Question 1

Which of the following is true of a dealer market?

Accepted Answer

A)  Buyers and sellers are never brought together directly. 
B)  Brokers execute the buy or sell orders in a dealer market. 
C)  It has centralized trading floors. 
D)  It is a part of the broker market. 
A)  Buyers and sellers are never brought together directly. 
B)  Brokers execute the buy or sell orders in a dealer market. 
C)  It has centralized trading floors. 
D)  It is a part of the broker market. A

Question 2

The Gramm-Leach-Bliley Act ________.

Accepted Answer

A)  is created to monitor banks on a regular basis to ensure that they were safe and sound 
B)  allows business combinations between commercial banks and investment banks, but not insurance companies 
C)  allows business combinations between commercial banks, investment banks, and insurance companies 
D)  was signed during the Great Depression because of the financial crisis 
A)  is created to monitor banks on a regular basis to ensure that they were safe and sound 
B)  allows business combinations between commercial banks and investment banks, but not insurance companies 
C)  allows business combinations between commercial banks, investment banks, and insurance companies 
D)  was signed during the Great Depression because of the financial crisis C

Question 3

Which of the following provides savers with a secure place to invest funds and offer both individuals and companies loans to finance investments?

Accepted Answer

A)  investment banks 
B)  securities exchanges 
C)  mutual funds 
D)  commercial banks 
A)  investment banks 
B)  securities exchanges 
C)  mutual funds 
D)  commercial banks D

Question 4

Which of the following is true of a primary market?

Accepted Answer

A)  It is an organized market in which all financial derivatives are traded. 
B)  It is regulated by The Sarbanes-Oxley Act. 
C)  It is a market where smaller, unlisted securities are traded. 
D)  It is the only market in which the issuer is directly involved in the transaction. 
A)  It is an organized market in which all financial derivatives are traded. 
B)  It is regulated by The Sarbanes-Oxley Act. 
C)  It is a market where smaller, unlisted securities are traded. 
D)  It is the only market in which the issuer is directly involved in the transaction.

Question 5

In a ________ market, the buyer and seller are not brought together to trade securities directly but instead have their orders executed on the ________.

Accepted Answer

A)  dealer; securities market 
B)  broker; over-the -counter market 
C)  broker; securities market 
D)  dealer; over-the-counter market 
A)  dealer; securities market 
B)  broker; over-the -counter market 
C)  broker; securities market 
D)  dealer; over-the-counter market

Question 6

In a ________ market, the buyer and seller are brought together to trade securities in an organization called ________.

Accepted Answer

A)  dealer; securities market 
B)  broker; over-the -counter market 
C)  broker; securities market 
D)  dealer; over-the-counter market 
A)  dealer; securities market 
B)  broker; over-the -counter market 
C)  broker; securities market 
D)  dealer; over-the-counter market

Question 7

The tax liability of a corporation with ordinary income of $105,000 is ________. Range of taxable income Marginal rate
$ 0 to $ 50,000 15%
50,000 to 75,000 25
75,000 to 100,000 34
100,000 to 335,000 39
335,000 to 10,000,000 34
10,000,000 to 15,000,000 35

Accepted Answer

A)  $42,000 
B)  $35,700 
C)  $23,950 
D)  $24,450 
A)  $42,000 
B)  $35,700 
C)  $23,950 
D)  $24,450

Question 8

The ________ is created by a financial relationship between suppliers and demanders of short-term funds.

Accepted Answer

A)  stock market 
B)  capital market 
C)  forex market 
D)  money market 
A)  stock market 
B)  capital market 
C)  forex market 
D)  money market

Question 9

Dividends received by a corporation on an investment in the common and preferred stock of another corporation, where ownership in the dividend paying corporation is less than 20%, is subject to 70 percent exclusion for tax purposes.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following acts regulates the secondary market ?

Accepted Answer

A)  The Securities Act of 1933 
B)  The Gramm-Leach-Bliley Act 
C)  The Securities Exchange Act of 1934 
D)  The Glass-Steagall Act 
A)  The Securities Act of 1933 
B)  The Gramm-Leach-Bliley Act 
C)  The Securities Exchange Act of 1934 
D)  The Glass-Steagall Act

Question 11

In the OTC market, the ask price is the highest price offered by a dealer to purchase a given security.

Accepted Answer

A) True 
 B)False

Question 12

Most money market transactions are made in ________.

Accepted Answer

A)  common stock 
B)  marketable securities 
C)  commodities market 
D)  preferred stock 
A)  common stock 
B)  marketable securities 
C)  commodities market 
D)  preferred stock

Question 13

The average tax rate paid on the firm's ordinary income can be calculated by dividing its taxes by its taxable income.

Accepted Answer

A) True 
 B)False

Question 14

Subprime mortgages are mortgage loans made to borrowers with high incomes and better than average credit histories.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true?

Accepted Answer

A)  The process of pooling mortgages or other types of loans and then selling claims or securities against that pool in a secondary market is called capitalization. 
B)  Corporations pay taxes on all dividends received from other corporations, no matter their share of ownership. 
C)  Corporations may pay taxes depending on their percentage of ownership. 
D)  Capital gains are treated separately from ordinary corporate income for tax purposes. 
A)  The process of pooling mortgages or other types of loans and then selling claims or securities against that pool in a secondary market is called capitalization. 
B)  Corporations pay taxes on all dividends received from other corporations, no matter their share of ownership. 
C)  Corporations may pay taxes depending on their percentage of ownership. 
D)  Capital gains are treated separately from ordinary corporate income for tax purposes.

Question 16

Securitization is the process of pooling mortgages or other types of loans and selling the claims or securities against that pool in the secondary market.

Accepted Answer

A) True 
 B)False

Question 17

The process of pooling mortgages or other types of loans and selling the claims or securities against that pool in the secondary market is called ________.

Accepted Answer

A)  valuation 
B)  securitization 
C)  private placement 
D)  capital restructuring 
A)  valuation 
B)  securitization 
C)  private placement 
D)  capital restructuring

Question 18

The money market is a market ________.

Accepted Answer

A)  that enables suppliers and demanders of long-term funds to make transactions 
B)  which brings together suppliers and demanders of short-term funds 
C)  where smaller, unlisted securities are traded 
D)  where all derivatives are traded 
A)  that enables suppliers and demanders of long-term funds to make transactions 
B)  which brings together suppliers and demanders of short-term funds 
C)  where smaller, unlisted securities are traded 
D)  where all derivatives are traded

Question 19

An efficient market is a market that establishes correct prices for the securities that firms sell and allocates funds to their most productive use as a result of the intense competition among investors.

Accepted Answer

A) True 
 B)False

Question 20

When home prices are falling, we would expect a(n) ________.

Accepted Answer

A)  high mortgage default rates 
B)  low mortgage default rates 
C)  unchanged mortgage default rates 
D)  higher percentage of owner home equity 
A)  high mortgage default rates 
B)  low mortgage default rates 
C)  unchanged mortgage default rates 
D)  higher percentage of owner home equity

Which of the following is true of a dealer market?

The Gramm-Leach-Bliley Act ________.

Which of the following provides savers with a secure place to invest funds and offer both individuals and companies loans to finance investments?

Which of the following is true of a primary market?

In a market, the buyer and seller are not brought together to trade securities directly but instead have their orders executed on the .

In a market, the buyer and seller are brought together to trade securities in an organization called .

The tax liability of a corporation with ordinary income of $105,000 is ________. Range of taxable income Marginal rate $ 0 to $ 50,000 15% 50,000 to 75,000 25 75,000 to 100,000 34 100,000 to 335,000 39 335,000 to 10,000,000 34 10,000,000 to 15,000,000 35

The ________ is created by a financial relationship between suppliers and demanders of short-term funds.

Dividends received by a corporation on an investment in the common and preferred stock of another corporation, where ownership in the dividend paying corporation is less than 20%, is subject to 70 percent exclusion for tax purposes.

Which of the following acts regulates the secondary market ?

In the OTC market, the ask price is the highest price offered by a dealer to purchase a given security.

Most money market transactions are made in ________.

The average tax rate paid on the firm's ordinary income can be calculated by dividing its taxes by its taxable income.

Subprime mortgages are mortgage loans made to borrowers with high incomes and better than average credit histories.

Which of the following is true?

Securitization is the process of pooling mortgages or other types of loans and selling the claims or securities against that pool in the secondary market.

The process of pooling mortgages or other types of loans and selling the claims or securities against that pool in the secondary market is called ________.

The money market is a market ________.

An efficient market is a market that establishes correct prices for the securities that firms sell and allocates funds to their most productive use as a result of the intense competition among investors.

When home prices are falling, we would expect a(n) ________.

The Role of Managerial Finance

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters

Exam 2: The Financial Market Environment

Which of the following is true of a dealer market?

The Gramm-Leach-Bliley Act ________.

Which of the following provides savers with a secure place to invest funds and offer both individuals and companies loans to finance investments?

Which of the following is true of a primary market?

In a ________ market, the buyer and seller are not brought together to trade securities directly but instead have their orders executed on the ________.

In a ________ market, the buyer and seller are brought together to trade securities in an organization called ________.

The tax liability of a corporation with ordinary income of $105,000 is ________. Range of taxable income Marginal rate $ 0 to $ 50,000 15% 50,000 to 75,000 25 75,000 to 100,000 34 100,000 to 335,000 39 335,000 to 10,000,000 34 10,000,000 to 15,000,000 35

The ________ is created by a financial relationship between suppliers and demanders of short-term funds.

Dividends received by a corporation on an investment in the common and preferred stock of another corporation, where ownership in the dividend paying corporation is less than 20%, is subject to 70 percent exclusion for tax purposes.

Which of the following acts regulates the secondary market ?

In the OTC market, the ask price is the highest price offered by a dealer to purchase a given security.

Most money market transactions are made in ________.

The average tax rate paid on the firm's ordinary income can be calculated by dividing its taxes by its taxable income.

Subprime mortgages are mortgage loans made to borrowers with high incomes and better than average credit histories.

Which of the following is true?

Securitization is the process of pooling mortgages or other types of loans and selling the claims or securities against that pool in the secondary market.

The process of pooling mortgages or other types of loans and selling the claims or securities against that pool in the secondary market is called ________.

The money market is a market ________.

An efficient market is a market that establishes correct prices for the securities that firms sell and allocates funds to their most productive use as a result of the intense competition among investors.

When home prices are falling, we would expect a(n) ________.

The Role of Managerial Finance

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Time Value of Money

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters

In a market, the buyer and seller are not brought together to trade securities directly but instead have their orders executed on the .

In a market, the buyer and seller are brought together to trade securities in an organization called .