Ferg CCHS Accounting EOPA Prep 4

Kent owns 150 shares of 7% perferred stock that has a face value of $100 per share. Last year he received no dividiends. If profits are large enought this year, he should receive this amount in dividends.

• $1,050

• $105

• $700

• 7% of profits

Answer explanation

150 shares x $100 x .07 = $1,050

Bonds are long-term financial instrucments that:

• are a type of debt equity

• represent a share of ownership in the corporation

• cannot be bought or sold by investors

• have a fixed value that does not change

Which financial institution offers the widest variety of services?

• commercial banks

• trust companies

• savings banks

• savings and loan associates

A financial institution that offers loans and deposit services to members only is the:

• credit union

• savings institution

• FDIC

• commercial bank

In processing checks, an exact digital copy of an original check is a:

• substitute check

• duplicate check

• facsimile check

• replica check

Answer explanation

Think of using your phone and app to take a pic and deposit a check. The digital copy (pic) is a SUBSTITUTE for the real check.

Which of the following would be accepted by a bank as security for the business loan?

• Merchandise inventory

• Accounts payable

• A rented building

• Leased equipment

A finance company is a type of nonbank that:

• obtains funds by issuing securities

• invests in pension funds

• collects premiums on insurance products

• accepts deposits

The U. S. money supply is controlled by the:

• Federal Reserve System

• Congress

• FDIC (Federal Deposit Insurance Corporation)

• Wall Street

Banks offer reliable customers a maximum amount of money that can be borrowed over a specific period, called a:

• line of credit

• collateral

• secured loan

• collateral line

Which of the following sayings helps explain the concept of DIVERSITY as it relates to investing?

• Don't put all your eggs in one basket.

• Don't count your chickens before they hatch.

• Don't put the cart before the horse.

• Don't put off until tomorrow what you can do today.