14 May Question1.value:1.00 pointsMC Qu. 62 Which of the following statements concerning…
Question
1.
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MC Qu. 62 Which of the following statements concerning…
Which of the following statements concerning futures markets is false?
| Futures markets allow investors to manage risk. | |
| Futures markets can be used to hedge against changing commodity prices. | |
| Interest rate futures can be used to hedge against the risk of rising interest rates. | |
| All of the statements above are true. |
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MC Qu. 63 All of the following are recognized as an…
| All of the following are recognized as an important influences in the development of the banking crisis of 2008 and the resulting credit crisis EXCEPT: |
| Too many subprime loans were repackaged and sold as securities. | |
| The IMF bailed out Freddie Mac and Fannie Mae. | |
| Real estate prices collapsed. | |
| Consumers, especially homeowners, took on too much debt. |
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MC Qu. 65 Evidence of how global markets are linked…
Evidence of how global markets are linked was provided in 1997 and 1998 when international markets reacted to
| the collapse of Asian currencies in Thailand, Indonesia, Malaysia and Korea. | |
| Russia’s default on its sovereign debt. | |
| Japan’s seven years of economic stagnation. | |
| a and b are true. |
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MC Qu. 68 The European Monetary Union (EMU) which came…
The European Monetary Union (EMU) which came into effect in January of 1999 includes
| Britain, France, Germany, Spain, Italy and 6 other European countries. | |
| The establishment of a new European Central Bank to coordinate monetary policy for the Euro-zone countries. | |
| A new currency called the Euro, which will be put into circulation in all EMU countries no later than 2009. | |
| All of these. |
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MC Qu. 70 During the next ten years, the major threat …
| During the next ten years, the major threat to the dominance of the U.S. money and capital markets will come from |
| The Euro-zone countries comprising the European Monetary Union and a single currency. | |
| The huge Chinese economy and its billion plus people. | |
| Japan’s prolonged recession and banking crisis. | |
| Russia’s difficulty in transforming its economy into a capitalistic one. |
6.
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MC Qu. 76 Corporations prefer bonds over preferred…
Corporations prefer bonds over preferred stock for financing their operations because
| preferred stocks require a dividend. | |
| bond interest rates change with the economy while stock dividends remain constant. | |
| the after-tax cost of debt is less than the cost of preferred stock. | |
| none of these. |
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MC Qu. 77 In general when interest rates are expected …
In general when interest rates are expected to rise, financial managers
| balance the company’s debt structure with more short-term debt and less long-term debt. | |
| rely more on internal sources of funds rather than external sources. | |
| try to lock in long-term financing at low cost. | |
| accept more risk. |
8
MC Qu. 80 The major supplier of funds for investment…
The major supplier of funds for investment in the whole economy is
| businesses. | |||||||||
| financial institutions. | |||||||||
| households. | |||||||||
| government.
9 MC Qu. 92 Security markets are efficient when each of … Security markets are efficient when each of the following exist except
|
10
MC Qu. 97 The strong form of the efficient market…
The strong form of the efficient market hypothesis states that
| past price data is positively correlated to future prices. | |
| prices reflect all public information. | |
| all information both public and private is immediately reflected in stock prices. | |
| none of these |
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MC Qu. 98 The Securities Act of 1933 is primarily…
The Securities Act of 1933 is primarily concerned with
| original issues of securities. | |
| protecting customers of bankrupt securities firms. | |
| secondary trading of securities. | |
| national securities market. |
12
MC Qu. 99 The Securities Act of 1933 did not
The Securities Act of 1933 did not
| require that all securities sold in more than one state be registered with the SEC. | |
| set guidelines for insiders who trade in the securities of their own firm. | |
| require a prospectus for all new issues of securities which contains all information appearing in the registration statement. | |
| hold corporate officers liable for losses for those who were misled by false information in the prospectus. |
13
MC Qu. 101 The Securities Exchange Act of 1934 is…
The Securities Exchange Act of 1934 is primarily concerned with
| original issues of securities. | |
| a central market system. | |
| regulation of organized exchanges. | |
| protecting customers of bankrupt securities firms. |
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