DECA - Finance Exam // Practice 3

As financial intermediaries, what is all financial institutions' primary responsibility?

• A. Transferring money from those who have it to those who need it

• B. Investing clients' money in mid-cap growth companies

• C. Calculating the opportunity costs of clients' potential investments

• D. Conducting fundamental and technical analyses to evaluate securities

Which type of financial institution facilitates the buying and selling of securities between investors?

• A. Savings and loan associations

• B. Brokerage firms

• C. Insurance companies

• D. Credit unions

Mortgages and government bonds are examples of

• A. interest-free services.

• B. debt instruments.

• C. equity products.

• D. unrated investments.

Which of the following is a characteristic of a call market:

• A. Buyers and sellers determine prices.

• B. Buy orders are made at specific times.

• C. Trades occur continuously.

• D. Prices change from moment to moment.

Which of the following is an ethical principle that is applicable to finance:

• A. Incrementalism

• B. Competence

• C. Self-interest

• D. Framing

The Money for You Bank recently merged with the Keeping You Safe Insurance Company. The merger is an example of __________ in the finance industry.

• A. tactical planning

• B. consolidation

• C. convergence

• D. licensing

When a business reviews a customer's credit application, it is evaluating risks associated with the

• A. customer's beneficiaries.

• B. business's reporting strategies.

• C. business's accounting processes.

• D. customer's ability to pay.

According to most analysts, the three economic indicators that stock market investors and traders should pay the closest attention to are

• A. gross domestic product, overhead expenses, and unemployment.

• B. gross domestic product, unemployment, and inflation.

• C. inflation, unemployment, and bonds rates.

• D. interest rates, overhead expenses, and inflation.

When a country is experiencing a recession, which of the following typically occurs first:

• A. Stock prices increase

• B. A stock market crash

• C. A stock market recovery

• D. Stock prices decrease

Which of the following statements about hedge funds is true:

• A. Hedge funds involve private investment partnerships.

• B. Government agencies usually manage hedge funds.

• C. Investment options for hedge funds are limited in scope.

• D. Hedge funds are designed to generate conservative financial returns.