ECO 320 MIDTERM EXAM 2023 Business Finance

2023 Question 1 5 out of 5 points Which of the following


· Question 1 

5 out of 5 points


Which of the following is an example   of a financial market?


· Question 2 

5 out of 5 points


Identify which item is not one of the   six parts of the financial system. 


· Question 3 

5 out of 5 points


“When an individual obtains a   car loan and makes all of the regular monthly payments, the sum of the   payments made will exceed the purchase price of the car. This is due   primarily to the core principle:”


· Question 4 


The future value of $100 that earns   10% annually for n years is best expressed by which of the following?


· Question 5 

5 out of 5 points


The future value of $100 at a 5% per   year interest rate at the end of one year is:


· Question 6 

5 out of 5 points


Which of the following best expresses   the proceeds a lender receives from a one-year simple loan when the annual   interest rate equals i?


· Question 7 

5 out of 5 points


The shorter the time until a payment   the:


· Question 8 

5 out of 5 points


As a company issues more debt:


· Question 9 

5 out of 5 points


People who claim to have the ability   to accurately predict the future prices of stocks:


· Question 10 


“As the corporation uses more   debt financing, which of the following holds true for the stockholders?”


· Question 11 

5 out of 5 points


Which of the following could cause a   stock market bubble?


· Question 12 

5 out of 5 points


A primary financial market is:


· Question 13 

5 out of 5 points


A futures contract is an example of:


· Question 14 

5 out of 5 points


The fundamental characteristics   influencing the value of a financial instrument include each of the following   except:


· Question 15 


“If Americans develop a greater   appreciation for Mexican-made goods, we should observe the following change   in the dollar-peso market:”


· Question 16 


If the Japanese yen appreciates   against the U.S. dollar:


· Question 17 


The nominal exchange rate:


· Question 18 

5 out of 5 points


An American traveling to Europe will   find it easier to make purchases now because:


· Question 19 

5 out of 5 points


When the yield curve is downward   sloping:


· Question 20 

5 out of 5 points


A flight to quality refers to a move   by investors:


· Question 21 


If the Federal Reserve surprises   investors by announcing an easing of monetary policy:


· Question 22 

5 out of 5 points


Under the liquidity premium theory a   flat yield curve implies:


· Question 23 


“The primary difference in   certificates of deposit (CDs) that are equal to or less than $100,000 and   those over $100,000 (other than the amount) is:”


· Question 24 

5 out of 5 points


“Considering the balance sheet   for all commercial banks in the U.S., the largest category of assets   is:”


· Question 25 

5 out of 5 points


Repurchase agreements are usually   used by banks that:


· Question 26 

5 out of 5 points


“If the probability of an   outcome equals one, the outcome:”


· Question 27 

5 out of 5 points


“All other factors held   constant, an investment:”


· Question 28 

5 out of 5 points


“If an investment has a 20%   (0.20) probability of returning $1,000; a 30% (0.30) probability of returning   $1,500; and a 50% (0.50) probability of returning $1,800; the expected value   of the investment is:”


· Question 29 

5 out of 5 points


Diversification is the principle of:


· Question 30 


Which best describes money as a means   of payment?


· Question 31 

5 out of 5 points


U.S. currency is


· Question 32 

5 out of 5 points


To say an asset is liquid implies   that:


· Question 33 

5 out of 5 points


The purchasing power of money:


· Question 34 


“As general business conditions   improve, we would witness the following in the bond market:”


· Question 35 

5 out of 5 points


When the price of a bond is above   face value the yield to maturity:


· Question 36 


“If the purchase price of a bond   exceeds the face value, the yield to maturity:”


· Question 37 

5 out of 5 points


“A 10-year Treasury note as a   face value of $1,000, price of $1,200, and a 7.5% coupon rate. Based on this   information, we know the:”


· Question 38 

5 out of 5 points


“Mary Jones is the president of   a local bank. She knows that half of the loan applicants in town she would   classify as high risk and the other half as low risk. She observes that the   other banks in town charge two different interest rates, a lower rate for low   risk borrowers and the higher rate for high risk borrowers. She decides that   to have an advantage over the other banks she will offer an average rate to   everyone. The likely result will be:”


· Question 39 

5 out of 5 points


Two problems that arise from   asymmetric information are:


· Question 40 


Most individuals save at banks rather   than lend directly because:


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