Question

1. As an alternative to selling shares of stock as a means of raising funds,
a large company could, instead,

a)invest in physical capital
b)use equity finance
c)sell bonds
d)purchase bonds

2. The economy's two most important financial markets are

a)the investment market and the saving market
b)the bond market and the stock market
c)banks and the stock market
d)financial markets and financial institutions

3. Two of the economy's most important financial intermediaries are

a)suppliers of funds and demanders of funds
b)banks and the bond market
c)the stock market and the bond market
d)banks and mutual funds

4. We associate the term debt finance with

a)the bond market, and we associate the term equity finance with the stock market
b)the stock market, and we associate the term equity finance with the bond market
c)financial intermediaries, and we associate the term equity
d)finance with financial markets financial intermediaries

5. A bond is a

a)financial intermediary
b)certificate of indebtedness
c)certificate of partial ownership in an enterprise
d)None of the above is correct

6. If the Apple corporation sells a bond it is

a)borrowing directly from the public
b)borrowing indirectly from the public
c)selling shares of ownership directly to the public
d)selling shares of ownership indirectly to the public

7. The single most important piece of information about a stock is its

a)term
b)dividend
c)daily volume
d)price

8. Which of the following lists is included in what economists call
"money"?

a)cash
b)cash and stocks and bonds
c)cash and stocks and bonds and real estate
d)cash and stocks and bonds and real estate and all other assets

9. Which of the following best illustrates the medium of exchange function
of money?

a)You keep some money hidden in your shoe.
b)You keep track of the value of your assets in terms of currency.
c)You pay for your oil change using currency.
d)None of the above is correct.

10. Most financial assets other than money function as

a)a medium of exchange, a unit of account, and a store of value.
b)a medium of exchange and a store of value, but not a unit of account.
c)a store of value and a unit of account, but not a medium of exchange.
d)a store of value, but not a unit of account nor a medium of exchange

11. To maintain their standard of living, most people rely on

a)government assistance.
b)their labor earnings
c)their personal savings
d)All of the above are correct

12. The amount of unemployment that an economy normally experiences is
called the

a)average rate of unemployment
b)natural rate of unemployment
c)cyclical rate of unemployment
d)typical rate of unemployment

Answer 1