management of financial services chapter-1: -...
TRANSCRIPT
Management of Financial Services Chapter-1: Financial Services Self Assessment Questions 1. Financial markets and institutions
a. involve the movement of huge quantities of money. b. affect the profits of businesses. c. affect the types of goods and services produced in an economy. d. do all of the above.
2. Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called
a. commodity markets. b. fund-available markets. c. derivative exchange markets. d. financial markets.
3. The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100 per year) is commonly referred to as the
a. inflation rate. b. exchange rate. c. interest rate. d. aggregate price level.
4. The bond markets are important because
a. they are easily the most widely followed financial markets in the United States b. they are the markets where foreign exchange rates are determined c. they are the markets where interest rates are determined d. of all of the above
5. Interest rates are important to financial institutions since an interest rate increase
a. decreases the cost of acquiring funds b. increases the cost of acquiring funds c. raises the income from assets. d. (B) and (C) of the above.
6. Typically, increasing interest rates
a. discourage corporate investments b. discourage individuals from saving c. encourage corporate expansion d. encourage corporate borrowing
7. Compared to interest rates on long-term U.S. government bonds, interest rates on ………….fluctuate more and are lower on average
a. medium-quality corporate bonds b. low-quality corporate bonds
c. high-quality corporate bonds d. three-month Treasury bills
8. Compared to interest rates on long-term U.S. government bonds, interest rates on three-month Treasury bills fluctuate ................. and are ................. on average.
a. more; lower b. less; lower c. more; higher d. less; higher
9. The stock market is important because
a. it is where interest rates are determined b. it is the most widely followed financial market in the United States c. it is where foreign exchange rates are determined d. all of the above
10. Stock prices since the 1950s have been
a. relatively stable, trending upward at a steady pace b. relatively stable, trending downward at a moderate rate c. extremely volatile. d. unstable, trending downward at a moderate rate
11. A rising stock market index due to higher share prices
a. increases people’s wealth and as a result may increase their willingness to spend b. increases the amount of funds that business firms can raise by selling newly issued stock c. decreases the amount of funds that business firms can raise by selling newly issued
stock d. both (A) and (B) of the above.
12. A declining stock market index due to lower share prices
a. reduces people’s wealth and as a result may reduce their willingness to spend. b. increases people’s wealth and as a result may increase their willingness to spend. c. decreases the amount of funds that business firms can raise by selling newly issued
stock. d. both (A) and (C) of the above.
13. Changes in stock prices
a. affect people’s wealth and their willingness to spend. b. affect firm’s decisions to sell stock to finance investment spending. c. are characterized by considerable fluctuations. d. all of the above.
14. (I) Debt markets are often referred to generically as the bond market. (II) A bond is a security that is a claim on the earnings and assets of a corporation.
a. (I) is true, (II) false. b. (I) is false, (II) true. c. Both are true.
d. Both are false. 15. (I) A bond is a debt security that promises to make payments periodically for a specified period of time. (II) A stock is a security that is a claim on the earnings and assets of a corporation.
a. (I) is true, (II) false. b. (I) is false, (II) true. c. Both are true. d. Both are false.
16. The price of one country’s currency in terms of another’s is called
a. the exchange rate. b. the interest rate. c. the Dow Jones industrial average. d. none of the above.
17. A stronger dollar benefits................. and hurts .................
a. American businesses; American consumers b. American businesses; foreign businesses c. American consumers; American businesses d. foreign businesses; American consumers
18. A weaker dollar benefits ................. and hurts .................
a. American businesses; American consumers b. American businesses; foreign consumers c. American consumers; American businesses d. foreign businesses; American consumers
19. From 1980 to early 1985 the dollar................. in value, thereby benefiting American.................
a. appreciated; consumers b. appreciated; businesses c. depreciated; consumers d. depreciated; businesses
20. Money is defined as
a. anything that is generally accepted in payment for goods and services or in the repayment of debt
b. bills of exchange c. a riskless repository of spending power d. all of the above
Answers for Self Assessment Questions 1. (d) 2.(d) 3.(c) 4.(c) 5.(d) 6. (a) 7.(d) 8. (a) 9.(b) 10.(c) 11.(d) 12.(d) 13.(d) 14.(a) 15. (c) 16.(a) 17.(c) 18.(a) 19.(a) 20. (a)
Chapter-2: Marketing Environment Self Assessment Questions 1. What is a company's marketing environment?
a. Actors and forces outside of a company and the marketing functions that affect marketing management
b. The marketing department within a company c. The climate and nature d. The land area around a company's headquarters
2. What is a company's micro-environment?
a. The detailed processes needed to achieve Total Quality Control b. A company's operating policies c. The machines and tools a company uses to make the products d. A company's departments, suppliers and other publics which make up its value delivery
chain 3. What are marketing intermediaries?
a. Wholesalers b. Firms that help the company promote, sell and distribute its goods to final buyers c. Competitors that come between a company and its customers d. Banks and credit unions
4. What are marketing services agencies?
a. Firms that supply financial resources to a company b. Suppliers c. Firms that help the company target and promote its products to the right markets d. Companies that supply pure services to the final consumer
5. What is the proper name for any group that has actual or potential interest in or impact on an organization’s ability to achieve its objectives?
a. Customers b. Competitors c. Suppliers d. Publics
6. What is the name for the study of human populations in terms of size, density, location, age, gender, race and other such details?
a. The census b. Sociophysics c. Demographics d. Statistics
7. The cultural environment is critical to global marketing. What does a cultural environment consist of?
a. Forces that affect a society's basic values and behavior b. People of similar skin color c. Religion d. Education
8. What is the primary purpose of analyzing the marketing environment?
a. To understand how external forces have the ability to influence marketing strategies b. To assist in the creation of an effective promotional campaign c. To understand competitors' strategies d. To adapt the marketing mix to suit changes in the environment
9. The development of the sun protective swimwear industry in Australia resulted from increased skin cancer levels due to the depletion of the ozone layer. The represents a change in which of the following macro environmental factors?
a. Cultural b. Demographic c. Technological d. Natural
10. Which of the macro environmental factors is said to have the most dramatic impact on our destiny?
a. Technological b. Political c. Demographic d. Natural
11. Which of the following is not part of an organization’s publics?
a. Financial b. Social c. General d. Media
12. Changing consumer spending patterns is an element of which environment?
a. Natural b. Economic c. Political d. Demographic
13. Which of the following is true about marketing planning at the bottom of a business cycle?
a. This is the worst time to invest because the market is weak. b. If it is fairly certain that the bottom of the cycle has been reached, this is the time to
begin increasing investment. c. Planning should continue on the basis of no change in the level of national economic
activity. d. There is greater certainty at this stage in the cycle than at other stages.
14. A value chain in marketing is:
a. An operator of discount stores with many branches. b. A factory outlet store. c. A process by which goods gain value as they pass through different levels of
intermediaries.
d. A process by which companies target value conscious customers. 15. Which of the following is the best definition of an organization's "environmental set"?
a. Ecological system b. Micro-environment c. Closed system d. Open system
16. Most western countries experienced a decade of prosperity, and then from 2008 a period of recession. A term that describes the transition between these stages is:
a. Inflation b. Deflation c. The business cycle d. The multiplier effect
17. Which of the following is least likely to be associated with a firm's macro-environment?
a. Study of the changing birth rate b. Analysis of household savings ratios c. A new staff incentive scheme d. Cultural convergence
18. Which of the following represents the most directly important reason why firms monitor their demographic environment?
a. To explain historical trends b. To predict political change c. To predict the size of market segments d. To predict business cycles
19. In a flexible firm, "core workers" are:
a. Numerically flexible b. Functionally flexible c. Numerically flexible and functionally flexible d. None of the above
20. Which of the following is NOT part of an organization's micro-environment?
a. Customers b. Suppliers c. Competitors d. Government legislation
Answers for Self Assessment Questions 1. (a) 2.(d) 3.(b) 4.(c) 5.(d) 6. (c) 7.(a) 8. (d) 9.(d) 10.(a) 11.(b) 12.(b) 13.(b) 14.(c) 15. (b) 16.(c) 17.(c) 18.(c) 19.(b) 20. (d)
Chapter-3: Marketing Mix Strategy Development and Project Planning Self Assessment Questions 1. We define a....................... as anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.
a. service variability b. private brand c. service d. product
2. Product is a key element in........................ At one extreme, it may consist of pure tangible goods or at the other extreme, pure services.
a. brand equity b. the market experience c. the market offering d. co-branding
3. Product planners need to think about products and services on three levels. The most basic level is the ......................., which addresses the question, "What is the buyer really buying?"
a. co-branding b. exchange c. core benefit d. actual product
4. Product planners must design the actual product and find ways to....................... it in order to create the bundle of benefits that will create the most customer value.
a. brand b. package c. promote d. augment
5........................ are products and services bought by final consumers for personal consumption. These include convenience products, shopping products, specialty products, and unsought products.
a. Line extensions b. Services c. Industrial products d. Consumer products
6. ....................... are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort.
a. Industrial products b. Specialty products c. Unsought products d. Shopping products
7........................ are those products purchased for further processing or for use in conducting a business.
a. Unsought products b. Industrial products c. Specialty products d. Shopping products
8........................ are industrial products that aid in the buyer's production or operations, including installations and accessory equipment.
a. Parts b. Specialty items c. Capital items d. Supplies
9........................ is defined as the use of commercial marketing concepts and tools in programs designed to influence individuals' behavior to improve their well-being and that of society.
a. Unsought product marketing b. Internal marketing c. Social marketing d. Interactive marketing
10. Developing a product or service involves defining the benefits that it will offer. These benefits are communicated and delivered by....................... such as quality, features, and style and design.
a. marketing tools b. product mixes c. consumer products d. product attributes
11........................ is an approach in which all the company's people are involved in constantly improving the products, services, and business processes.
a. Brand equity b. Product quality c. Total quality management d. Specialty product marketing
12. Which of the following types of quality refers to freedom from defects and consistency in delivering a targeted level of performance?
a. total quality management b. conformance c. adherence d. private brand
13........................ contribute to a product's usefulness as well as to its looks.
a. Brand b. Functionality c. Package
d. Design 14........................ involves designing and producing the container or wrapper for a product.
a. Product line b. Labeling c. Service d. Packaging
15. At the very least, the....................... identifies the product or brand. It might also describe several things about the product.
a. specialty product b. social marketing c. line extension d. label
16. Many companies now use a combination of phone, e-mail, fax, Internet, and other technologies to provide........................
a. support services b. labeling information c. packaging advantages d. brand equity
17. Maheu Piano Company can expand its product line in one of two common ways. Which of the following is one of the ways that might prove productive?
a. product mix b. internal marketing c. line filling d. line mixing
18. When a company lengthens its product line beyond its current range, it is........................
a. product line stretching b. product mixing c. increasing product depth d. product line filling
19. Product mix....................... refers to the number of different product lines the company carries. Procter & Gamble markets around 250 brands organized into many product lines.
a. depth b. perimeter c. length d. width
20. A company can increase its business in four ways. Which is not one of these ways?
a. It can increase the consistency of its product mix b. It can add new product lines, thus widening its product mix c. It can discontinue some of its lines d. It can lengthen its existing product lines
Answers for Self Assessment Questions 1. (d) 2.(c) 3.(c) 4.(d) 5.(d) 6. (b) 7.(b) 8. (c) 9.(c) 10.(d) 11.(c) 12.(b) 13.(d) 14.(d) 15. (d) 16.(a) 17.(c) 18.(a) 19.(d) 20. (c)
Chapter-4: Pricing, Promotion and Distribution Decisions Self Assessment Questions 1. ................... is the amount of money charged for a product or service.
a. Salary b. Price c. Demand curve d. Experience curve
2. Consumer perceptions of the product's value set the ................... for prices.
a. variable cost b. image c. demand curve d. ceiling
3. Which of the following is a customer-oriented approach to pricing?
a. value-based pricing b. target profit pricing c. sealed-bid pricing d. break-even pricing
4. In ..................., price is considered along with the other marketing mix variables before the marketing program is set.
a. price elasticity b. value-based pricing c. variable costs d. target pricing
5. Underpriced products sell very well, but they produce less revenue than they would have if price were raised to the ................... level.
a. variable b. perceived value c. price-floor d. demand curve
6. ................... is a company's power to maintain or even raise prices without losing market share.
a. Fixed cost b. Pricing power c. Target cost d. Unit cost
7. ................... pricing is product driven. The company designs what it considers to be a good product, totals the expenses of making the product, and sets a price that covers costs plus a target profit.
a. Cost-based
b. Fixed cost c. Variable d. Value-based
8. Costs that do not vary with production or sales level are referred to as....................
a. target costs b. variable costs c. unit costs d. fixed costs
9. ................... are the sum of the ................... and ................... for any given level of production.
a. Fixed costs; variable; total costs b. Fixed costs; total; variable costs c. Break-even costs; fixed; total costs d. Total costs; fixed; variable costs
10. Which of the following is a cost-based approach to pricing?
a. value-based pricing b. break-even pricing c. going-rate pricing d. good-value pricing
11. Which of the following is an external factor that affects pricing decisions?
a. the salaries of production management b. competition c. the company's overall marketing strategy d. the salaries of finance management
12. Common ................... objectives include survival, current profit maximization, market share leadership, and leadership building.
a. cost-plus pricing b. management c. image d. pricing
13. Under ..................., the market consists of many buyers and sellers trading in a uniform commodity such as wheat, copper, or financial securities.
a. anti-trust agreements b. a pure monopoly c. oligopolistic competition d. pure competition
14. Under ..................., the market consists of a few sellers who are highly sensitive to each other's pricing and marketing strategies.
a. capitalism b. pure competition c. monopolistic competition
d. oligopolistic competition 15. Consumers usually perceive higher-priced products as....................
a. having high profit margins b. being in the introductory stage of the product life cycle c. having cost-based prices d. having high quality
16. If demand hardly changes with a small change in price, we say the demand is....................
a. market penetrating b. variable c. inelastic d. value-based
17. When setting prices, the company must consider factors in its external environment. ..................., including factors such as boom or recession, inflation, and interest rates affecting pricing decisions, can have a strong impact on the firm's pricing strategies.
a. Value-based pricing b. Economic conditions c. Competitors d. Target costing
18. When companies set prices, the government and social concerns are two ................... affecting pricing decisions.
a. internal factors b. economic conditions c. temporary influences d. external factors
19. Companies usually develop ................... rather than single products.
a. product groupings b. product families c. product images d. product lines
20. All of the following conditions support market-penetration pricing except which one?
a. Production and distribution costs must fall as sales volume increases. b. The product's quality and image must support the price. c. The low price must help keep out the competition. d. A low price will produce more market growth.
Answers for Self Assessment Questions
1. (b) 2.(d) 3.(a) 4.(b) 5.(b) 6. (b) 7.(a)
8. (d) 9.(d) 10.(b) 11.(b) 12.(d) 13.(d) 14.(d)
15. (d) 16.(c) 17.(b) 18.(d) 19.(d) 20. (b)
Chapter-5: Service Marketing Applications Self Assessment Questions 1. The first step in the market segmentation process is to.
a. Position offer in the market. b. Target the market. c. Define the market. d. Segment the market.
2. The Coca Cola Company markets a wide range of different beverage products including soft drinks, bottled water, juices and sports drinks. Each product appeals to a different segment. This is an example of which type of market offering?
a. Undifferentiated marketing b. Differentiated marketing c. Targeted marketing d. None of the above
3. Which of the following 'market definitions' could be used by Mercedes Benz in describing its market?
a. The motor car market. b. The luxury car market. c. The transportation market. d. All of the above.
4. Which one of the following is not a geo demographic basis for market segmentation?
a. Personality. b. Occupation. c. Marital status. d. Postcode.
5. Psychographic segmentation categorizes markets according to...
a. Preference to behave in certain ways. b. Characteristics of the organization. c. People's product usage patterns. d. None of the above.
6. Which of the following could be used as a basis for segmenting business-to-business markets?
a. Frequency of purchase b. Number of employees. c. Industry type. d. All of the above.
7. Which of the following should not a lifestyle segmentation factor?
a. The growth rate of the segment. b. An interest in sports. c. The buyers interest in cars.
d. Stamp collecting. 8. Market positioning involves
a. Designing, communicating and delivering value b. Creating an appropriate image of your offering in the minds of customers c. Understanding the unique value propositions of your offering d. All of the above
9. Which of the following is not a commonly-used age segment?
a. Retirees b. Generation X c. Baby boomers d. Achievers
10. Which of the following is not a demographic characteristic?
a. Marital status-single b. Age-21 c. Personality - anxious d. Gender-male
11. Marketers segment markets to achieve which of the following objectives?
a. To create an offer that best fits the desires of the groups that exist in the market b. To identify the most appropriate media for advertising c. To better understand their target segments d. All of the above
12. Which of the following enjoys limited liability?
a. A general partnership b. A corporation c. A sole proprietorship d. None of the above
13. Michael Cohn is a "member" (a type of owner) of a marine supply business. Michael's business is
a. a sole proprietorship b. a corporation c. a limited liability company d. a general partnership
14. The Counting House, Inc., purchased 5-year property class equipment for $60,000. It uses the MACRS method of depreciation. What is tax depreciation for the second year of the asset's life?
a. $12,000 b. $19,200 c. $20,000 d. $24,000
15. A corporation in which you are a shareholder has just gone bankrupt. Its liabilities are far in excess of its assets. You will be called on to pay:
a. a proportionate share of bondholder claims based on the number of common shares that you own
b. a proportional share of all creditor claims based on the number of common shares that you own
c. an amount that could, at most, equal what you originally paid for the shares of common stock in the corporation
d. nothing 16. A 30-year bond issued by Gary's Plaid Pants Warehouse, Inc., in 1997 would now trade in the
a. primary money market b. secondary money market c. primary capital market d. secondary capital market
17. A major advantage of the corporate form of organization is:
a. reduction of double taxation b. limited owner liability c. legal restrictions d. ease of organization
18. Money market mutual funds
a. enable individuals and small businesses to invest indirectly in money-market instruments.
b. are available only to high net-worth individuals c. are involved in acquiring and placing mortgages d. are also known as finance companies
19. The purpose of financial markets is to:
a. increase the price of common stocks b. lower the yield on bonds c. allocate savings efficiently d. control inflation
20. Which of the following is NOT an example of a financial intermediary?
a. International Business Machines, Inc. (IBM). b. Vanguard Mutual Fund c. El Dorado Savings and Loan Association d. Bank of America
Answers for Self Assessment Questions
1. (c) 2.(b) 3.(d) 4.(a) 5.(a) 6. (c) 7.(a)
8. (d) 9.(d) 10.(c) 11.(d) 12.(b) 13.(c) 14.(d)
15. (d) 16.(d) 17.(b) 18.(a) 19.(c) 20. (a)
Chapter-6: Insurance Self Assessment Questions 1. Proactive risk management is sometimes described as fire fighting.
a. True b. False
2. Software risk always involves two characteristics
a. fire fighting and crisis management b. known and unknown risks c. uncertainty and loss d. staffing and budget
3. Three major categories of risks are
a. business risks, personnel risks, budget risks b. project risks, technical risks, business risks c. planning risks, technical risks, personnel risks d. management risks, technical risks, design risks
4. Generic risks require far more attention than product-specific risks.
a. True b. False
5. A risk item checklist would contain known and predictable risks from which of these categories?
a. development environment b. staff size c. process definition d. all of the above
6. Questions that should be asked to assess the overall project risk include:
a. Have top managers formally committed to support the project? b. Are end-users committed to the project and proposed system being built? c. Are requirements fully understood by development team and customers? d. all of the above
7. Software risk impact assessment should focus on consequences affecting
a. planning, resources, cost, schedule b. marketability, cost, personnel c. business, technology, process d. performance, support, cost, schedule
8. Risk projection attempts to rate each risk in two ways
a. likelihood and size b. likelihood and probability c. likelihood and impact d. likelihood and mitigation
9. Risk tables are sorted by
a. probability and cost b. probability and impact c. probability and size d. probability and exposure
10. Individual team members can make their own estimate for a risk probability and then develop a consensus value.
a. True b. False
11........................ is the amount of money charged for a product or service.
a. Experience curve b. Demand curve c. Price d. Salary
12. Consumer perceptions of the product's value set the....................... for prices.
a. image b. ceiling c. variable cost d. floor
13. Which of the following is a customer-oriented approach to pricing?
a. value-based pricing b. target profit pricing c. sealed-bid pricing d. break-even pricing
14. In ......................., price is considered along with the other marketing mix variables before the marketing program is set.
a. building the marketing mix b. price elasticity c. target pricing d. value-based pricing
15. Underpriced products sell very well, but they produce less revenue than they would have if price were raised to the....................... level.
a. demand curve b. perceived value c. value-based d. variable
16........................ is a company's power to maintain or even raise prices without losing market share.
a. Fixed cost
b. Target cost c. Pricing power d. Variable cost
17........................ pricing is product driven. The company designs what it considers to be a good product, totals the expenses of making the product, and sets a price that covers costs plus a target profit.
a. Fixed cost b. Variable c. Cost-based d. Skimming
18. Costs that do not vary with production or sales level are referred to as........................
a. unit costs b. variable costs c. fixed costs d. target costs
19........................ are the sum of the....................... and....................... for any given level of production.
a. Total costs; fixed; variable costs b. Variable costs; fixed; total costs c. Fixed costs; total; variable costs d. Break-even costs; fixed; total costs
20. Which of the following is a cost-based approach to pricing?
a. value-based pricing b. break-even pricing c. going-rate pricing d. good-value pricing
Answers for Self Assessment Questions
1. (b) 2.(c) 3.(b) 4.(b) 5.(d) 6. (d) 7.(d)
8. (c) 9.(b) 10.(a) 11.(c) 12.(b) 13.(a) 14.(d)
15. (b) 16.(c) 17.(c) 18.(c) 19.(a) 20. (b)
Chapter-7: Mutual Funds Self Assessment Questions 1. Unlike mutual funds, hedge funds
a. allow private investors to pool assets to be managed by a fund manager. b. are commonly organized as private partnerships. c. are typically only open to wealthy or institutional investors. d. b and c
2. The risk profile of hedge funds ..................., making performance evaluation ....................
a. can shift rapidly and substantially; challenging b. can shift rapidly and substantially; straightforward c. is stable; challenging d. is stable; straightforward
3. Hedge funds are typically set up as ................... and provide ................... information about portfolio composition and strategy to their investors.
a. limited partnerships; minimal b. limited partnerships; extensive c. investment trusts; minimal d. investment trusts; extensive
4. Hedge funds are ................... transparent than mutual funds because of ................... strict SEC regulation on hedge funds.
a. more; more b. more; less c. less; less d. less; more
5. The minimum investment in some new hedge funds is as low as $..................., compared to a traditional minimum of $ ....................
a. 50,000; 500,000 to 1million b. 25,000; 250,000 to 1 million c. 175,000; 400,000 to 1 million d. 10,000; 750,000
6. Hedge funds may invest or engage in
a. convertible bonds b. currency speculation c. merger arbitrage d. all of the above
7. A hedge fund pursuing a …………….. strategy is attempting to exploit temporary misalignments in relative pricing.
a. directional b. non-directional c. stock or bond
d. arbitrage or speculation 8. A hedge fund attempting to profit from a change in the spread between mortgages and Treasuries is using a …………………….. strategy.
a. market neutral b. directional c. relative value d. divergence
9. Assume that you manage a $1.3 million portfolio that pays no dividends, has a beta of 1.45 and an alpha of 1.5% per month. Also, assume that the risk-free rate is 0.025% (per month) and the S&P 500 is at 1220. If you expect the market to fall within the next 30 days you can hedge your portfolio by ……………. S&P 500 futures contracts (the futures contract has a multiplier of $250).
a. selling 1 b. selling 6 c. buying 1 d. buying 6
10. Hedge funds exhibit a pattern known as a
a. January effect b. Santa effect c. size effect d. book-to-market
11. A mutual fund is a collection of ..........................., owned by a group of investors.
a. stocks and cash b. stocks, bonds, and other securities c. bonds d. interests accrued on a stock
12. A mutual fund is managed by....................
a. the federal government b. a credit union c. a city manager d. a professional investment company
13. A short term corporate bond's maturity period is between ............................ years.
a. 1 and 2 b. 5 and 10 c. 7 and 10 d. 1 and 5
14. All dividends and profits of a mutual fund are paid back to.............................
a. the federal government b. banks that are secured by the FDIC c. investors
d. stock brokers 15. Municipal bonds cost ..........................and up.
a. $1000.00 b. $10,0000.00 c. $7500.00 d. $5000.00
16. The capital a company raises by selling shares is referred to as a....................
a. bond b. mutual fund c. capital gain d. stock
17. Regarding mutual funds, who makes investments with the pooled money?
a. bank teller b. fund manager c. you make the investments d. it is determined by the stock market
18. The ................... is a popular business and investment daily newspaper.
a. Fortune b. Barron's c. Wall Street Journal d. Telegram Tribune
19. A long term liability of a company, municipality, or povernment, usually specified by a specific interest rate and for a specific length of time is referred to as a ....................
a. coupon b. bond c. stock d. mutual fund
20. The annual percentage of an investment is called a....................
a. P/E ration b. rate of return c. mutual fund d. premium
Answers for Self Assessment Questions
1. (d) 2.(a) 3.(a) 4.(c) 5.(b) 6. (d) 7.(b)
8. (c) 9.(b) 10.(b) 11.(b) 12.(d) 13.(d) 14.(c)
15. (d) 16.(d) 17.(a) 18.(c) 19.(b) 20. (b)
Chapter-8: Mutual Funds Self Assessment Questions 1. What is a credit card?
a. A cash substitute for things you cannot afford b. A loan that must be repaid in full monthly c. An account that lets you borrow any amount from your credit line to make purchases or
take cash advances d. Free money
2. What do lenders look for before they lend you money?
a. Your major b. Your grades c. Your driving record d. Your credit history
3. What is a credit report?
a. A record of every purchase you've ever made with your credit card b. A record that shows your creditors account-related information, and whether you pay
your bills on time c. A list of your bank balances d. A report showing your past and current income
4. How can you build a good credit history?
a. Pay your bills on time consistently b. Never make purchases on credit c. Open a checking account d. Use all your available credit on all accounts
5. Who of the following may request your credit report from a credit bureau?
a. Your employer b. Your cell phone provider c. Your landlord d. All of the above
6. What is an APR?
a. The cost of credit expressed as a yearly interest rate b. A flat fee that you are charged if your payment is late c. A set-up fee that is charged when your credit account is opened d. A fee that is imposed every time you make a transaction
7. How long can negative information, such as late payments and collections, remain on your credit report?
a. One year b. Four years c. Up to seven years
d. Until you pay off your debt 8. If your credit card is lost or stolen and is used to make an unauthorized purchase, how much do you owe?
a. Nothing, if you report the loss before the card is used fraudulently b. Fifty dollars, if the card is used before you report the loss and your credit card company
does not have a $0 fraud liability policy. c. Nothing, if your credit card company has a $0 fraud liability policy d. All of the above
9. What should you do if you're having trouble paying your credit card bills?
a. Use another credit card to pay them off b. Borrow money from family or friends c. Work with your creditors to determine how best to repay your obligations d. All of the above
10.“Interest Rate” is …..…
a. The amount you owe on your credit card b. The amount of credit remaining on your credit card c. The cost of borrowing money, usually stated as a yearly percentage rate, called the
annual percentage rate d. A cost-per-transaction fee for every time you use your credit card
11. Which of the following is an internal source of finance:
a. Relatives and friends b. Banks c. Sahukar d. Retained profit
12. Public deposit is a source of finance for:
a. Partnership Firm b. Joint stock company c. Co-operative Society d. Sole trader
13. Which of the following is a source of long term finance
a. Trade Credit b. Factoring c. Bank Credit d. Leasing Finance
14. Which of the following is correct about overdraft:
a. Money credited by banks in a separate bank account b. Facility of loan given in the existing Current Account c. Loan limit based on the value of security placed with the bank d. Interest is charged on the free amount of loan credited
15. A market in which shares are bought and sold is a a. Stock Exchange b. Commodity market c. Whole sale market d. Retail market
16. A Joint stock company collects long term finance through
a. Instalments credit b. Issue of Equity shares c. Cash Credit d. Advances by customers
17. A Hundi which is payable after a specified time is known as
a. Darshani Hundi b. Muddati Hundi c. Sahajog Hundi d. Dhanijog Hundi
18. A Cheque which is payable to a person, who presents it for payment at the bank counter is called:
a. Order Cheque b. Bearer Cheque c. Crossed Cheque d. Mutilated Cheque
19. A banking facility enabling customer to withdraw cash 24 hours a day is called:
a. Credit Card b. Net Banking c. ATM d. Phone Banking
20. A negotiable instrument on which acceptance is a must is called:
a. Promissory note b. Bill of Exchange c. Hundi d. Cheque
Answers for Self Assessment Questions
1. (c) 2.(d) 3.(b) 4.(a) 5.(d) 6. (a) 7.(a)
8. (d) 9.(c) 10.(c) 11.(d) 12.(b) 13.(d) 14.(b)
15. (a) 16.(b) 17.(b) 18.(b) 19.(c) 20. (b)
Chapter-9: Financial Management Decisions Self Assessment Questions 1. In capital budgeting, the term Capital Rationing implies:
a. That no retained earnings available
b. That limited funds are available for investment
c. That no external funds can be raised
d. That no fresh investment is required in current year
2. Feasibility Set Approach to Capital Rationing can be applied in:
a. Accept-Reject Situations
b. Divisible Projects
c. Mutually Exclusive Projects
d. None of the above
3. In case of divisible projects, which of the following can be used to attain maximum NPV?
a. Feasibility Set Approach
b. Internal Rate of Return
c. Profitability Index Approach
d. Any of the above
4. In case of the indivisible projects, which of the following may not give the optimum result?
a. Internal Rate of Return
b. Profitability Index
c. Feasibility Set Approach
d. All of the above
5. Profitability Index, when applied to Divisible Projects, impliedly assumes that:
a. Project cannot be taken in parts
b. NPV is linearly proportionate to part of the project taken up
c. NPV is additive in nature
d. Both (b) and (c)
6. If there is no inflation during a period, then the Money Cashflow would be equal to:
a. Present Value
b. Real Cash flow
c. Real Cash flow + Present Value
d. Real Cash flow - Present Value
7. The Real Cash flows must be discounted to get the present value at a rate equal to:
a. Money Discount Rate
b. Inflation Rate
c. Real Discount Rate
d. Risk free rate of interest
8. Real rate of return is equal to:
a. Nominal Rate × Inflation Rate,
b. Nominal Rate ÷ Inflation Rate
c. Nominal Rate - Inflation Rate
d. Nominal Rate + Inflation Rate
9. If the Real rate of return is 10% and Inflation s Money Discount Rate is:
a. 14.4%
b. 2.5%
c. 25%
d. 14%
10. If the Money Discount Rate is 19% and Inflation Rate is 12%, then the Real Discount Rate is:
a. 7%
b. 5%,
c. 5.70%
d. 6.25%
11. What is the underlying characteristic of the WTO? (a) It facilitates economic co-operation between different countries (b) It resolves disputes between economic trade blocks (c) It facilitates the development of less developed countries (d) It acts as an umbrella institution that regulates the agreements concluded at the Uruguay round, the organization’s ultimate goal being the promotion of free international trade 12. Does the WTO come with its own institutional framework? (a) No, the WTO depends on the relevant frameworks of national governments (b) No, the WTO provides certain institutional arrangements but only on an ad hoc basis (c) Yes, the WTO provides a certain institutional framework which changes depending on the nature of free trade agreements (d) Yes, the WTO provides a common institutional framework for the implementation of free trade agreements 13. What are the three key ‘components’ of the WTO? (a) A Senate, a Judiciary and a Directorate (b) A Trade Commission, a Dispute Settlement Body and a Council of Ministers (c) An Executive apparatus, a Legislative apparatus and an Enforcement apparatus (d) A Board of Governors, the Assembly of Member States and a Steering Committee 14. Does the WTO apply its framework in exactly the same fashion throughout the world? (a) Yes, the WTO applies its framework in exactly the same way throughout the world
(b) Yes, the WTO applies its framework in exactly the same way around the world, unless it deals with trade blocks (c) No, the WTO makes allowance for regional variation (d) No, the WTO makes allowance for variation in the case of economically stronger countries 15. What are the two main functions of the WTO? (a) The promotion of free trade and economic liberalism (b) The administration of the WTO agreements and the resolution of international trade disputes (c) The promotion of world peace, economic stability and financial co-operation (d) The administration of the WTO’s institutional framework and the promotion of economic co-operation amongst its members 16. Anti-dumping cases initiated by the WTO have increased significantly since the mid-1990s.
a. True b. False
17. Trade creation describes the situation where the removal of tariff barriers between members of the trading bloc now enables various products to be purchased at lower prices, thereby stimulating intra-regional trade.
a. True b. False
18. The imposition of a tariff will only create a net welfare gain if the demand for the imported product is elastic.
a. True b. False
19. The average tariff rate on goods in the industrialized world is less than 5%.
a. True b. False
20. Measures designed to protect the manufacturing sector are much more widespread than similar measures to protect the service sector.
a. True b. False
Answers for Self Assessment Questions
1. (b) 2.(a) 3.(c) 4.(c) 5.(d) 6. (b) 7.(c)
8. (b) 9.(a) 10.(d) 11.(d) 12.(d) 13.(c) 14.(c)
15. (d) 16.(a) 17.(a) 18.(b) 19.(a) 20. (b)