Question 1

Which of the following is not an important stock exchange in the United States?

Accepted Answer

A)   New York Stock Exchange
B)   American Stock Exchange
C)   Chicago Mercantile Exchange
D)   NASDAQE) None of the above
F) A) and B)

Question 2

When the government's budget deficit increases

Accepted Answer

A)   the government is borrowing less and public savings falls.
B)   the government is borrowing less and public savings increases.
C)   the government is borrowing more and public savings falls.
D)   the government is borrowing more and public savings increases.E) A) and B)
F) B) and C)

Question 3

Scenario 26-1. Assume the following information for an imaginary, closed economy.
GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000.
-Refer to Scenario 26-1. For this economy, private saving amounts to

Accepted Answer

A)   $22,000.
B)   $18,000.
C)   $15,000.
D)   $37,000.E) A) and C)
F) A) and D)

Question 4

You observe a closed economy that has a government deficit and positive investment. Which of the following is correct?

Accepted Answer

A)   Private and public saving are both positive.
B)   Private saving is positive; public saving is negative.
C)   Private saving is negative; public saving is positive.
D)   Both private saving and public saving are negative.E) A) and B)
F) A) and C)

Question 5

A bond buyer is a

Accepted Answer

A)   saver. Bond buyers must hold their bonds until maturity.
B)   saver. Bond buyers may sell their bonds prior to maturity.
C)   borrower. Bond buyers must hold their bonds until maturity.
D)   borrower. Bond buyers may sell their bonds prior to maturity.E) None of the above
F) A) and B)

Question 6

The bond market, the stock market, banks, pension funds, and insurance companies are all financial

Accepted Answer

A)   systems.
B)   markets.
C)   institutions.
D)   intermediaries.E) A) and B)
F) A) and D)

Question 7

Generally, if people begin to expect a company to have higher future profits, the price of the company's stock will begin to decrease.

Accepted Answer

A) True 
 B)False

Question 8

A higher interest rate makes more attractive. Therefore the quantity of loanable funds supplied increases.

Accepted Answer

The answer of A higher interest rate makes more attractive....

Question 9

It is claimed that a secondary advantage of mutual funds is that

Accepted Answer

A)   an investor can avoid investment charges and fees.
B)   they give ordinary people access to loanable funds for investing.
C)   they usually outperform stock market indexes.
D)   they give ordinary people access to the skills of professional money managers.E) B) and D)
F) None of the above

Question 10

Longview Corporation has a stock price of $60, has issued 1,000,000 shares of stock, has retained earnings of $3 million dollars, and a dividend yield of 5 percent. The price-earnings ratio for Longview stock is

Accepted Answer

A)   20, which is high compared to historical standards of the market.
B)   20, which is low compared to historical standards of the market.
C)   10, which is low compared to historical standards of the market.
D)   10, which is high compared to historical standards of the market.E) None of the above
F) A) and B)

Question 11

Suppose the government deficit increases, but the interest rate remains the same. Which of the following things might have happened simultaneously to keep interest rates the same?

Accepted Answer

A)   The government reduces the amount that people may put into savings accounts on which the interest is tax exempt.
B)   Because they are optimistic about the future of the economy, firms desire to borrow more to purchase physical capital.
C)   Consumers decide to decrease consumption and work more.
D)   All of the above could explain why the interest rate would be unchanged.E) None of the above
F) All of the above

Question 12

Which of the following statements is correct?

Accepted Answer

A)   NASDAQ is an important stock exchange in the United States.
B)   The Standard & Poor's 500 Index and the New York Stock Exchange are two examples of stock indexes.
C)   The most significant influence on the demand for a corporation's stock is the number of shares of the stock that the corporation has issued.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 13

In a closed economy private saving is $500 billion and the government budget deficit is $100 billion. What is investment?

Accepted Answer

The answer of In a closed economy private saving is...

Question 14

Which of the following is not a nonsensical headline?

Accepted Answer

A)   British perpetuities about to mature.
B)   Disney issues new bonds with term of 7 percent.
C)   Corporate bonds currently pay higher interest rates than government bonds.
D)   Standard and Poor's judges new junk bond to have very low credit risk.E) All of the above
F) B) and C)

Question 15

Table 26-2 
-Refer to Table 26-2. Which company had the highest dollar dividend per share?

Accepted Answer

A)   Boeing Co.
B)   Eli Lilly and Co.
C)   Kraft Foods Group
D)   Kellogg Co.E) A) and B)
F) A) and C)

Question 16

Who accepts all of the risk associated with a mutual fund's portfolio of stocks and/or bonds?

Accepted Answer

A)   the fund's managers
B)   the fund's shareholders
C)   the federal government
D)   the corporations that originally issued the stocks and/or bonds held by the fundE) A) and D)
F) A) and C)

Question 17

Suppose that Congress were to repeal an investment tax credit. What would happen in the market for loanable funds?

Accepted Answer

A)   The demand and supply of loanable funds would shift right.
B)   The demand and supply of loanable funds would shift left.
C)   The supply of loanable funds would shift right.
D)   The demand for loanable funds would shift left.E) B) and D)
F) A) and C)

Question 18

Identify each of the following acts as representing either saving or investment.
a. Fred uses some of his income to buy government bonds.
b. Julie takes some of her income and buys mutual funds.
c. Alex purchases a new truck for his delivery business using borrowed funds.
d. Elaine uses some of her income to buy stock in a major corporation.
e. Henrietta hires a builder to construct a new building for her bicycle shop.

Accepted Answer

a. Fred is saving.
b. Julie is...

Question 19

If an economy is closed and if it has no government, then

Accepted Answer

A)   national saving = private saving.
B)   total income = consumption + investment.
C)   saving = total income - consumption.
D)   All of the above are correct.E) B) and D)
F) A) and C)

Question 20

Compared to stocks, bonds offer the holder

Accepted Answer

A)   lower risk and lower potential return.
B)   lower risk and higher potential return.
C)   higher risk and lower potential return.
D)   higher risk and higher potential return.E) A) and D)
F) None of the above

Exam 26: Saving, Investment, and the Financial System

In a closed economy private saving is $500 billion and the government budget deficit is $100 billion. What is investment?

Correct Answer
verified

If an economy is closed and if it has no government, then

Correct Answer
verified

Longview Corporation has a stock price of $60, has issued 1,000,000 shares of stock, has retained earnings of $3 million dollars, and a dividend yield of 5 percent. The price-earnings ratio for Longview stock is

Correct Answer
verified

Generally, if people begin to expect a company to have higher future profits, the price of the company's stock will begin to decrease.

Correct Answer
verified

A higher interest rate makes more attractive. Therefore the quantity of loanable funds supplied increases.

Correct Answer
verified

The bond market, the stock market, banks, pension funds, and insurance companies are all financial

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Suppose the government deficit increases, but the interest rate remains the same. Which of the following things might have happened simultaneously to keep interest rates the same?

Correct Answer
verified

Compared to stocks, bonds offer the holder

Correct Answer
verified

Who accepts all of the risk associated with a mutual fund's portfolio of stocks and/or bonds?

Correct Answer
verified

Which of the following is not a nonsensical headline?

Correct Answer
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Table 26-2 -Refer to Table 26-2. Which company had the highest dollar dividend per share?

Correct Answer
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Correct Answer
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a. Fred is saving.
b. Julie is...
View Answer

When the government's budget deficit increases

Correct Answer
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Which of the following is not an important stock exchange in the United States?

Correct Answer
verified

Suppose that Congress were to repeal an investment tax credit. What would happen in the market for loanable funds?

Correct Answer
verified

Scenario 26-1. Assume the following information for an imaginary, closed economy. GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000. -Refer to Scenario 26-1. For this economy, private saving amounts to

Correct Answer
verified

A bond buyer is a

Correct Answer
verified

It is claimed that a secondary advantage of mutual funds is that

Correct Answer
verified

You observe a closed economy that has a government deficit and positive investment. Which of the following is correct?

Correct Answer
verified

Exam 26: Saving, Investment, and the Financial System

In a closed economy private saving is $500 billion and the government budget deficit is $100 billion. What is investment?

Correct AnswerverifiedShow Answer

If an economy is closed and if it has no government, then

Correct AnswerverifiedShow Answer

Longview Corporation has a stock price of $60, has issued 1,000,000 shares of stock, has retained earnings of $3 million dollars, and a dividend yield of 5 percent. The price-earnings ratio for Longview stock is

Correct AnswerverifiedShow Answer

Generally, if people begin to expect a company to have higher future profits, the price of the company's stock will begin to decrease.

Correct AnswerverifiedShow Answer

A higher interest rate makes more attractive. Therefore the quantity of loanable funds supplied increases.

Correct AnswerverifiedShow Answer

The bond market, the stock market, banks, pension funds, and insurance companies are all financial

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Suppose the government deficit increases, but the interest rate remains the same. Which of the following things might have happened simultaneously to keep interest rates the same?

Correct AnswerverifiedShow Answer

Compared to stocks, bonds offer the holder

Correct AnswerverifiedShow Answer

Who accepts all of the risk associated with a mutual fund's portfolio of stocks and/or bonds?

Correct AnswerverifiedShow Answer

Which of the following is not a nonsensical headline?

Correct AnswerverifiedShow Answer

Table 26-2 -Refer to Table 26-2. Which company had the highest dollar dividend per share?

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Fred is saving.b. Julie is...View AnswerShow Answer

When the government's budget deficit increases

Correct AnswerverifiedShow Answer

Which of the following is not an important stock exchange in the United States?

Correct AnswerverifiedShow Answer

Suppose that Congress were to repeal an investment tax credit. What would happen in the market for loanable funds?

Correct AnswerverifiedShow Answer

Scenario 26-1. Assume the following information for an imaginary, closed economy. GDP = $100,000; taxes = $22,000; government purchases = $25,000; national saving = $15,000. -Refer to Scenario 26-1. For this economy, private saving amounts to

Correct AnswerverifiedShow Answer

A bond buyer is a

Correct AnswerverifiedShow Answer

It is claimed that a secondary advantage of mutual funds is that

Correct AnswerverifiedShow Answer

You observe a closed economy that has a government deficit and positive investment. Which of the following is correct?

Correct AnswerverifiedShow Answer

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a. Fred is saving.
b. Julie is...
View Answer

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