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WorksheetsEconomics: Chapter 10 Review
Total questions: 25
Worksheet time: 14mins
Name
Class
Date
1.
A bond is a type of loan.
a)
True
b)
False
2.
Consumers usually value future consumption more than present consumption.
a)
True
b)
False
3.
The demand & supply for loans come together in the market for loans to determine the market interest rate.
a)
True
b)
False
4.
Securities exchanges reduce the liquidity of securities.
a)
True
b)
False
5.
Interest is a reward for not consuming now.
a)
True
b)
False
6.
The prime rate, as determined by the Federal Reserve Board, is the highest interest rate in the economy.
a)
True
b)
False
7.
Stockholders are liable for company debts up to the amount of their investment in the firm.
a)
True
b)
False
8.
One way that corporations can fund new equipment is to issue and sell stock.
a)
True
b)
False
9.
Interest rates tend to be highest on
a)
business loans
b)
personal loans
c)
government loans
d)
home loans
10.
Loans are made possible by
a)
workers
b)
bankers
c)
the government
d)
savers
11.
A rightward shift of the supply curve of loans would
a)
increase the interest rate
b)
decrease the supply of loans
c)
increase the supply of loans and increase the interest rate
d)
reduce the interest rate
12.
After-tax profits that a corporation reinvests in itself are
a)
initial public offerings
b)
retained earnings
c)
securities
d)
dividends
13.
To continue operating during periods of low sales, businesses want quick access to cash, as needed. To get this access, they
a)
sell stock
b)
negotiate a line of credit
c)
sell bonds
d)
offer dividends
14.
Interest rate on credit cards are generally higher than interest rates on other types of loans because
a)
the credit card interest rate generally matches the prime rate
b)
there are many credit cards in the market
c)
there is no collateral on credit card debt
d)
credit card interest is not taxed
15.
Which of the following would increase the interest rate on a loan, other things constant?
a)
lower administration cost of the loan
b)
shorter loan duration
c)
collateral that loses value more quickly
d)
tax-free loan interest
16.
Dividends paid by corporations are
a)
taxes on corporate profits
b)
a portion of after-tax profit paid to shareholders
c)
interest paid to shareholders on their amount invested
d)
a portion of after-tax profit reinvested in the firm
17.
Compared to stocks, bonds are generally
a)
more risky
b)
less resaleable
c)
less risky
d)
more profitable
18.
The federal body that regulates the stock and bond markets is the
a)
New York Stock Exchange
b)
Securities and Exchange Commission
c)
NASDAQ
d)
Institutional Investors Forum
19.
Between 1964 & 1969, 4/5 of all mergers were
a)
vertical
b)
hostile
c)
conglomerate
d)
corporate
20.
The merger of the oil companies Exxon and Mobil is an example of a
a)
conglomerate merger
b)
horizontal merger
c)
diversifying merger
d)
vertical merger
21.
Which merger wave was characterized by horizontal mergers, which created dominant firms that reached markets over broad geographic areas?
a)
first merger wave (1887-1904)
b)
second merger wave (1916-1929)
c)
third merger wave (1948-1969)
d)
fourth merger wave (1982-present)
22.
The __ is the price of borrowing- the annual rate expressed as a percentage of the amount borrowed.
a)
interest rate
b)
line of credit
c)
collateral
d)
consumption
23.
The quantity of loans demanded equals the quantity of loans supplied at the __ interest rate.
a)
equilibrium
b)
prime
c)
mortgage
d)
credit card
24.
A(n) _ is an arrangement with a bank through which a business can quickly borrow needed cash.
a)
line of credit
b)
credit card
c)
mortgage
d)
personal loan
25.
Before a bank lends money, it usually requires that a borrower put up __, as asset owned by the borrower that can be sold to pay off the loan in the event the loan is not repaid.
a)
collateral
b)
consumption
c)
credit
d)
interest rate
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