Subject: Business    / Finance
Question
Question 1 (1 point)

If the annual earnings for a company are $30, the expected future price of its stock is $100, and the required rate of return is 30%, then the current price of the stock should be
Question 1 options:
$97.00
$100.00
$130.00
$169.00

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Question 2 (1 point)

If the _____ for a stock fall(s), the current price of the stock rises.
Question 2 options:
earnings
expected price
required rate of return
none of the above

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Question 3 (1 point)

Which of the following does NOT involve a financial intermediary?
Question 3 options:
saving for retirement
buying a treasury bond from the government
buying stock online
They all involve an intermediary.

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Question 4 (1 point)

Banks are said to ration credit when they refuse to lend above a certain interest rate. The purpose of such a policy is to minimize _____ of lending.
Question 4 options:
adverse selection problems
moral hazard problems
transactions costs
all of the above

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Question 5 (1 point)

An analyst says that inside information would not have helped investors forecast the collapse of the stock market in 2008. This is true if markets satisfy
Question 5 options:
allocational efficiency.
weak efficiency.
semi-strong efficiency.
strong efficiency.

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Question 6 (1 point)

Spinning, in relation to IPOs, is a practice that hurts
Question 6 options:
underwriters.
investors.
the company going public.
all of the above.

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Question 7 (1 point)

Which are examples of external finance?
Question 7 options:
issuing commercial paper
stock sales
issuing bonds
all of the above

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Question 8 (1 point)

If the annual earnings for a company are $10, the expected future price of its stock is $110, and the current price is $100, then the required rate of return on the stock is
Question 8 options:
10%.
20%.
30%.
none of the above.

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Question 9 (1 point)

The free-rider problem affects decisions of participants in
Question 9 options:
the stock market.
IPOs.
both of the above.
neither of the above.

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Question 10 (1 point)

Which of the following could be examples of inefficiencies in financial markets data?
Question 10 options:
random walk
high volatility
bubbles
all of the above
Question 11 (1 point)

Firms that pay efficiency wages are attempting to minimize
Question 11 options:
transactions costs.
monitoring costs.
adverse selection problems.
agency problems.

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Question 12 (1 point)

Laws that require companies to fully inform investors about debts and loans on their balance sheets are intended to increase
Question 12 options:
transparency.
efficiency.
volatility.
all of the above.

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Question 13 (1 point)

Which of the following are examples of transactions costs faced by lenders?
Question 13 options:
accounting fees
legal fees
monitoring costs
all of the above

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Question 14 (1 point)

Deductibles on car insurance are solutions to the _____ problem for insurers.
Question 14 options:
adverse selection
moral hazard
free-rider
all of the above

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Question 15 (1 point)

If an asset market is not weakly efficient, then it cannot be
Question 15 options:
semi-strongly efficient.
strongly efficient.
both of the above.
neither of the above.

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Question 16 (1 point)

Which of the following is a technique lenders use to alleviate moral hazard problems?
Question 16 options:
specialized lending
diversified lending
requiring collateral
all of the above

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Question 17 (1 point)

Forecasting stock prices using trends of past data should not be an effective method for making trading decisions if asset markets are
Question 17 options:
weakly efficient.
semi-strongly efficient.
strongly efficient.
all of the above.

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Question 18 (1 point)

Which of the following is a technique lenders use to alleviate the adverse selection problem?
Question 18 options:
checking credit ratings
monitoring borrower activity
restrictive covenants
all of the above

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Question 19 (1 point)

Which of the following is an example of a source of internal finance?
Question 19 options:
corporate bonds
withheld earnings
commercial loans
none of the above

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Question 20 (1 point)

The earnings for a company are $10 and they are expected to grow at 3% annually. According to the Gordon Growth Model, if the required rate of return is 4%, then the price of the company’s stock should be
Question 20 options:

$10.10.

$257.50.

$1030.00.

$4,050.00

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