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Engineering Economics - Elements (Exercise 3)

Total questions: 25

Worksheet time: 13mins

Name
Class
Date
1.

What refers to a document that shows proof of legal ownership of a financial security?

a)

Bond

b)

Bank note

c)

Coupon

d)

Check

2.

What type of bond is issued jointly by two or more corporations?

a)

Mortgage bond

b)

Joint bond

c)

Tie-up bond

d)

Trust bond

3.

What type of bond whose guaranty is in lien on railroad equipment, such as freight and passenger cars. locomotives, etc.?

a)

Railroad bond

b)

Equipment obligation bond

c)

Equipment bond

d)

Equipment trust bond

4.

A type of bond to which are attached coupons indicating the interest due and the date when such interest is to be paid is called

a)

Registered bond

b)

Coupon bond

c)

Mortgage bond

d)

Collateral trust bond

5.

What bond whose security is a mortgage on certain specified assets of the corporation?

a)

Registered bond

b)

Collateral trust bond

c)

Mortgage bond

d)

Debenture bond

6.

A bond without any security behind them except a promise to pay by the issuing corporation is called

a)

Joint bond

b)

Debenture bond

c)

Trust bond

d)

Common bond

7.

A type of bond where the corporation pledges securities which it owns such as the stock or bonds of one of its subsidiaries.

a)

Mortgage bond

b)

Joint bond

c)

Security bond

d)

Collateral trust bond

8.

What type of bond where the corporation's owner name are recorded and the interest is paid periodically to the owners with their asking for it?

a)

Preferred bond

b)

Registered bond

c)

Incorporators bond

d)

Callable bond

9.

What type of bond which can be redeemed before maturity date?

a)

Preferred bond

b)

Registered bond

c)

Incorporators bond

d)

Callable bond

10.

What is the feature of some bonds whereby the issuer can redeem it before it matures?

a)

Return clause

b)

Callability

c)

Recall clause

d)

Callclass

11.

The price at which the callable bond will be redeemed from the bondholder is called ______ .

a)

Par value

b)

Call value

c)

Face value

d)

Redemption value

12.

What is defined as the reduction or fall of the value of an asset due to constant use and passage of time?

a)

Depletion

b)

Inflation

c)

Depreciation

d)

Deflation

13.

In what method of computing depreciation where it assumes that the loss in value is directly proportional to the age of the equipment or asset?

a)

Straight line method

b)

Sinking fund method

c)

Sum-of-year digit method

d)

Declining balance method

14.

In what method of computing depreciation where it assumes that a sinking fund is established in which funds will accumulate for replacement purposes?

a)

Straight line method

b)

Sinking fund method

c)

Sum-of-year digit method

d)

Declining balance method

15.

In what method of computing depreciation where it assumes that the annual cost of depreciation is a fixed percentage of the book value at the beginning of the year?

a)

Straight line method

b)

Sinking fund method

c)

Sum-of-year digit method

d)

Declining balance method

16.

In SYD method of computing depreciation, which of the following is the formula in finding the sum of years’ digits?

a)

n (n-1)

b)

[n (n +2)]/2

c)

[n (n - 1)]/2

d)

[n(n + 1)]/2

17.

The declining balance method is also known as ______.

a)

Double percentage method

b)

Constant percentage method

c)

Modified sinking fund method

d)

Modified SYD method

18.

What type of depreciation is due to the reduction in the demand for the function that the equipment or asset was designed to render?

a)

Functional depreciation

b)

Design depreciation

c)

Physical depreciation

d)

Demand depreciation

19.

What type of depreciation is due to the reduction of the physical ability of an equipment or asset to produce results?

a)

Functional depreciation

b)

Design depreciation

c)

Physical depreciation

d)

Demand depreciation

20.

The functional depreciation is sometimes called ______ .

a)

Demand depreciation

b)

Adolescence

c)

Life depreciation

d)

Failure depreciation

21.

What is defined as the reduction of the value of certain natural resources such as mines, oil, timber, quarries. etc. due to the gradual extraction of its contents?

a)

Depletion

b)

Inflation

c)

Depreciation

d)

Deflation

22.

What are the common methods of computing depletion charge?

a)

Rational method and irrational method

b)

Conservative method and conventional method

c)

Unit method and percentage method

d)

Discrete method and depletion allowance method

23.

Under the depletion allowance method in computing depreciation. the depletion charge is equal to either ______ whichever is smaller.

a)

Fixed percentage of gross income or the net taxable income

b)

Fixed percentage of gross income or 50% of the net taxable income

c)

50% of the fixed percentage of gross income or 50% of the net taxable income

d)

50% of the fixed percentage of gross income or the net taxable income

24.

The depletion allowance method of computing depletion is commonly known as ______ .

a)

Unit method

b)

Percentage method

c)

Factor method

d)

Sinking fund method

25.

What is another term for “unit method” for computing depletion?

a)

Initial cost method

b)

Percentage method

c)

Factor method

d)

Sinking fund method