Please review the following multiple choices questions and determine if answers are correct. My answers are italicized . If answer is wrong please provide correct answer.
1. A mutual fund is BEST characterized by ________.
a) multiple investors making collective decisions
b) multiple investors in a diversified set of bonds or stocks
c) multiple investors in a single bond or stock
d) multiple investors with limited knowledge of the market
2. ________ is a practice that enables banks to “create” money that can be loaned out by requiring them to keep on hand only a small percentage of their total deposits.
a) Fractional reserve banking
b) Financial intermediation
c) Printing money
d) Leverage
3. Which of the following statements about financing with stocks is NOT true?
a) Equity financing allows the company to retain cash and profits.
b) Equity financing means less debt, which means the balance sheet looks stronger
c) Equity financing does not need to be repaid.
d) Equity financing increases owner control of the company
4. In the process of a retailer deciding where to locate a new store, Juan is analyzing U.S. Census Bureau data on household characteristics. What type of data is Juan using?
a) secondary data
b) observational data
c) internal data
d) primary data
5. Most individual stock investors buy stock ________.
a) directly from companies
b) in the secondary market
c) through their local banks
d) in the primary market
6. The Federal Deposit Insurance Corporation (FDIC) was created to ________.
a) apprehend counterfeiters
b) stop people from taking their money out of the bank
c) prevent bank runs and subsequent bank failures
d) prevent robberies
7. If you buy a $10,000, five-year corporate bond, what amount will the company pay you in a lump sum at the end of five years?
a) It’s impossible to know before the investment is made
b) the interest earned by the $10,000 only
c) $10,000 plus the principle amount invested
d) $10,000
8. Your boss asks you to email a spreadsheet that shows the company’s profitability last month. When sending the email, you MOST LIKELY will attach the file named ________.
a) Statement_of_Cash_Flows
b) Income_Statement
c) Balance_Sheet
d) Operating_Budget
9. Of the following investments, which has the lowest risk?
a) common stock
b) mutual funds
c) futures
d) government bonds
10. The Federal Reserve manages the supply of money through its ________.
a) monetary policy
b) domestic policy
c) foreign policy
d) fiscal policy
11. The Federal Reserve is most likely to sell U.S. Treasury bonds to counteract ________.
a) Cyclicality
b) Inflation
c) Unemployment
d) recession
12. The Federal Reserve System (the Fed) manages the country’s money supply by doing all of the following EXCEPT ________.
a) Increasing taxes
b) changing the reserve requirement
c) changing the discount rate
d) buying and selling government securities
13. The strategic planning and budgeting of short- and long-term funds for current and future needs is called ________ management.
a) Product
b) Strategic
c) Financial
d) needs