4) (C)
(5) (C)
Indirect finance is characterized by high transaction costs, information asymmetry and lack of
portfolio diversification.
(6) (D).
Darvative and-risk-managemnt
this is a mcq of derivatives of management kindly check and follow fore your exam and all the best for exam
Exam 3 Corrections (Explain briefly why the red highlighted answe.docx
Exam 3 Corrections (Explain briefly why the red “highlighted answer is right 14 questions)
1) The currency of Venadia, a country, falls sharply in value against the currency of Lutetia, a neighboring country. Which of the following is a consequence of this exchange rate movement?
A. Lutetia's products will achieve a competitive pricing in Venadia.
B. Venadia's exports to Lutetia will increase because Venadian goods will become cheaper in Lutetia.
C. Venadia's products will cost more in Lutetia.
D. There will be no difference in the volume or direction of trade.
E. Lutetia's exports to Venadia will increase because Lutetian goods will become cheaper in Venadia.
2) The euro/dollar exchange rate is €1 = $1.20. If a trader buys a camera that retails for $300 in New York
and sells it for €200 in Berlin (ignoring transaction costs, transportation costs, or trade barriers), this represents a potential profit (arbitrage) of _____.
A. $60
B. $80
C. $20
D. $100
E. $40
3) The nominal interest rate is 9 percent in Brazil and 6 percent in Japan. Applying the international Fisher effect, the Brazilian real should:
A. appreciate by 3 percent against the Japanese yen.
B. depreciate by 3 percent against the Japanese yen.
C. appreciate by 1.5 percent against the Japanese yen.
D. depreciate by 1.5 percent against the Japanese yen.
E. appreciate by 15 percent against the Japanese yen.
4) The government of Beryllia tightly controls the ability of its residents to convert its currency into other currencies. However, all foreign businesses with deposits in banks of Beryllia may, at any time, convert all their currency into foreign currency and take them out of the country. Beryllia's currency is said to be _____.
A. leading
B. nonconvertible
C. externally convertible
D. freely convertible
E. lagging
5) Certovia and Norkland are two neighboring countries that actively trade goods and services with each other. Under the gold standard, there will be a net flow of gold from Norkland to Certovia when:
A. Certovia is in trade deficit with Norkland.
B. Norkland is in balance-of-trade equilibrium with Certovia.
C. Certovia is in trade surplus with Norkland.
D. Certovia imports more than it exports to Norkland.
E. Norkland’s balance of payment to Certovia is favorable.
6) Which of the following statements is true about the role of the International Monetary Fund?
A. It never interfered in the monetary and fiscal conditions of its member countries.
B. It was authorized to approve currency devaluations of only up to 10 percent.
C.It required member countries to adhere to specific agreements irrespective of the amount of funds the
countries borrowed
D.It lent money under the International Bank for Reconstruction and Development (IBRD) scheme and a second scheme which is overseen by the International Development Association (IDA).
E. It helped deficit-laden countries bring down inflation rates by providing short-term foreign currency
loa ...
Q_FIN 571 Final Exam.docFinal ExamPlease provide your answ.docx
Q_FIN 571 Final Exam.doc
Final Exam
Please provide your answers as follows in the Assignment newsgroup (Excel spreadsheet is preferred):
1. A
2. B
3. B, etc
Chapter 1 The Goals and Functions of Financial Management
Multiple Choice Questions
1. What is the primary goal of financial management?
A) Increased earnings
B) Maximizing cash flow
C) Maximizing shareholder wealth
D) Minimizing risk of the firm
2. The partnership form of organization
A) avoids the double taxation of earnings and dividends found in the corporate form of organization.
B) usually provides limited liability to the partners.
C) has unlimited life.
D) simplifies decision making.
3. Increased productivity due to technology has
A) increased corporations' reliance on debt for capital expansion needs.
B) created larger asset values on the firm's historical balance sheet.
C) made it cheaper (in terms of interest costs) for firms to borrow money.
D) helped to keep corporate costs in check.
4. Insider trading occurs when
A) someone has information not available to the public which they use to profit from trading in stocks.
B) corporate officers buy stock in their company.
C) lawyers, investment bankers, and others buy common stock in companies represented by their firms.
D) any stock transactions occur in violation of the Federal Trade Commissions restrictions on monopolies.
Chapter 2 Review of Accounting
5. When a firm's earnings are falling more rapidly than its stock price, its P/E ratio will:
A) remain the same
B) go up
C) go down
D) could go either up or down
6. The net worth of a firm
A) is usually the same as the firm's market value.
B) is based on current asset costs.
C) is based on current liabilities.
D) none of the above.
7. A statement of cash flows allows a financial analyst to determine
A) whether a cash dividend is affordable.
B) how increases in asset accounts have been financed.
C) whether long-term assets are being financed with long-term or short-term financing.
D) all of the above
8. A firm has $200,000 in current assets, $400,000 in long-term assets, $80,000 in current liabilities, and $200,000 in long-term liabilities. What is its net working capital?
A) $120,000
B) $320,000
C) $520,000
D) none of the above
Chapter 3 Financial Analysis
Multiple Choice Questions
9. The ______________ method of inventory costing is least likely to lead to inflation-induced profits.
A) FIFO
B) LIFO
C) Weighted average
D) Lower of cost or market
10. The Bubba Corp. had net income before taxes of $200,000 and sales of $2,000,000. If it is in the 50% tax bracket its after-tax profit margin is:
A) 5%
B) 12%
C) 20%
D) 25%
11. XYZ's receivables turnover is 10x. The accounts receivable at year-end are $600,000. The average collection period is 90 days (3 months). What was the sales figure for the year?
A) $60,000
B) $6,000,000
C) $24,000,000
D) none of the above
12. A firm ha ...
Chapter -12, Antibiotics (One Page Notes).pdf
This is a notes for the D.Pharm students and related to the antibiotic drugs.
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Financial derivate-mcqs
this is a mcq of derivatives of management kindly check and follow fore your exam and all the best for exam
ExamName___________________________________MULTIPLE CH.docx
Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
1) Which one of these is a correct definition?
A) Long-term debt is defined as a residual claim on a firm’s assets.
B) Tangible assets are fixed assets such as patents.
C) Net working capital equals current assets plus current liabilities.
D) Current assets are assets with short lives, such as inventory.
E) Current liabilities are debts that must be repaid in 18 months or less.
1)
2) Which one of these accounts is included in net working capital?
A) inventory
B) long-term debt
C) copyright
D) manufacturing equipment
E) common stock
2)
3) The ultimate control of a corporation lies in the hands of the corporate:
A) president.
B) stockholders.
C) chairman of the board.
D) board of directors.
E) chief executive officer.
3)
4) Net working capital is defined as:
A) fixed assets minus long-term liabilities.
B) current assets plus stockholders’ equity.
C) current assets minus current liabilities.
D) total assets minus total liabilities.
E) current assets plus fixed assets.
4)
5) An asset that can be quickly converted into cash without significant loss in value is
referred to as being:
A) liquid.
B) tangible.
C) intangible.
D) fixed.
E) marketable.
5)
1
6) Noncash items refer to:
A) expenses charged against revenues that do not directly affect cash flow.
B) the costs incurred for the purchase of intangible fixed assets.
C) all accounts on the balance sheet other than cash on hand.
D) the credit sales of a firm.
E) the accounts payable of a firm.
6)
7) The cash flow resulting from a firm’s ongoing, normal business activities is referred to
as the:
A) cash flow to investors.
B) net capital spending.
C) additions to net working capital.
D) operating cash flow.
E) cash flow to retained earnings.
7)
8) Projected future financial statements are called:
A) plug statements.
B) comparative statements.
C) reconciled statements.
D) aggregated statements.
E) pro forma statements.
8)
9) Which statement expresses all accounts as a percentage of total assets?
A) common-size income statement
B) common-size balance sheet
C) pro forma balance sheet
D) pro forma income statement
E) statement of cash flows
9)
10) The quick ratio is measured as:
A) current assets minus inventory minus current liabilities.
B) current liabilities divided by current assets, plus inventory.
C) current assets minus inventory, divided by current liabilities.
D) current assets divided by current liabilities.
E) cash on hand plus current liabilities, divided by current assets.
10)
11) Ratios that measure a firm’s financial leverage are known as ________ ratios.
A) asset management
B) profitability
C) long-term solvency
D) market value
E) short-term solvency
11)
2
12) The debt-equity ratio is measured as:
A) long-term debt divided by total equity.
B) total equity divided by total debt.
C) total debt divided by total eq ...
Outline for the Diversity Management Proposal1) Problem A thoro.docx
Outline for the Diversity Management Proposal
1) Problem: A thorough description of the problem or opportunity
a. Include a summary of how your problem or opportunity is a diversity issue (written from the reader’s perspective)
b. What is being lost if you solution is not adopted?
c. An analysis of the factors contributing to the problem or opportunity should include answers to questions like:
i. Who does it affect?
ii. Where does it impact the business the most?
iii. When did the problem start and how long has it been going on?
iv. What are the business implications of the problem? (These implications should be quantifiable and affect the reader’s job.)
d. Be specific. Provide numbers or other measures to support your points.
2)
Solution
: how will your proposal solve the problem or allow the company to take advantage of the opportunity?
a. State your solution clearly.
b. Identify your top three criteria for selecting this solution as the “best” one. (Examples: Timing? Cost? Revenue?) Compare this chosen solution to other less-favorable options.
c. Consider objections and provide support for your solution before these objections are voiced/considered.
d. Who needs to be involved in the solution?
e. How will your solution make the problem you identified better, or what are the resulting benefits? (this should be specific and measurable and address the analysis in your problem statement)
f. Why must the solution be implemented now?
3) The plan:
a. Detail the plan of action or implementation
b. Set a schedule with specific deadlines.
c. What resources will you need? Where will they come from?
d. Review the challenges that must be overcome to implement this plan and make suggestions for overcoming them.
e. Suggest a control method for evaluating the success of the plan. (How will you measure success?)
4) Conclusion:
a. Briefly summarize key points focusing primarily on how the organizational will be better once they implement your solution
b. End with a call to action
Principles of Accounting 2
1) Issued stock is:
A) Authorized shares of stock that can be sold.
B) Stock only sold to another company
C) Shares sold and in stockholders’ possession
D) Stock sold to stockholders.
2) In the statement of cash flows, which event would cause net income to be increased?
A) A decrease in Inventory
B) An increase in Prepaid Insurance
C) A decrease in Accounts Payable
D) An increase in Accounts Receivable
3) Finished Goods Inventory appears on which of the following statements on the worksheet?
A) Statement of cost of goods manufactured and income statement
B) Statement of cost of goods manufactured and balance sheet
C) Income statement and balance sheet
D) Income statement and cost of goods sold statement
4) One reason a corporation might issue bonds rather than sell stock is that:
a. Bond interest is a tax-deductible expense
b. Interest rates are high
c. Dividends will lower th.
FINANCIAL MANAGEMENT,WCM MOST IMPORTANT AND EXPECTED MCQ.pptx
FINANCIAL MANAGEMENT,WCM MOST IMPORTANT AND EXPECTED MCQ.pptx
1) Which of the following statements is true about money A) Money is.pdf
1) Which of the following statements is true about money? A) Money is sometimes viewed as a
lubricant that greases the wheels of economic activity B) Without money, most transactions
would be very difficult. C) Money influences the behavior of the economy as a whole D) All of
the above are true. 2) Which of the following items are NOT considered to be money by all
economists? A) Money market accounts B) Certificates of Deposit C) Travelers\' checks D)
Stock and bonds 3) All financial securities share the characteristic that they represent a claim to
future ownership B) interest income C) cash flows D) dividend payments 4) Holders of exchange
their bonds into bonds can shares of the company\'s common stock at a predetermined price. A)
investment grade B) callable C) convertible D) junk 5) Transaction costs, portfolio
diversification, and asymmetric information all refer to A) the reasons the public prefers indirect
finance to direct finance the reasons the public prefers the primary market to the secondary
market. C) the reasons the public prefers direct finance to indirect finance D) the reasons the
public prefers the secondary market to the primary market. 6) The Glass-Steagall Act A) did not
allow commercial banks to give mortgage loans B) did not allow commercial banks to sell T-
bills did not allow commercial banks to buy T-bills D) did not allow commercial banks to engage
in investment banking
Solution
(1) (D)
Money is the medium of exchange, which impacts economic behavior and without which most
transactions will become difficult.
(2) (D)
Stocks and bonds are capital market instruments which are not included in money.
(3) (C)
Stocks represent claim in future dividends (a cash inflow) and Bonds represent a claim to future
interest payments (a cash inflow).
(4) (C)
(5) (C)
Indirect finance is characterized by high transaction costs, information asymmetry and lack of
portfolio diversification.
(6) (D).
Darvative and-risk-managemnt
this is a mcq of derivatives of management kindly check and follow fore your exam and all the best for exam
Exam 3 Corrections (Explain briefly why the red highlighted answe.docx
Exam 3 Corrections (Explain briefly why the red “highlighted answer is right 14 questions)
1) The currency of Venadia, a country, falls sharply in value against the currency of Lutetia, a neighboring country. Which of the following is a consequence of this exchange rate movement?
A. Lutetia's products will achieve a competitive pricing in Venadia.
B. Venadia's exports to Lutetia will increase because Venadian goods will become cheaper in Lutetia.
C. Venadia's products will cost more in Lutetia.
D. There will be no difference in the volume or direction of trade.
E. Lutetia's exports to Venadia will increase because Lutetian goods will become cheaper in Venadia.
2) The euro/dollar exchange rate is €1 = $1.20. If a trader buys a camera that retails for $300 in New York
and sells it for €200 in Berlin (ignoring transaction costs, transportation costs, or trade barriers), this represents a potential profit (arbitrage) of _____.
A. $60
B. $80
C. $20
D. $100
E. $40
3) The nominal interest rate is 9 percent in Brazil and 6 percent in Japan. Applying the international Fisher effect, the Brazilian real should:
A. appreciate by 3 percent against the Japanese yen.
B. depreciate by 3 percent against the Japanese yen.
C. appreciate by 1.5 percent against the Japanese yen.
D. depreciate by 1.5 percent against the Japanese yen.
E. appreciate by 15 percent against the Japanese yen.
4) The government of Beryllia tightly controls the ability of its residents to convert its currency into other currencies. However, all foreign businesses with deposits in banks of Beryllia may, at any time, convert all their currency into foreign currency and take them out of the country. Beryllia's currency is said to be _____.
A. leading
B. nonconvertible
C. externally convertible
D. freely convertible
E. lagging
5) Certovia and Norkland are two neighboring countries that actively trade goods and services with each other. Under the gold standard, there will be a net flow of gold from Norkland to Certovia when:
A. Certovia is in trade deficit with Norkland.
B. Norkland is in balance-of-trade equilibrium with Certovia.
C. Certovia is in trade surplus with Norkland.
D. Certovia imports more than it exports to Norkland.
E. Norkland’s balance of payment to Certovia is favorable.
6) Which of the following statements is true about the role of the International Monetary Fund?
A. It never interfered in the monetary and fiscal conditions of its member countries.
B. It was authorized to approve currency devaluations of only up to 10 percent.
C.It required member countries to adhere to specific agreements irrespective of the amount of funds the
countries borrowed
D.It lent money under the International Bank for Reconstruction and Development (IBRD) scheme and a second scheme which is overseen by the International Development Association (IDA).
E. It helped deficit-laden countries bring down inflation rates by providing short-term foreign currency
loa ...
Q_FIN 571 Final Exam.docFinal ExamPlease provide your answ.docx
Q_FIN 571 Final Exam.doc
Final Exam
Please provide your answers as follows in the Assignment newsgroup (Excel spreadsheet is preferred):
1. A
2. B
3. B, etc
Chapter 1 The Goals and Functions of Financial Management
Multiple Choice Questions
1. What is the primary goal of financial management?
A) Increased earnings
B) Maximizing cash flow
C) Maximizing shareholder wealth
D) Minimizing risk of the firm
2. The partnership form of organization
A) avoids the double taxation of earnings and dividends found in the corporate form of organization.
B) usually provides limited liability to the partners.
C) has unlimited life.
D) simplifies decision making.
3. Increased productivity due to technology has
A) increased corporations' reliance on debt for capital expansion needs.
B) created larger asset values on the firm's historical balance sheet.
C) made it cheaper (in terms of interest costs) for firms to borrow money.
D) helped to keep corporate costs in check.
4. Insider trading occurs when
A) someone has information not available to the public which they use to profit from trading in stocks.
B) corporate officers buy stock in their company.
C) lawyers, investment bankers, and others buy common stock in companies represented by their firms.
D) any stock transactions occur in violation of the Federal Trade Commissions restrictions on monopolies.
Chapter 2 Review of Accounting
5. When a firm's earnings are falling more rapidly than its stock price, its P/E ratio will:
A) remain the same
B) go up
C) go down
D) could go either up or down
6. The net worth of a firm
A) is usually the same as the firm's market value.
B) is based on current asset costs.
C) is based on current liabilities.
D) none of the above.
7. A statement of cash flows allows a financial analyst to determine
A) whether a cash dividend is affordable.
B) how increases in asset accounts have been financed.
C) whether long-term assets are being financed with long-term or short-term financing.
D) all of the above
8. A firm has $200,000 in current assets, $400,000 in long-term assets, $80,000 in current liabilities, and $200,000 in long-term liabilities. What is its net working capital?
A) $120,000
B) $320,000
C) $520,000
D) none of the above
Chapter 3 Financial Analysis
Multiple Choice Questions
9. The ______________ method of inventory costing is least likely to lead to inflation-induced profits.
A) FIFO
B) LIFO
C) Weighted average
D) Lower of cost or market
10. The Bubba Corp. had net income before taxes of $200,000 and sales of $2,000,000. If it is in the 50% tax bracket its after-tax profit margin is:
A) 5%
B) 12%
C) 20%
D) 25%
11. XYZ's receivables turnover is 10x. The accounts receivable at year-end are $600,000. The average collection period is 90 days (3 months). What was the sales figure for the year?
A) $60,000
B) $6,000,000
C) $24,000,000
D) none of the above
12. A firm ha ...
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- 1. School of Distance Education Financial derivatives & risk management Page 1 MULTIPLE CHOICE QUESTIONS FOR MCOM (MC4C14) FINANCIAL DERIVATIVES & RISK MANAGEMENT 1. …………. risk is a loss may occur from the failure of another party to perform according to the terms of a contract? a) Credit b) Currency c) Market d) Liquidity 2. Financial derivatives includes? a) Stock b) Bonds c) Future d) None of these 3. By hedging a portfolio ; a bank manager a) Reduces interest rate risk b) Increases re investment risk c) Increases exchange rate risk d) None of these 4. A long contract requires that the investor a) Sell securities in the future b) Buy securities in the future c) Hedge in the future d) Close out his position in the future 5. The disadvantage of swaps is that they a) Lack of liquidity b) Suffer from default risk c) Both A & B d) B only 6. Hedging by buying an option a) Limits gain b) Limits losses c) Limits gain & losses d) Has no limit on losses 7. All other things held constant premium on options will increase when the a) Exercise price increases b) Volatility of the underlying assets fails c) Term to maturity increases d) Both B & C
- 2. School of Distance Education Financial derivatives & risk management Page 2 8. An option allowing the owner to sell an asset at a future date is a …………… a) Put option b) Call option c) Forward option d) Future contract 9. Composite value of traded stocks group of secondary market is classified as a) Stock index b) Primary index c) Stock market index d) Limited liability index 10. ………….. is the minimum amount which must be remained in a margin account a) Maintenance margin b) Variation margin c) Initial margin d) None of these 11. The number of future contract outstanding is called ………….? a) Liquidity b) Float c) Volume d) Turnover 12. The amount paid for an option is the a) Strike price b) Discount c) Premium d) Yield 13. Futures contracts are more successful than interest rate forward contracts because they : a) are less liquid b) have greater default risk c) are more liquid d) have an interest rate tied to the discount rate 14. The payoffs for financial derivatives linked to a) Securities that will be issued in the future b) The volatality of interest rates c) previously issued securities d) none of the above. 15. Which of the following is not a problem with an interest rate forward contract? a) Low interest rate b) default risk c) lack of liquidity d) finding a counterparty Answer key : 1.(a). 2.(c). 3 .(a). 4.(b). 5.(c). 6.(b). 7.(c). 8.(a). 9.(c). 10.(c). 11.(a). 12.(c) 13. (c) 14. (c) 15. (a)