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8) Assume that you borrow $2,000 at 10% annual interest to finance a new business project. For
this loan to be profitable, the minimum amount this project must generate in annual earnings is
A) $400.
B) $201.
C) $200.
D) $199.
Answer: B
Ques Status: Previous Edition
AACSB: Analytical Thinking
9) You can borrow $5,000 to finance a new business venture. This new venture will generate
annual earnings of $251. The maximum interest rate that you would pay on the borrowed funds
and still increase your income is
A) 25%.
B) 12.5%.
C) 10%.
D) 5%.
Answer: D
Ques Status: Previous Edition
AACSB: Analytical Thinking
3
Copyright © 2019 Pearson Education, Inc.
10) Which of the following can be described as involving direct finance?
A) A corporation issues new shares of stock.
B) People buy shares in a mutual fund.
C) A pension fund manager buys a short-term corporate security in the secondary market.
D) An insurance company buys shares of common stock in the over-the-counter markets.
Answer: A
Ques Status: Previous Edition
AACSB: Analytical Thinking
14) Securities are ________ for the person who buys them, but are ________ for the individual
or firm that issues them.
A) assets; liabilities
B) liabilities; assets
C) negotiable; nonnegotiable
D) nonnegotiable; negotiable
Answer: A
Ques Status: Previous Edition
AACSB: Reflective Thinking
4
Copyright © 2019 Pearson Education, Inc.
15) With ________ finance, borrowers obtain funds from lenders by selling them securities in
the financial markets.
A) active
B) determined
C) indirect
D) direct
Answer: D
Ques Status: Previous Edition
AACSB: Application of Knowledge
16) With direct finance, funds are channeled through the financial market from the ________
directly to the ________.
A) savers; spenders
B) spenders; investors
C) borrowers; savers
D) investors; savers
Answer: A
Ques Status: Previous Edition
AACSB: Reflective Thinking
17) Well functioning financial markets benefit ________ by allowing them to time their
purchases more efficiently.
A) consumers
B) lenders
C) creditors
D) cashiers
Answer: A
Ques Status: New
AACSB: Reflective Thinking
18) Distinguish between direct finance and indirect finance. Which of these is the most important
source of funds for corporations in the United States?
Answer: With direct finance, funds flow directly from the lender/saver to the borrower. With
indirect finance, funds flow from the lender/saver to a financial intermediary who then channels
the funds to the borrower/investor. Financial intermediaries (indirect finance) are the major
source of funds for corporations in the U.S.
Ques Status: Previous Edition
AACSB: Reflective Thinking
5
Copyright © 2019 Pearson Education, Inc.
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Extract, &c. Attest, T. Todd, C. H. R.
In Senate, Nov. 22, 1799—Read and concurred in.
Attest, B. Thurston, C. S.
Washington’s Farewell Address to the People
of the United States, Sept. 17, 1796.
Accepted as a Platform for the People of the Nation, regardless of
party.
George Washington.
1801–1811.—No Platforms.
No Federal Platform.
Clintonian Platform.
Philadelphia, September.
Resolved, That it is recommended to the people of the United
States, opposed to secret societies, to meet in convention on Monday,
the 26th day of September, 1831, at the city of Baltimore, by
delegates equal in number to their representatives in both Houses of
Congress, to make nominations of suitable candidates for the offices
of President and Vice-President, to be supported at the next election,
and for the transaction of such other business as the cause of Anti-
Masonry may require.
1832.—National Democratic Platform,
adopted at a ratification Meeting,
1836.—“Locofoco” Platform,
1836.—Whig Resolutions,
Abolition Platforms.
1840.—Democratic Platform,
Baltimore, May 5.
Resolved, That the Federal government is one of limited powers,
derived solely from the constitution, and the grants of power shown
therein ought to be strictly construed by all the departments and
agents of the government, and that it is inexpedient and dangerous
to exercise doubtful constitutional powers.
2. Resolved, That the constitution does not confer upon the
general government the power to commence and carry on a general
system of internal improvements.
3. Resolved, That the constitution does not confer authority upon
the Federal government, directly or indirectly, to assume the debts of
the several states, contracted for local internal improvements or
other state purposes; nor would such assumption be just or
expedient.
4. Resolved, That justice and sound policy forbid the Federal
government to foster one branch of industry to the detriment of
another, or to cherish the interests of one portion to the injury of
another portion of our common country—that every citizen and every
section of the country has a right to demand and insist upon an
equality of rights and privileges, and to complete and ample
protection of persons and property from domestic violence or foreign
aggression.
5. Resolved, That it is the duty of every branch of the government
to enforce and practice the most rigid economy in conducting our
public affairs, and that no more revenue ought to be raised than is
required to defray the necessary expenses of the government.
6. Resolved, That Congress has no power to charter a United
States bank; that we believe such an institution one of deadly
hostility to the best interests of the country, dangerous to our
republican institutions and the liberties of the people, and calculated
to place the business of the country within the control of a
concentrated money power, and above the laws and the will of the
people.
7. Resolved, That Congress has no power under the constitution, to
interfere with or control the domestic institutions of the several
states; and that such states are the sole and proper judges of
everything pertaining to their own affairs, not prohibited by the
constitution; that all efforts, by Abolitionists or others, made to
induce Congress to interfere with questions of slavery, or to take
incipient steps in relation thereto, are calculated to lead to the most
alarming and dangerous consequences, and that all such efforts have
an inevitable tendency to diminish the happiness of the people, and
endanger the stability and permanence of the Union, and ought not
to be countenanced by any friend to our political institutions.