Question 1

Which statement demonstrates the money characteristic of portability?

Accepted Answer

A)   I can carry money with me.
B)   I can break big bills down into small ones.
C)   Dollar bills last a long time.
D)   The dollar bill cannot easily be copied or counterfeited.
E)   The value of the dollar won't change when I give it to a supplier. A

Question 2

A technology start-up received money from a venture capital company. What type of financing is this?

Accepted Answer

A)   long-term loan
B)   debt financing
C)   equity financing
D)   retaining earnings
E)   selling stock C

Question 3

All commercial banks are________, meaning they have received government permission to operate, either from the federal government (national banks) or an individual state (state banks).

Accepted Answer

A)   licensed
B)   chartered
C)   regional
D)   certified
E)   accredited B

Question 4

Luna placed $1,000 in an interest-bearing checking account. She can write as many checks as she needs to each month but must keep her balance above $500. Luna most likely opened a ________ account.

Accepted Answer

A)   NOW
B)   certificate of deposit
C)   promissory
D)   savings
E)   money market

Question 5

Which statement demonstrates the concept of durability as it relates to money?

Accepted Answer

A)   I can carry money with me.
B)   I can break big bills down into small ones.
C)   Dollar bills last a long time.
D)   The dollar bill cannot easily be copied or counterfeited.
E)   The value of the dollar won't change when I give it to a supplier.

Question 6

Chasen's friends ask him to come out to the lake house this weekend, but he politely passes. He is in the process of analyzing his employer's investments to ensure that their risk is translating to their expected level of return. This examplebest describes the concept of

Accepted Answer

A)   risk-return trade-off.
B)   financial controls.
C)   short-term forecasting.
D)   pledging.
E)   factoring.

Question 7

Money can be used to measure the worth of goods and services. This relates to which function of money?

Accepted Answer

A)   medium of exchange
B)   store of wealth
C)   standard of value
D)   stability of form
E)   durable quality

Question 8

The most familiar form of trade credit is ________, a written contract prepared by the buyer who agrees to pay the seller a certain amount by a certain time.

Accepted Answer

A)   a secured loan
B)   an unsecured loan
C)   collateral
D)   a promissory note
E)   crowdfunding

Question 9

The Fed is considering increasing the amount of money that banks are required to keep in their vault. This amount is known as the ________ and an increase would most likely cause ________ to interest rates.

Accepted Answer

A)   discount rate; no change
B)   indenture term; a decrease
C)   reserve requirement; an increase
D)   reserve requirement; a decrease
E)   discount rate; an increase

Question 10

Kiri's job is to pay suppliers and determine how much money is left for investment. Which task of financial managers is Kiri performing?

Accepted Answer

A)   overseeing collection of money owed
B)   managing bank account
C)   monitoring accounting
D)   minimizing taxes
E)   overseeing bill payment

Question 11

When a firm uses its accounts receivable as collateral, or security, to obtain a short-term loan, as from a commercial bank, it is called

Accepted Answer

A)   pledging accounts payable.
B)   factoring accounts receivable.
C)   factoring accounts payable.
D)   pledging accounts receivable.
E)   commercial financing.

Question 12

What is a purpose of the Fed's administrative districts?

Accepted Answer

A)   to monitor the member banks in their districts for violations of the law
B)   to adjust interest rates on a regional basis
C)   to set monetary policy for their districts
D)   to provide the member banks in their districts with sufficient currency
E)   to provide oversight on potentially risky loan practices

Question 13

Alize has owned her own consulting firm for more than 10 years. She is very resistant to debt but needs to borrow money to fund some upcoming product development efforts she is planning. Describe three options available to her.

Accepted Answer

The answer of Alize has owned her own consulting firm...

Question 14

Kiley is reviewing her company's projected sales and its planned expenses. This data would bebest suited for which of the following forecasts?

Accepted Answer

A)   long-term
B)   trade credit
C)   short-term
D)   risk-return
E)   cash flow

Question 15

A commercial bank is also sometimes called a full-service bank.

Accepted Answer

A) True 
 B)False

Question 16

Ellison is responsible for taking care of her elderly parents. She also is a small business owner. As her bills mount for caring for her parents, she is forced to tap into her savings account. She then decides to borrow money from the bank to pay bills related to her business. Which of the reasons a firm borrows money does thisbest demonstrate?

Accepted Answer

A)   funds for extending credit
B)   funds for short-term cash flow
C)   funds for minor investments
D)   funds for managing everyday business activities
E)   funds for trade credit

Question 17

Brewster needs to purchase a new company car for his sales manager within the next year. He wants a clear forecast of the potential money that his company will collect and pay during that period. What would be hisbest approach?

Accepted Answer

A)   revolving credit forecast
B)   financial leverage review
C)   short-term forecast
D)   cost of capital review
E)   long-term forecast

Question 18

Cong works in the banking industry. He is responsible for ensuring that member banks in his district have enough cash on hand to serve customers during the holiday buying season. Congmost likely works in

Accepted Answer

A)   a chartered bank.
B)   the Bureau of Engraving and Printing.
C)   a commercial bank.
D)   the Federal Reserve Bank.
E)   the Board of Governors.

Question 19

The price you pay for the use of money over a certain period of time is called the

Accepted Answer

A)   collateral.
B)   interest rate.
C)   fixed payment.
D)   promissory rate.
E)   investment cost.

Question 20

Short-term financing by which a firm buys a product, then receives a bill from the supplier, and pays it in 30 to 90 days, is

Accepted Answer

A)   debt financing.
B)   equity financing.
C)   an unsecured loan.
D)   trade credit.
E)   liability financing.

Exam 3: Fundamentals of Economics and Types of Markets