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BUSN 602 Midterm Exam Answers

By Anne Newton | Category :: Story

BUSN 602 Midterm Exam Answers
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BUSN602 Midterm Exam

Part 1 of 1 – 100.0 Points

Question 1 of 20 5.0 Points
Jill Clinton puts $1,000 in a savings passbook that pays 4% compounded quarterly. How much will she have in her account after five years?


Question 2 of 20 5.0 Points
An increase in inflation should:

A.increase the demand for loanable funds
B.decrease the interest rate on loans
C.increase the interest rate on loans
D.none of the above

Question 3 of 20 5.0 Points
Economists use a ___________________ framework to explain how the prices and quantities of goods and services are determined in a free-market economic system.

B.marginal cost
E.none of the above

Question 4 of 20 5.0 Points
The future value of $100 received today and deposited at 6 percent for four years is

B.$ 79.

Question 5 of 20 5.0 Points
All of the following are important components of a financial system except:

A.government and private policy makers
B.a monetary system
C.the international monetary fund
D.financial institutions and markets

Question 6 of 20 5.0 Points
In general, the effective rate of interest on a discount loan

A.is lower than that on standard loan
B.is higher than that on a standard loan
C.is identical to that on a standard loan
D.none of the above

Question 7 of 20 5.0 Points
Because of the financial crisis that began in 2008, by the end of 2009:

A.unemployment was in excess of 10 percent
B.many homeowners owed more money on their mortgage loans than the their homes were worth
C.home mortgage foreclosure rates and personal and business bankruptcies were increasing
D.over 100 banks in the U.S. had already failed with over 500 more being considered financially weak
E.all of the above are true

Question 8 of 20 5.0 Points
Which of the following statements about greenbacks is false?

A.Greenbackswere money issued by the U.S. government to help finance the Civil War.
B.Greenbackswere fiat money.
C.Greenbackswere not redeemable for gold or silver.
D.All of the above statements are correct.

Question 9 of 20 5.0 Points
____________ is anything generally accepted as a means of paying for goods and services and for paying off debts. It must be easily divisible, so that exchanges can take place in small or large quantities; relatively inexpensive to store and transfer; and reasonably stable in value over time.

A.A financial asset
B.A real asset
D.all of the above
E.none of the above

Question 10 of 20 5.0 Points
List the five major capital market securities described in the chapter 7.

The five major capital market securities are mortgages, treasury bonds, municipal bonds, corporate bonds, and corporate stocks (Melicher, 2014). Ronald W. Melicher, E. A. (2014). Introduction to Finance: Custom Edition Select Chapters, Fifteenth Edition. Danvers: John Wiley & Sons.
Feedback: The five major capital market securities:
• Mortgage: loan backed by real property in the form of buildings and houses.
• Treasury bond: long-term debt instrument issued by the U.S. federal government.
• Municipal bond: long-term debt instrument issued by a state or local government.
• Corporate bond: debt instrument issued by a corporation to raise long-term funds.
• Common stock: security that indicates ownership interest in a corporation.

Question 11 of 20 5.0 Points
Which of the following is not an asset of depository institutions?

B.unsecured loans
C.time deposits
D.U.S. government securities

Question 12 of 20 5.0 Points
Identify and describe the factors, in addition to supply and demand, that determine interest rates.

Question 13 of 20 5.0 Points
You need $8,000 four years from now for a down payment on your future house. How much money must you deposit today if your credit union pays 5% interest compounded annually? Pick the closest answer.


Question 14 of 20 5.0 Points
When investors expect __________ inflation rates they will require __________ nominal interest rates so that a real rate of return will remain after the inflation.

A.higher, higher
B.higher, lower
C.lower, higher
D.none of the above

Question 15 of 20 5.0 Points
The major factor that determines the volume of savings, corporate as well as individual, is the:

A.volume of spending
B.level of national income
C.amount of private pension plans
D.amount of life insurance policies

Question 16 of 20 5.0 Points
Your college has agreed to give you a $10,000 tuition loan. As part of the agreement, you must repay $12,600 at the end of the three-year period. What interest rate is the college charging?


Question 17 of 20 5.0 Points
Identify the objectives of the national economic policy.

Question 18 of 20 5.0 Points
The three functions of money are:

A.medium of exchange, store of value, and measure of liquidity
B.conduit for international trade, store of value, and standard of value
C.medium of exchange, store of value, and standard of value
D.inflation hedge, measure of liquidity, and medium of exchange

Question 19 of 20 5.0 Points
$1,000 invested today at 6% interest would be worth ________ one year from now

E.none of the above

Question 20 of 20 5.0 Points
If the money supply and total demand increase faster than output, prices will:

B.stay the same
D.reflect lower inflation

By Anne Newton | Nov 22, 2017 | Category > Story > Mystery | Comments | Views 8


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