Finance FIN 212 (Ch.7-12 & 17-18)

Which of the following best defines savings in financial terms?

• Spending less on consumption

• Buying stocks

• Borrowing money for investment

• Delaying payments

• Printing money

In the financial system, investment refers to:

• Placing money in a savings account

• Consuming durable goods

• Acquiring assets that generate income

• Purchasing foreign currency

• Increasing tax revenue

Which factor most directly influences personal saving behavior?

• The GDP growth rate

• Household income

• Stock market index

• Exchange rate

• Government spending

Businesses typically fund long-term investments through:

• Daily revenues

• Short-term bank loans

• Retained earnings and capital markets

• Central bank financing

• Inventory sales

A nation's savings must equal its:

• Government expenditure

• Investment plus net exports

• Current account deficit

• Domestic consumption

• Fiscal surplus

Which of the following is NOT a determinant of interest rates?

• Inflation expectations

• Liquidity preference

• Currency exchange rates

• Risk premiums

• Time preference for consumption

The real interest rate is defined as:

• Nominal rate plus inflation

• Inflation rate minus nominal rate

• Nominal rate minus inflation rate

• Treasury yield plus tax rate

• Market return adjusted for taxes

What does the term structure of interest rates describe?

• Interest rates across different sectors

• Interest rates over different time horizons

• Difference between nominal and real rates

• Structure of financial regulation

• Fixed vs. floating interest arrangements

An upward-sloping yield curve suggests:

• Economic slowdown

• Lower inflation expectations

• Investors expect higher future rates

• Tight monetary policy

• Low default risk

Which theory assumes investors have specific maturity preferences?

• Expectations theory

• Liquidity premium theory

• Market segmentation theory

• Fisher effect

• Time-value theory