19 May QuestionMC Qu. 62 Which of the following statements concerning…Which of the following statements concerning futures markets is
Question
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. |
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: |
| Consumers, especially homeowners, took on too much debt. | |
| Real estate prices collapsed. | |
| Too many subprime loans were repackaged and sold as securities. | |
| The IMF bailed out Freddie Mac and Fannie Mae. |
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. |
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. |
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. | |
| Russia’s difficulty in transforming its economy into a capitalistic one. | |
| Japan’s prolonged recession and banking crisis. |
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. |
MC Qu. 77 In general when interest rates are expected …
In general when interest rates are expected to rise, financial managers
| accept more risk. | |
| try to lock in long-term financing at low cost. | |
| rely more on internal sources of funds rather than external sources. | |
| balance the company’s debt structure with more short-term debt and less long-term debt. |
MC Qu. 80 The major supplier of funds for investment…
The major supplier of funds for investment in the whole economy is
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