Question 1

If an individual supplies funds to a business firm by purchasing bonds issued by the firm,the transaction:

Accepted Answer

A)  creates two types of financial assets and two types of financial liabilities
B)  increases the liquidity and safety of principal for the individual
C)  initially occurs in the primary market
D)  limits the ability of the security to be sold in the secondary market
E)  all of the aboveF) A) and E)
G) A) and C)

Question 2

Government-held reserves which are invested primarily in the in the obligations of federal,local,and state governments include:

Accepted Answer

A)  life insurance
B)  pension funds
C)  retirement funds
D)  money market fundsE) None of the above
F) A) and B)

Question 3

Which of the following statements is most correct?

Accepted Answer

A)  Corporate after-tax profits rose from $473.8 billion in 2006 to $616.2 billion in 2008.This rise coincided with the 2007-09 financial crisis.
B)  Corporate after-tax profits declined from $616.2 billion in 2006 to $473.8 billion in 2008.This decline coincided with the 2007-09 financial crisis.
C)  Corporate after-tax profits declined from $616.2 million in 2006 to $473.8 million in 2008.This decline coincided with the 2007-09 financial crisis.
D)  Corporate after-tax profits rose from $473.8 million in 2006 to $616.2 million in 2008.This rise coincided with the 2007-09 financial crisis.
E)  none of the above.F) B) and D)
G) A) and B)

Question 4

Which one of the following instruments is the least important in terms of funds raised in the credit markets?

Accepted Answer

A)  U.S.government securities
B)  tax-exempt obligations
C)  corporate bonds
D)  mortgagesE) None of the above
F) A) and B)

Question 5

Which of the following represents the least important instrument used to raise funds in the credit markets during recent years?

Accepted Answer

A)  U.S.government securities
B)  corporate bonds
C)  mortgages
D)  consumer debtE) C) and D)
F) B) and D)

Question 6

Which of the following is an example of indirect financing?

Accepted Answer

A)  corporate bonds
B)  corporate stocks
C)  business bank loans
D)  U.S.government bondsE) B) and D)
F) A) and C)

Question 7

Capital formation refers to the:

Accepted Answer

A)  total accumulation of monetary savings in the nation
B)  distribution of savings among thrift institutions
C)  total of capital stock accounts with business corporations
D)  creation of physical productive facilitiesE) None of the above
F) A) and C)

Question 8

Which one of the following borrowing sectors is the least important in terms of funds raised in the credit markets?

Accepted Answer

A)  U.S.markets
B)  state and local governments
C)  households
D)  farms
E)  corporateF) C) and E)
G) A) and E)

Question 9

What type of investment occurs when claims to wealth in the form of real assets are created or acquired?

Accepted Answer

A)  financial investment
B)  real investment
C)  contractual investment
D)  voluntary investmentE) A) and B)
F) None of the above

Question 10

Corporate saving for short-term working capital purposes is the most important reason for businesses accumulating financial assets.

Accepted Answer

A) True 
 B)False  True

Question 11

The accumulation of reserves in insurance and pension funds is referred to as what type of savings?

Accepted Answer

A)  voluntary savings
B)  contractual savings
C)  real savings
D)  all of the aboveE) A) and B)
F) A) and D)

Question 12

The life stages of an individual saver include all of the following EXCEPT:

Accepted Answer

A)  the formative/education developing stage
B)  the career earning/family creating stage
C)  the wealth building stage
D)  the tax minimizing stageE) A) and B)
F) None of the above

Question 13

Motivations for individuals to deposit money into a savings account include:

Accepted Answer

A)  safety of principal
B)  return on investment
C)  liquidity
D)  all the above
E)  none of the aboveF) None of the above
G) D) and E) D

Question 14

Gross investment may or may not equal gross savings.

Accepted Answer

A) True 
 B)False

Question 15

Years of budget surpluses during the Reagan and first Bush presidencies changed into deficits under the Clinton presidency.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is false?

Accepted Answer

A)  The process of channeling savings into investment through the use of a financial institution or intermediary results in no real economic value
B)  During the early years of the history of the United States,foreigners purchased significant volumes of federal government securities.
C)  The single most important use of funds raised in the credit markets is by the household sector.
D)  All of the above statements are false.E) All of the above
F) A) and B)

Question 17

When current savings of an economic unit exceed its direct investment in real assets,this is referred to as:

Accepted Answer

A)  savings surplus
B)  savings deficit
C)  savings neutral
D)  savings inflation
E)  none of the aboveF) B) and C)
G) D) and E) A

Question 18

Which of the following factors usually influence a person's choice of savings medium?

Accepted Answer

A)  liquidity
B)  degree of safety
C)  return
D)  all of the aboveE) None of the above
F) A) and C)

Question 19

The major factors which influence the level of savings are the level of:

Accepted Answer

A)  income and the life stage of the individual saver
B)  income,economic expectations,cyclical influence,and the life stage of the individual saver
C)  income,interest rates,and the life stage cycle of the individual saver
D)  income and interest ratesE) A) and D)
F) A) and C)

Question 20

The corporate retention rate is simply another term for the corporate savings rate.

Accepted Answer

A) True 
 B)False

Exam 7: Savings and Investment Process

If an individual supplies funds to a business firm by purchasing bonds issued by the firm,the transaction:

Correct AnswerverifiedShow Answer

Government-held reserves which are invested primarily in the in the obligations of federal,local,and state governments include:

Correct AnswerverifiedShow Answer

Which of the following statements is most correct?

Correct AnswerverifiedShow Answer

Which one of the following instruments is the least important in terms of funds raised in the credit markets?

Correct AnswerverifiedShow Answer

Which of the following represents the least important instrument used to raise funds in the credit markets during recent years?

Correct AnswerverifiedShow Answer

Which of the following is an example of indirect financing?

Correct AnswerverifiedShow Answer

Capital formation refers to the:

Correct AnswerverifiedShow Answer

Which one of the following borrowing sectors is the least important in terms of funds raised in the credit markets?

Correct AnswerverifiedShow Answer

What type of investment occurs when claims to wealth in the form of real assets are created or acquired?

Correct AnswerverifiedShow Answer

Corporate saving for short-term working capital purposes is the most important reason for businesses accumulating financial assets.

Correct AnswerverifiedTrue

The accumulation of reserves in insurance and pension funds is referred to as what type of savings?

Correct AnswerverifiedShow Answer

The life stages of an individual saver include all of the following EXCEPT:

Correct AnswerverifiedShow Answer

Motivations for individuals to deposit money into a savings account include:

Correct AnswerverifiedD

Gross investment may or may not equal gross savings.

Correct AnswerverifiedShow Answer

Years of budget surpluses during the Reagan and first Bush presidencies changed into deficits under the Clinton presidency.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

When current savings of an economic unit exceed its direct investment in real assets,this is referred to as:

Correct AnswerverifiedA

Which of the following factors usually influence a person's choice of savings medium?

Correct AnswerverifiedShow Answer

The major factors which influence the level of savings are the level of:

Correct AnswerverifiedShow Answer

The corporate retention rate is simply another term for the corporate savings rate.

Correct AnswerverifiedShow Answer

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True

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D

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A

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