apu-busn602-midterm-exam

Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn

BUSN602 Midterm Exam

Return
to Assessment List

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?

A.$1,200.50

B.$1,220.20

C.$1,174.80

D.$1,217.50

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.

A.opportunity

B.marginal cost

C.supply-and-demand

D.anti-monopoly

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

A.$126.

B.$ 79.

C.$124.

D.$116.

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.Greenbacks were money issued by the U.S.
government to help finance the Civil War.

B.Greenbacks were fiat money.

C.Greenbacks were 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

C.money

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?

A.cash

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.

In addition to the supply and
demand, interest rates are determined by the nominal interest rate, inflation
premium, real rate of interest, default risk premium, maturity risk premium,
interest rate risk, and liquidity premium (Melicher, 2014). The nominal interest rate includes premiums
which are added for forecasted inflation. It also includes the default risk
premium. Real rate of interest is the
rate at a time in which no inflation is expected (Melicher, 2014). Inflation premiums are based on the average
rate of inflation over the period of lifetime for the given instrument. The default risk premium is compensation for
the event a borrower fails to pay interest on a loan (Melicher, 2014). Maturity risk premiums are the amount
included for added returns which are anticipated and expected by lenders and/or
investors. Interest rate risk is a
reflection upon the possibility the market may experience fluctuations in the
values of fixed-rate debts (Melicher, 2014).
Liquidity premiums are compensation for instruments of financial debt
which are unable to be transformed tocash near their estimated fair market
values (Melicher, 2014). Ronald W.
Melicher, E. A. (2014). Introduction to Finance: Custom Edition Select
Chapters, Fifteenth Edition. Danvers: John Wiley & Sons.

Feedback:
In addition to supply and demand relationships, interest rates (r) are
determined by: the real rate of interest (RR); an inflation premium (IP); a
default risk premium (DRP); a maturity risk premium (MRP); and a liquidity
premium (LP). The real rate of interest is the interest rate on a risk-free
financial debt instrument. The inflation premium is the average inflation rate
expected over the life of the debt instrument. The default risk premium
indicates compensation for the possibility that the borrower will not pay
interest and/or repay principal according to the financial instrument’s
contractual arrangements. The maturity risk premium is the added return
expected by lenders or investors because of interest rate risk (possibility of
fluctuations in market values due to market interest rate changes) on
instruments with longer maturities. The liquidity premium is compensation for
those financial debt instruments that cannot be easily converted to cash at
prices close to their estimated fair market values.

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.

A.$6,269.59

B.$6,578.95

C.$6,394.12

D.$6,189.83

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?

A.8%

B.9%

C.11%

D.6%

Question
17 of 20 5.0 Points

Identify
the objectives of the national economic policy.

The American government attempts to
create policies which create a positive and healthy economic environment for
the United States of America (Melicher, 2014).
At times interest rates are raised in order to keep inflation under
control. Doing this does tend to make it
difficult for businesses to obtain money in order to grow their businesses and
hire new employees. The goals are to
keep prices stable, attempt full employment, and have economic growth (Melicher,
2014). Ronald W. Melicher, E. A. (2014).
Introduction to Finance: Custom Edition Select Chapters, Fifteenth Edition.
Danvers: John Wiley & Sons.

Feedback:
Objectives include:

a.
Economic growth: This encompasses not only growth of total output but also
growth on a per capita basis.

b.
High and stable levels of employment: It is a stated objective of the
government to promote stability of employment and production at levels close to
the nation’s total potential.

c.
Price stability: Inflation causes inequities and discourages investment.
Consistently stable prices help create an environment in which the other
economic objectives are achieved more easily.

d.
International financial equilibrium: The increasing importance of international
trade and of the flow of funds in the international capital markets imposes a
strong incentive for maintaining international financial equilibrium.

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

A.$1,600

B.$1,060

C.$1,160

D.$1,006

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:

A.fall

B.stay the same

C.rise

D.reflect lower inflation

More to explorer

Change Management Presentation

Purpose of AssessmentDevelop specific strategies with supporting tactics to implement positive change within an organization. You may refer to the information that you

Driver Safety

 You were recently hired as the fleet safety manager of a company that operates a fleet of 25 delivery trucks within a

Answer:

Title: apu-busn602-midterm-exam

This question has been Solved!

Click the button below to order this solution.

Leave a Reply

Your email address will not be published. Required fields are marked *

Open chat