transparentballoonpeach-blog - Tumblr blog

transparentballoonpeach-blog · 8 years ago

Text

MKT 475 Week 8 Quiz – Strayer

Click on the Link Below to Purchase A+ Graded Course Material

http://budapp.net/MKT-475-Week-8-Quiz-Strayer-438.htm

Quiz 7 Chapter 11 and 12

Chapter 11

Pricing Strategy

True/False Questions 

1. Price strategy is always related to competition whether firms use a higher, lower, or equal price.

323

2. Both revenues and costs need to be taken into account in selecting pricing strategies.

323

3. Lowering prices generally eliminates potential price wars.

324

4. The second step in selecting a pricing strategy is analyzing the pricing situation.

324

5. The core issue in pricing is finding out what value requirements (benefits-costs) the buyer places on the product or brand. 

327 

6. The underlying logic of economic value modeling (EVM) is that using the price/benefit ratio is a more realistic view of value than "dollar worth of benefits minus price." 

328

7. Customer value mapping estimates are based on the differentiated benefits that a customer receives from a product.

328

8. Competitive bidding is an example of demand-oriented approach of pricing. 

340 

9. Reverse auction pricing involves sellers bidding for organizational buyers’ purchases. 

340 

10. The competitor is the frame of reference for demand-oriented pricing methods. 

340 

Multiple Choice Questions

11. Which of the following distribution approaches is most likely to call for more competitive pricing?

A. Exclusive

B. Selective

C. Intensive

D. Narrow

321

322

12. Price cuts in economic downturns are primarily aimed at:

A. increasing short-term profits.

B. defending a firm’s position vigorously.

C. compensating for low quality products.

D. capturing market share.

323

13. Which of the following is the first step in selecting a pricing strategy?

A. Setting pricing objectives

B. Analyzing the pricing situation

C. Selecting pricing strategy

D. Determining specific prices and policies

323

14. Which of the following is the final step in selecting a pricing strategy?

A. Setting pricing objectives

B. Determining specific prices and policies

C. Selecting pricing strategy

D. Analyzing the pricing situation

323

15. _____ is the percentage change in the quantity sold of a brand when the price changes, divided by the percentage change in price.

A. Price distribution

B. Price band

C. Price point

D. Price elasticity

327

16. _____ estimates value as the perceived quality buyers obtain per unit of price.

A. Customer value mapping

B. Customer equity

C. User lifetime value

D. Customer value proposition

327

328

17. Value using _____ consists of the financial savings and gains provided to customers due to purchase of the firm’s brand instead of competitors’ brands.

A. customer value mapping

B. economic value modeling

C. user lifetime value

D. customer value proposition

328

18. Which of the following is the first step in cost analysis for pricing decisions?

A. Estimating how cost varies with the volume of sales

B. Analyzing the cost competitive advantage of the product

C. Determining the components of the cost of the product

D. Estimating how much control management has over costs

330

19. _____ indicates whether costs and prices for various products decline by a given amount each time the number of units produced doubles.

A. Economic value modeling

B. Activity-based costing

C. Customer value mapping

D. Learning-curve analysis

331

20. A high-active pricing strategy:

A. values superiority.

B. emphasizes nonprice competitive factors.

C. offers discounts.

D. avoids price comparisons.

336

21. Which of the following is true of high-passive strategy pricing?

A. It is used when competition for the market target is very high.

B. It emphasizes nonprice competitive factors.

C. It is primarily used by discount retailers.

D. It is used by producers whose brands are not familiar to the market.

337

22. A low-active pricing strategy:

A. emphasizes nonprice competitive factors.

B. is mainly used to gain margins in small market targets.

C. is most effective for discount retailers.

D. is an attractive strategy when competition for market target is high.

337

23. A low-passive pricing strategy:

A. emphasizes superior value of the product.

B. emphasizes nonprice competitive factors.

C. offers discounts.

D. avoids price comparisons.

337

24. When two or more competitors collude to explicitly or implicitly set prices, this practice is referred to as _____.

A. horizontal price fixing

B. price discrimination

C. deceptive pricing

D. predatory pricing

337

25. _____ is the practice of charging different prices to different buyers for goods of similar grade and quality. A. Price fixing B. Price discrimination C. Deceptive pricing D. Predatory pricing

338

26. Charging a very low price for a product with the intent of driving competitors out of business is referred to as _____. A. cannibalization B. price fixing C. predatory pricing D. deceptive pricing

338 

27. Which of the following types of price determination methods uses the price of producing and marketing the product as the basis for determining price?

A. Cost-oriented

B. Supply-oriented

C. Competition-oriented

D. Demand-oriented

339

28. _____ pricing methods consider estimated market response to alternative prices.

A. Cost-oriented B. Supply-oriented C. Competition-oriented D. Demand-oriented

339

29. Which of the following types of pricing is considered a cost-oriented approach of pricing?

A. Break-even pricing

B. Reverse auction pricing

C. Demand-oriented pricing

D. Internet auction pricing

339

30. When using markup pricing, which of the following formulas determines the selling price?

A. Price = Average unit cost divided by Markup percentage

B. Price = Average unit cost divided by 1 minus Markup percentage

C. Price = Unit cost minus Markup price

D. Price = Total fixed costs divided by Unit price minus Unit variable cost

340

Essay Questions 

31. Explain the role of price in the distribution strategy.

32. Explain the various roles of price in the marketing program.

33. What are the steps in selecting a pricing strategy?

34. Give an account of predatory pricing. What are its ethical implications?

35. Give an account of the impact of emerging markets on pricing.

Chapter 12

Promotion, Advertising, and Sales Promotion Strategies

True/False Questions 

1. An advantage of personal selling over advertising is its flexibility in responding to the buyer’s objections and questions at the time the decision to purchase is being made.

355

2. The percent-of-sales method of budgeting for promotion is arbitrary and does not recognize that promotion efforts and results are related. 

357 

3. Promotion expenditures for the competitive parity method are guided by comparing which component(s) is/are appropriate for attaining each objective.

357 

4. The final step in developing an advertising strategy involves evaluating its effectiveness.

359 

5. Determining the sales and profit impact of advertising is more difficult to measure than the exposure and awareness it creates. 

360 

6. The fragmentation of many consumer markets is driving significant amounts of advertising spending from traditional mass media to more focused narrowcast media.

363

7. Recall tests measure consumers’ awareness of specific ads and campaigns by asking questions to determine if a sample of people remembers an ad.

366

8. Longitudinal studies use empirical data to build a mathematical relationship between sales and advertising effort.

366

9. Sales promotions are primarily used to bring awareness of a particular product.

366

10. Coupons are extensively used as a promotional activity to target value chain members.

369

Multiple Choice Questions 

11. _____ consists of planning, implementing, and controlling an organization's communications to its customers and other target audiences.  A. Promotion strategy B. Distribution program C. Benchmarking D. Planned obsolescence

350 

12. Which of the following is a disadvantage of advertising?

A. It has high cost per exposure.

B. It has fixed messages for the duration of an exposure.

C. It does not allow much creativity in message design.

D. It provides low control of message content.

351

13. Which of the following is true about advertising?

A. It has high cost per exposure.

B. It provides low control over exposure.

C. It does not allow direct interactions with buyer.

D. It does not allow for creative message designs.

351

14. _____ consists of verbal communication between a salesperson and one or more prospective purchasers with the objective of making or influencing a sale.  A. Public relation B. Sales promotion C. Advertising D. Personal selling

  351

15. _____ consists of activities such as, trade shows, contests, samples, point-of-purchase displays, product placement in films and other occasions, trade incentives, and coupons. A. Sales promotion B. Advertising C. Personal selling D. Interactive marketing

351

 16. _____ refers to communications placed in the commercial media at no charge to the company receiving the publicity. A. Advertising B. Public relations C. Personal selling D. Interactive marketing

353

17. Which of the following is a disadvantage of the percent of sales method of setting promotional budgets?

A. It heavily relies on the experience and judgment of the marketing team.

B. It can result in too much spending on promotion when sales are high and not enough when sales are low.

C. Its budgeting method is directly guided by how much competitors spend.

D. It does not base its budgeting on past expenditure patterns.

357

 18. Which of the following promotion strategies is most appropriate when buyers’ information needs are high?

A. Advertising-driven

B. Sales promotion-driven

C. Personal selling-driven

D. Generic

358

19. An advertising-driven promotion strategy is used when:

A. the numbers of buyers are small.

B. the size and importance of purchase is large.

C. product complexity is high.

D. no post purchase contact is required.

358

20. Which of the following advertising objectives is used more often because of the ease of measurement?

A. Exposure objectives

B. Attitude change objectives

C. Sales objectives

D. Profit objectives

360

21. Distributing promotional video clips across the Internet is referred to as _____. A. personal selling

B. viral marketing

C. sales promotion

D. direct distribution

363

22. _____ identifies relationships between advertising expenditures and sales using statistical techniques such as regression analysis.  A. Test marketing B. Recall test C. Longitudinal study D. Evaluating historical data

366 

23. _____ measure(s) consumers' awareness of specific ads and campaigns by asking questions to determine if a sample of people remembers an ad.  A. Recall tests  B. Effort/result models  C. Longitudinal studies D. Test marketing

366 

24. _____ track(s) advertising expenditures and sales results before, during, and after an advertising campaign.  A. Effort/result models B. Longitudinal studies C. Recall tests D. Test marketing

366 

25. _____ use empirical data to build a mathematical relationship between sales and advertising effort.  A. Controlled tests B. Recall tests C. Effort/results models D. Longitudinal studies

366 

26. Which of the following is a promotional pricing form of sales promotion activity?

A. Selling aids

B. Trade shows

C. Prizes

D. Coupons

369

27. Which of the following sales promotion activity is targeted at industrial buyers?

A. Coupons

B. Bonuses

C. Rebates

D. Advertising support

369

28. Which of the following informational activities is targeted at both channel members and the salesforce?

A. Demonstrations

B. Trade shows

C. Displays

D. Selling aids

369

29. Which of the following is a disadvantage of sales promotions?

A. The sales response of the sales promotion activities cannot be measured to determine their effectiveness.

B. The incentive and price promotion techniques trigger the purchase of other products.

C. It allows value-added resellers to build inventories on products that receive manufacturers’ trade discounts.

D. It has the flexibility to contribute to various marketing objectives.

370

30. Which of the following is the first step in developing a sales promotion strategy?

A. Setting specific promotion objectives

B. Defining the communications task(s) to be accomplished

C. Evaluating the relative cost-effectiveness of various methods

D. Coordinating the content and the timing with other activities

371

Essay Questions 

31. Identify the advantages and disadvantages of advertising.

32. List the activities involved in designing an organization’s promotion strategy.

33. Define and explain the benefits of the objective and task method of promotion budget.

34. Explain the challenges impacting the creative process in advertising and changing the design of creative strategies and media.

35. Give an account of the different promotional activities targeted at a firm’s salesforce.

#MKT 475 Week 8 Quiz – Strayer

0 notes

transparentballoonpeach-blog · 8 years ago

Text

LEG 505 Assignment 4: Contract Change Evaluation

Click on the Link Below to Purchase A+ Graded Course Material

http://budapp.net/LEG-505-Assignment-4-Contract-Change-Evaluation-219.htm

Due Week 8 and worth 150 points

Note: The assignments are a series of papers that build upon one another.

Refer the following resources to complete this assignment:

FAR § 43.2—Change Orders  (https://www.acquisition.gov/far/current/html/Subpart%2043_2.html)

FAR § 33.2—Disputes and Appeals  (https://www.acquisition.gov/far/html/Subpart%2033_2.html)  Good news! You have been awarded the contract, but there has already been a change made to the contract that needs to be addressed. Note: You create the change based on the scenario you have developed. Additionally, the change has resulted in a dispute.  Write a three to four (3-4) page paper in which you:

1. Select the appropriate administrative process to effect the change and explain your selection in the context of its appropriateness for the situation.

2. Select the administrative and judicial process that will bring the dispute to a resolution and allow the contract to go forward.

3. Analyze the planned actions in soliciting and awarding contracts and make recommendations to ensure the government agency in question is in compliance with the FAR requirements.

4. Identify common compliance issues and develop recommendations to manage them throughout financing, administration, and closeout of contracts.

5. Use at least three (3) quality resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

#LEG 505 Assignment 4: Contract Change Evaluation

0 notes

transparentballoonpeach-blog · 8 years ago

Text

LEG 500 Week 8 Discussion Questions – Strayer NEW

Click On The Link Below to Purchase A+ Graded Material

Instant Download

http://budapp.net/LEG-500-Week-8-Discussion-Questions-Strayer-NEW-LEG500W8D.htm

Week 8 DQ

"Product Liability and Torts" Please respond to the following:

· From the first e-Activity, analyze the current state of the government regulation of product safety to determine whether the referenced agencies are generally proactive or reactive. Provide one (1) specific example of each agency to support your response.

· Compare and contrast the regulatory alternatives discussed in Chapter 8 of the text in terms of the efficiency and efficacy these alternatives might provide to businesses and consumers. Next, determine which solution is the most viable, considering the likelihood of support from business and government interests. Explain your rationale.

#LEG 500 Week 8 Discussion Questions – Strayer NEW

0 notes

transparentballoonpeach-blog · 8 years ago

Text

LEG 320 Week 8 Quiz – Strayer

Click on the Link Below to Purchase A+ Graded Course Material

http://budapp.net/LEG-320-Week-8-Quiz-Strayer-449.htm

Quiz 8 Chapter 14 and 15

CHAPTER 14

ROBBERY, BURGLARY, AND RELATED CRIMES

MULTIPLE CHOICE

1. Robbery may be thought of as a _____ type of stealing.

forcible

covert

surreptitious

inchoate

376

2. “Strong arm” robbery is also known as

misdemeanor robbery

armed robbery

simple robbery

aggravated robbery

376

3. A strong-arm robbery is one in which

the victim is a child

the victim is injured

a deadly weapon is used

no weapon is displayed or used

376

4. Strong-arm robbery is also known as

mugging

aggravated robbery

armed robbery

burglary

376

5. For the crime of robbery to occur

the robber must have used force against the victim

the robber must have caused physical harm to the victim

the robber must have used force or threatened to use imminent force

against the victim

the robber must have used or threatened to use gun violence against the

victim

376-377

6. Home invasion requires which of the following?

unlawful entry of the dwelling of another with intent to commit a crime

persons present in the home

use force or threat of force to commit a crime

all of these are required

381-382

7. When does purse snatching become robbery?

when more force than necessary to take the property is used in the crime

when less force than necessary to take the property is used in the crime

purse snatching is always robbery

none of these answers are true

382-383

8. Unlike most thefts, a robbery requires that the property be taken

with an intent to deprive

with an intent to commit a felony

from the person or from the presence of the victim

with a value exceeding $100

376-377

9. In a majority of states, if the perpetrator uses force, not to take the property, but to prevent the victim from escaping, the offense is

extortion

a robbery

embezzlement

intimidation

379-380

10. In a majority of states, if a purse-snatching involves no more force than necessary to take the purse from the victim’s hand, the offense will be charged as

a robbery

a strong armed ��robbery

theft

extortion

382-383

11. The crime of defiant trespass occurs when a person

remains in a place where he is not privileged to remain after notice of trespass is given

is violent in a place where he is not privileged to remain after notice of trespass is given

is violent after trespassing

remains in a place where he is not privileged to remain after notice of trespass is given and becomes violent

391

12. Forcible stealing is known as

robbery

burglary

aggravated robbery

aggravated burglary

376-377

13. In many jurisdictions, the unlawful entry into a dwelling by a person who knows someone is present in the dwelling at the time of the entry, and who is armed with a dangerous weapon which he uses or threatens to use against someone inside the dwelling is considered the crime of

intimidation

extortion

home invasion

“strong arm” robbery

381-382

14. Purse snatching without force is a form of

theft

robbery

burglary

home invasion

382-383

15. Robbery differs from extortion in that extortion requires

a threat to inflict harm in the future

the property to be taken from the person of the victim

the property to be taken by fraud or deceit

the person to be threatened with imminent harm

383-384

16. The federal act dealing specifically with extortion is the

Calvin Act

Hobbs Act

Lindbergh Act

Robbery and Extortion Act

384

17. The crime of extortion requires a threat

to use violence against the victim

to use violence or sue the victim

to take certain actions that are not legally protected against the victim, including but not limited to violence, for the purpose of obtaining anything of value from the victim

to take steps to tarnish the victim’s reputation

383-384

18. Robbery of persons inhabiting a dwelling is called

home invasion

aggravated robbery

burglary

aggravated burglary

381-382

19. The majority rule in the United States is that crimes like purse snatching are not robberies unless

there is some force used greater than that needed to take the purse

the value of the purse is greater than $100

two or more perpetrators participate

another crime is committed during the purse snatching

382-383

20. At common law, burglary was limited to

the dwelling of another, at night, with intent to commit a felony

the dwelling of another, at any time of day, with the intent to steal

structures where people gather or live, at night

structures where people gather or live, at any time of day

385

21. All states have abolished the common law burglary requirement that there be

a felony committed in the building

a breaking into the building

something stolen from the building

more than one burglar involved

385

22. Most courts hold that the crime of burglary requires

the burglar get entirely inside the building

some part of the burglar’s body (such as an arm) get inside the building

the burglar get in and then out of the building

some part of the burglar’s body or something attached to the burglar

get inside the building

385-387

23. At common law, the only type of buildings that could be burglarized were

dwellings

closed businesses and homes

businesses

privately owned buildings

385

24. Under the common law, the unlawful entry into and theft from a place of business

would be considered a burglary

would be considered a burglary depending on the value of the stolen

property

would not be considered a burglary

would be considered burglary if there was a breaking

385

25. Today state and federal burglary statutes

restrict burglary to only dwellings

consider all buildings within the scope of a jurisdiction’s burglary statute

consider only buildings that are inhabited within the scope of burglary

follow the common law requirements

385-387

26. What proportion of states have modified and changed the definition of burglary in their jurisdictions?

100%

10%

50%

75%

385-387

27. Under the common law, which of the following was required for burglary?

breaking into a residence

committing the crime at night

intent to commit a felony

all of these were required

385-387

28. In most jurisdictions, a defendant who unlawfully enters a building with intent to commit a rape or arson

can be convicted of burglary

can be convicted of burglary only if they completed the crime they intended to commit when they entered the building

cannot be convicted of burglary

can be convicted of burglary if they also stole property once inside the building

388-389

29. When force is not used in the taking of property, but it is used to keep the property and to escape from the scene of the theft

all states follow the rule that because force wasn’t used to take the property, a robbery was not committed

all states follow the rule that because force was used to keep the property after it was stolen, a robbery was committed

some state courts have ruled a robbery occurred, while others have ruled it did not occur

the crime of extortion was committed

379-380

30. The bad guy unlawfully enters the victim’s house with the intent to sexually assault her but, once inside, he realizes she is not home. He leaves without committing rape and without stealing any property from the home. The bad guy

cannot be prosecuted for any crime

can only be prosecuted for criminal trespass

can be prosecuted for attempted sexual assault

can be prosecuted for burglary

388-389

TRUE/FALSE

1. Robbery is the taking of property from a person or from the presence of the victim by the use of force or threat of force.

2. Strong-arm robbery is commonly called “armed robbery.”

3. Home invasion requires unlawful entry of the dwelling of another with intent to commit a crime, with persons present in the home, and the use force or threat of force to commit a crime.

4. Theft differs from robbery in that robbery involves force or threat of force.

5. Grabbing a victim and turning her around to get at her purse is not enough to make purse snatching a robbery.

6. If the threat is to inflict harm in the future, the offense charged will be robbery rather than extortion.

7. For the crime of extortion, the threat need not be communicated in the actual, physical presence of the victim.

8. In some states the burglary statute requires the intent to commit a felony; in others, specific crimes are listed.

9. Criminal trespass occurs when a person unlawfully and knowingly enters the land or building of another.

10. For purposes of a burglary charge, general intent may be inferred from the circumstances of the break-in itself.

COMPLETION

1. The taking of property from a person or from the presence of a victim by use or threat of force is the crime of ____________.

2. Armed or aggravated robbery occurs when a weapon is used in a robbery.

3. A person who unlawfully enters a dwelling knowing someone is present, and threatens the person with a dangerous weapon may be charged with home __________.

4. One of the requirements of home unlawful entry of the dwelling of another with intent to commit a crime.

5. When Congress enacted the __________ Act, the statute was aimed primarily at gangsters who were extorting protection money from businesses.

6. Purse snatching becomes when force more than that needed to take the property is used in the crime.

7. Under the old common law, the punishment for burglary was ________.

8. States no longer require _________ in their simple burglary statutes.

9. __________ trespass occurs when the person unlawfully entering is given notice of the trespass, but refuses to leave the premises.

10. The common law required that burglary be committed in the ___________.

CHAPTER 15

WHITE-COLLAR CRIME, CYBER CRIME, AND COMMERCIAL CRIME

MULTIPLE CHOICE

1. A class or type of criminal conduct that has solely economic gain to the criminal as its goal is known as

white collar crime

racketeering

wire fraud

bank fraud

396

2. What federal statute makes it a federal crime to defraud a financial institution that is federally insured?

false statement

claims

bank fraud

wire fraud

396-397

3. Deceitful means or acts used to cheat a person, corporation, or governmental agency is known as

fraud

forgery

false statement

false claims

396

4. Books, movies, and songs are protected by the

federal copyright act

the “fair use” doctrine

federal and state laws that protect trade secrets

federal wire fraud laws

398

5. A scheme to deprive another of the intangible right of honest services is known as a

scheme of artifice

scheme of neglect

scheme of fraud

scheme of deprivation

397

6. Laws protecting intellectual property do NOT include which of the following?

trade secrets

wire fraud

all of these are included

398-399

7. The reason fraud convictions require action done knowingly is because

fraud is a crime of deceit

fraud causes more harm than most other crimes

too many people would be falsely convicted otherwise

persons committing fraud do not always know what they are doing

396-397

8. Martha Stewart was investigated for insider trading

and was convicted of that charge

but was convicted of making false statements to federal investigators

but was convicted of security fraud

and was never convicted

405

9. Which of the following is not a type of fraud?

material fraud

bank fraud

health care fraud

intellectual property fraud

396 - 398

10. Offering a gift or payment to another with the specific intent to obtain some unlawful particular quid pro quo for the gift or payment is known as

bribery

bank fraud

health care fraud

intellectual property fraud

401-403

11. Under the Hobbs Act, what is required of an official regarding the quid pro quo requirement?

exercise of some influence

an agreement on a specific official act

multiple exercises of some influence

an agreement on numerous specific official acts

402

12. The term meaning giving something of value for something else is

quid pro quo

pro bono

pro rata

quid pro bono

402

13. Bribery under the federal statute is similar to extortion because it is not necessary in an extortion prosecution to prove an official threatened to use his official authority if

the extortion amount was not paid

the extortion amount was paid

the extortion was carried out

none of these answers is correct

402-403

14. What are the two types of identity theft?

true name and synthetic identity

false name and synthetic identity

true name and false identity

synthetic name and true identity

408

15. Insider trading includes using information acquired by an insider and

not available to the public to profit in a sale of securities

paid for through bribery

received by extorting a government official

gained through illegal entry

403-405

16. Which of the following consequences could result from importation of a counterfeit product into the United States?

prosecution under the criminal code of a state

civil suit and sanctions

federal prosecution under the mail fraud statute

all of these answers are correct

410-411

17. Criminal acts implemented through use of a computer are known as

cyber crime

identity theft

wire fraud

video voyeurism

411-415

18. Unlawful access to a computer or computer system with intent to commit a crime is known as

computer trespass

identity theft

wire fraud

video voyeurism

414

19. To convict someone of trafficking in stolen goods, the state is ordinarily required to prove that the

property involved was stolen property

defendant received, concealed, possessed, purchased, or transferred the -property as forbidden by the statutes of that state

defendant knew the property was stolen

all of these answers are correct

415

20. A person who traffics in stolen property is called a

fence

trafficker

mobster

dealer

415-416

21. Possession of burglary tools is

difficult to prove

easy to prove

not a crime

legal in most states

417

22. While the “white collar” language suggests the status of the wrongdoer, most definitions of the term focus on what rather than the identity of the criminal?

the kind of behavior made criminal

the socio-economic status of the criminal

the thinking of the criminal

the social impact of the criminal

396

23. The economic cost of white collar crimes is

enormous

slight

the same as many other crimes

less than many other crimes

396

24. What criminal charge is often used in fraud cases?

theft by fraud or larceny by fraud

theft by fraud

larceny by fraud

none of these answers is correct

396

25. The U.S. Supreme Court has held that any “scheme of artifice” must include which of the following?

a material falsehood

a legal falsehood

a criminal falsehood

a falsehood

397

26. It has been estimated that the yearly cost of healthcare fraud is more than

$13 billion

$14 billion

$15 billion

$16 billion

397

27. Insider trading includes a person called the

tippee

tipper

rippee

ripper

403-405

28. Although Martha Stewart was ultimately convicted of conspiracy and making false statements to federal investigators, what was she initially charged with?

insider trading

wire fraud

bank fraud

identity theft

405

29. What is the name of the crime that occurs when an actual person’s identity is stolen?

true name identity theft

synthetic identity theft

cyber identity theft

wire identity theft

408-410

30. Which of the following elements is included in wire fraud but NOT necessary in bank fraud?

the wire communication must cross state lines

the bank fraud must cross state lines

the wire communication must cross international borders

the bank fraud must cross international borders

407-408

TRUE/FALSE

1. Fraud involves deceitful means or acts to cheat a person, corporation, or governmental agency.

2. Stock market and corporate fraud declined significantly from 1990-2004.

3. Fraud schemes may be prosecuted on the federal, but not state level.

4. The federal government has no general Health Care Fraud statute which makes it a crime to willfully execute a “scheme of artifice” intended to defraud a “health care benefit” program.

5. A federal officer that “solicits” a bribe in exchange for some official act may also threaten to use his official position to prevent the official act from occurring has committed extortion in addition to bribery.

6. The principal laws protecting intellectual property are the federal copyright, patent, and trademark laws, as well as state trade secret laws.

7. The state bank fraud act and the wire fraud act are frequently used to convict white collar criminals.

8. A communication under the bank fraud act must cross state lines.

9. Insider trading includes using information acquired by an insider and not available to the public to profit in a sale of securities.

10. The federal identity theft statute requires the defendant know the identification document belongs to another person.

COMPLETION

1. Using deceitful acts to cheat another is called __________.

2. The federal government has passed many criminal laws directed at health care fraud, such as the False Claims Statute.

3. The _______________ Claims Act makes it a crime to present a claim to the U.S. government that is false or fraudulent.

4. A class or type of criminal conduct that has solely economic gain to the criminal as its goal is the definition of white crime.

5. Among the crimes created to protect stock markets and financial markets of the U.S. is the crime of insider _________.

6. Fraud is in essence a crime of .

7. �� Congress has power to punish most large fraud schemes under the __________ commerce clause.

8. The receipt of unlawful payment to an official may prove , and also could prove bribery.

9. The primary criminal laws aimed at property fraud are the federal copyright and patent acts and federal and state trade secret acts.

10. The federal fraud act and the wire fraud act are frequently used to convict white collar criminals.

#LEG 320 Week 8 Quiz – Strayer

0 notes

transparentballoonpeach-blog · 8 years ago

Text

HRM 530 Week 8 Assignment 4 – Strayer NEW

Click On The Link Below to Purchase A+ Graded Material

Instant Download

http://budapp.net/HRM-530-Assignment-4-Strayer-NEW-HRM530A4.htm

Assignment 4: HR Training Class

Due Week 8 and worth 200 points

Imagine that you are a member of the HR department of a small retail company and upper management has asked you to create a new employee customer service training class for all new employees.

Write a six to seven (6-7) pages paper in which you:

1. Justify the use of a needs assessment of your company’s proposed employee customer service training, stressing five (5) ways in which such an assessment would expose any existing performance deficiencies.

2. Develop a customer service training implementation plan and determine the method of training (i.e., presentation, discussion, case study, discovery, role play, simulation, modeling, or on-the-job training).

3. Justify why you selected the training method that you did.

4. Propose two (2) ways to motivate an employee who has no interest in attending a training class.

Develop a survey to collect feedback from the employees who attend the training.

Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are:

Design job and task analyses that align with the overall HRM strategy.

Design training and development systems to improve employee performance.

Use technology and information resources to research issues in strategic human resource development.

Write clearly and concisely about strategic human resource development using proper writing mechanics.

#HRM 530 Week 8 Assignment 4 – Strayer NEW

0 notes

transparentballoonpeach-blog · 8 years ago

Text

HRM 500 Week 8 Discussion Questions - Strayer

Click on the Link Below to Purchase A+ Graded Course Material

http://budapp.net/HRM-500-Week-8-Discussion-Questions-209.htm

Week 8 D1

From the scenario, examine two reasons why employees join labor unions. Examine two reasons why managers prefer that unions do not represent their employees. Suggest two benefits that unions can provide for an employer.

Week 8 D2

From the e-Activity, examine two actions that the selected HI organization takes in order to make its employees feel that they are members of a supportive community. Propose two scenarios in which high involvement by an organization would benefit the company and encourage employee loyalty.

#HRM 500 Week 8 Discussion Questions - Strayer

0 notes

transparentballoonpeach-blog · 8 years ago

Text

HRM 500 Week 8 Assignment 3: Performance Management

Click on the Link Below to Purchase A+ Graded Course Material

http://budapp.net/HRM-500-Assignment-3-Performance-Management-200.htm

Due Week 8 and worth 250 points

Imagine that you are the HR manager for a retail store. Your store sells clothing, shoes, handbags, linens, etc. The company recently had its worst quarter, and you want to improve employee performance through sales of the merchandise and through offering excellent customer service. The employees are less motivated, due to the recent negative media attention the company has been getting about its earnings. You want to implement a new performance management system, modify the employees’ current behavior, and link compensation directly to performance.

Write a four to six (4-6) page paper in which you:

1. Create a job description for a retail sales associate. Create an organizational behavior modification (OBM) plan to define a set of three (3) key behaviors that are necessary for job performance.

2. Determine two (2) ways that an HR manager would measure whether prospective employees exhibit the key job performance behaviors. Propose two (2) methods that an HR manager can use to inform employees of the new performance standards.

3. As the HR manager, create a plan with two (2) methods of providing feedback to employees. Include the frequency with which the feedback would be provided. Propose two (2) actions that company leaders should take to reinforce positive employee behaviors.

4. As the HR manager, determine three (3) benefits the organization would gain if it adopts a management by objects (MBO) approach in which the employees’ goals are aligned with the organization’s goals. Provide two (2) reasons why it is important to align pay with performance.

5. Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.

Your assignment must follow these formatting requirements:

#HRM 500 Week 8 Assignment 3: Performance Management

0 notes

transparentballoonpeach-blog · 8 years ago

Text

FIN 540 Week 8 Homework Problems – Strayer NEW

Click On The Link Below to Purchase A+ Graded Material

Instant Download

http://budapp.net/FIN-540-Week-8-Homework-Problems-Strayer-NEW-FIN540W8HP.htm

Week 8

Homework Problems Chapter 28

1. Which of the following would cause average inventory holdings to decrease, other things held constant?

a. The purchase price of inventory items decreases by 50 percent.

b. The carrying price of an item decreases (as a percent of purchase price).

c. The sales forecast is revised downward by 10 percent.

d. Interest rates fall.

e. Fixed order costs double.

2. During times of inflation, which of these inventory accounting methods is best for cash flow?

a. LIFO, because the most expensive goods are recorded as being sold first, resulting in a higher cost of goods sold and a lower reported net income.

b. Specific identification, because it correctly identifies the actual item sold and so the actual cost is recorded on the income statement.

c. Weighted average, because it smoothes the reported cost of goods sold over time.

d. It doesn't matter which you use since cash flow is unaffected by the choice of inventory identification method.

e. FIFO, because the cheapest goods are recorded as being sold first, resulting in lower cost of goods sold and higher reported net income.

3. Which of the following is true of the Baumol model? Note that the optimal cash transfer amount is C*.

a. If the total amount of cash needed during the year increases by 20%, then C will increase by 20%.

b. If the average cash balance increases by 20%, then the total holding costs will increase by 20%.

c. If the average cash balance increases by 20% the total transactions costs will increase by 20%.

d. The optimal transfer amount is the same for all companies.

e. If the fixed costs of selling securities or obtaining a loan (cost per transaction) increase by 20%, then C* will increase by 20%.

4. Which of the following is true of the EOQ model? Note that the optimal order quantity, Q, will be called EOQ.

a. If the annual sales, in units, increases by 20%, then EOQ will increase by 20%.

b. If the average inventory increases by 20%, then the total carrying costs will increase by 20%.

c. If the average inventory increases by 20% the total order costs will increase by 20%.

d. The EOC is the same for all companies.

e. If the fixed per order cost increases by 20%, then EOQ will increase by 20%.

5. Halliday Inc. receives a $2 million payment once a year. Of this amount, $700,000 is needed for cash payments made during the next year. Each time Halliday deposits money in its account, a charge of $2.00 is assessed to cover clerical costs. If Halliday can hold marketable securities that yield 5 percent, and then convert these securities to cash at a cost of only the $2 deposit charge, what is the total cost for one year of holding the minimum cost cash balance according to the Baumol model?

a. $7,483

b. $187

c. $3,741

d. $374

e. $748

#FIN 540 Week 8 Homework Problems – Strayer NEW

0 notes

transparentballoonpeach-blog · 8 years ago

Text

FIN 534 Homework Set 4 - Strayer

Click On The Link Below to Purchase A+ Graded Material

Instant Download

http://budapp.net/FIN-534-Homework-Set-4-Strayer-NEW-FIN534HS4.htm

Directions: Answer the following questions on a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link in the course shell. This homework assignment is worth 100 points.

Use the following information for Questions 1 through 5:

Assume you are presented with the following mutually exclusive investments whose expected net cash flows are as follows:

EXPECTED NET CASH FLOWS:

Year Project A Project B

0 −$400 −$650

1 −528 210

2 −219 210

3 −150 210

4 1,100 210

5 820 210

6 990 210

7 −325 210

1. Construct NPV profiles for Projects A and B.

2. What is each project’s IRR?

3. If each project’s cost of capital were 10%, which project, if either, should be selected? If the cost of capital were 17%, what would be the proper choice?

4. What is each project’s MIRR at the cost of capital of 10%? At 17%? (Hint: Consider Period 7 as the end of Project B’s life.)

5. What is the crossover rate, and what is its significance?

Use the following information for Questions 6 through 8:

The staff of Porter Manufacturing has estimated the following net after-tax cash flows and probabilities for a new manufacturing process:

Line 0 gives the cost of the process, Lines 1 through 5 give operating cash flows, and Line 5* contains the estimated salvage values. Porter’s cost of capital for an average-risk project is 10%.

Net After-Tax Cash Flows

Year P = 0.2 P = 0.6 P = 0.2

0 −$100,000 −$100,000 −$100,000

1 20,000 30,000 40,000

2 20,000 30,000 40,000

3 20,000 30,000 40,000

4 20,000 30,000 40,000

5 20,000 30,000 40,000

5* 0 20,000 30,000

6. Assume that the project has average risk. Find the project’s expected NPV. (Hint: Use expected values for the net cash flow in each year.)

7. Find the best-case and worst-case NPVs. What is the probability of occurrence of the worst case if the cash flows are perfectly dependent (perfectly positively correlated) over time?

8. Assume that all the cash flows are perfectly positively correlated. That is, assume there are only three possible cash flow streams over time—the worst case, the most likely (or base) case, and the best case—with respective probabilities of 0.2, 0.6, and 0.2. These cases are represented by each of the columns in the table. Find the expected NPV, its standard deviation, and its coefficient of variation for each probability.

Use the following information for Question 9:

At year-end 2013, Wallace Landscaping’s total assets were $2.17 million and its accounts payable were $560,000. Sales, which in 2013 were $3.5 million, are expected to increase by 35% in 2014. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $625,000 in 2013, and retained earnings were $395,000. Wallace has arranged to sell $195,000 of new common stock in 2014 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2014. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 5%, and 45% of earnings will be paid out as dividends.

9. What were Wallace’s total long-term debt and total liabilities in 2013?

#FIN 534 Homework Set 4 - Strayer

0 notes

transparentballoonpeach-blog · 8 years ago

Text

FIN 350 Week 8 Quiz – Strayer

Click on the Link Below to Purchase A+ Graded Course Material

http://budapp.net/FIN-350-Week-8-Quiz-Strayer-407.htm

Quiz 7 Chapter 16 and 17

Chapter 16—Foreign Exchange Derivative Markets

1. At any given point in time, the price at which banks will buy a currency is ____ the price at which they sell it.

higher than

lower than

the same as

none of the above

2. Which of the following is most likely to provide currency forward contracts to their customers?

commercial banks

international mutual funds

brokerage firms

insurance companies

3. The ____ allowed for the devaluation of the dollar in 1971.

Bretton Woods Agreement

Louvre Accord

Smithsonian Agreement

none of the above

4. The Bretton Woods Era was the era

of free-floating exchange rates.

of floating rates without boundaries, but subject to government intervention.

in which governments maintained exchange rates within 1 percent of a specified rate.

in which exchange rates were maintained within 10 percent of a specified rate.

5. A system whereby exchange rates are market determined without boundaries but subject to government intervention is called

a dirty float.

a free float.

the gold standard.

the Bretton Woods era.

6. A system whereby one currency is maintained within specified boundaries of another currency or unit of account is a

pegged system.

free float.

dirty float.

managed float.

7. A country that pegs its currency is still able to maintain complete control over its local interest rates.

a. True

b. False

8. If the demand for British pounds ____, the pound will ____, other things being equal.

increases; appreciate

decreases; appreciate

increases; depreciate

B and C

9. A(n) ____ in the supply of euros for sale will cause the euro to ____.

increase; appreciate

increase; depreciate

decrease; depreciate

none of the above

10. Beginning with an equilibrium situation, if European inflation suddenly ____ than U.S. inflation, this forced ____ pressure on the value of the euro.

becomes much higher; upward

becomes much higher; downward

becomes much less; upward

becomes much less; downward

B and C

11. Purchasing Power Parity suggests that the exchange rate will on average change by a percentage that reflects the ____ differential between two countries.

income

interest rate

inflation

tax

12. In reality, exchange rates do not always change as suggested by purchasing power parity.

a. True

b. False

13. If U.S. interest rates suddenly become much higher than European interest rates (and if it does not cause concern about higher inflation there), the U.S. demand for euros would ____, and the supply of euros to be exchanged for dollars would ____, other factors held constant.

increase; increase

increase; decrease

decrease; increase

decrease; decrease

14. Assume interest rate parity exists. If the spot rate on the British pound is $2 and the 1-year British interest rate is 7 percent, and the 1-year U.S. interest rate is 11 percent, what is the pound's forward discount or premium?

3.74 percent premium

3.74 percent discount

3.60 percent premium

3.60 percent discount

15. When a government influences factors, such as inflation, interest rates, or income, in order to affect currency's value, this is an example of

direct intervention.

indirect intervention.

a freely floating system.

a pegged system.

16. Which of the following statements is incorrect?

Central banks often consider adjusting a currency's value to influence economic conditions.

If the U.S. central bank wishes to stimulate the economy, it could weaken the dollar.

A weaker dollar could cause U.S. inflation by reducing foreign competition.

Direct intervention occurs when the central bank influences the factors that determine the dollar's value.

17. Direct intervention is always extremely effective.

a. True

b. False

18. If the U.S. government imposed trade restrictions on U.S. imports, this would ____ the U.S. demand for foreign currencies, and would place ____ pressure on the values of foreign currencies (with respect to the dollar).

increase; upward

increase, downward

limit; upward

limit; downward

19. If a commercial bank expects the euro to appreciate against the dollar, it may take a ____ position in euros and a ____ position in dollars.

short; short

long; short

short; long

long; long

20. Generally, a ____ home currency can ____ domestic economic growth.

weak; dampen

strong; stimulate

strong; dampen

A and B

21. A ____ home currency can ____ domestic inflation.

strong; increase

weak; decrease

strong; decrease

A and B

22. If the forward rate of a foreign currency ____ the existing spot rate, the forward rate will exhibit a ____.

exceeds; discount

is below; premium

is below; discount

A and B

23. ____ forecasting involves the use of historical exchange rate data to predict future values.

Technical

Fundamental

Market-based

Mixed

24. ____ forecasting is usually based on either the spot rate or the forward rate.

Technical

Fundamental

Market-based

Mixed

25. Fundamental forecasting has been found to be consistently superior to the other forecasting techniques.

a. True

b. False

26. Which of the following is not a method of forecasting exchange rate volatility?

using the volatility of historical exchange rate movements

using a time series of volatility patterns in previous periods

using the volatility of future exchange rate movements

using the exchange rate's implied standard deviation

27. Assume the following information.

•

Interest rate on borrowed euros is 5 percent annualized

•

Interest rate on dollars loaned out is 6 percent annualized

•

Spot rate for €0.83 per dollar (one € = $1.20)

•

Expected spot rate in five days is €0.85 per dollar

•

Alonso Bank can borrow €10 million

What is the euro profit to Alonso Bank over the five-day period from shorting euros and going long on dollars?

€200,311.11

€207,111.11

€201,555.56

none of the above

28. Which of the following statements is incorrect?

Forward contracts are contracts typically negotiated with a commercial bank that allow the purchase or sale of a specified amount of a particular foreign currency at a specified exchange rate on a specified future date.

The forward market is located in New York City.

Many of the commercial banks that offer foreign exchange on a spot basis also offer forward transactions for the widely traded currencies.

Forward contracts can hedge a corporation's risk that a currency's value may appreciate over time.

29. If the spot rate of the British pound is $2, and the 180-day forward rate is $2.05, what is the annualized premium or discount?

2.5 percent discount

2.5 percent premium

10 percent premium

5 percent discount

5 percent premium

30. Currency futures contracts differ from forward contracts in that they

are an obligation.

are not an obligation.

are standardized.

can specify any amount and maturity date.

31. If the spot rate ____ the exercise price, a currency ____ option would not be exercised.

remains below; call

remains below; put

A and B

32. The pegged exchange rate system is no longer used by any countries.

a. True

b. False

33. If a firm planning to hedge receivables is certain of the future direction a spot rate will move, and requires a tailor-made hedge in terms of amount and maturity date, it should use a

call options contract traded on an exchange.

futures contract traded on an exchange.

forward contract.

put options contract traded on an exchange.

34. Assume that a British pound put option has a premium of $.03 per unit, and an exercise price of $1.60. The present spot rate is $1.61. The expected future spot rate on the expiration date is $1.52. The option will be exercised on this date if at all. What is the expected per unit net gain (or loss) resulting from purchasing the put option?

$.01 loss

$.09 loss

$.09 gain

$.05 gain

35. The speculative risk of purchasing a ____ is that the foreign currency value ____ over time.

put option; increases

put option; decreases

call option; increases

futures contract; increases

36. Bank A asks $.555 for Swiss francs and Banks B and C are willing to pay $.557 for francs. An institution could capitalize on these differences by engaging in

covered interest arbitrage.

triangular arbitrage.

locational arbitrage.

witching hour arbitrage.

37. According to interest rate parity, if the interest rate in a foreign country is ____ than in the home country, the forward rate of the foreign country will have a ____.

higher; discount

lower; premium

higher; premium

A and B

38. ____ serve as financial intermediaries in the foreign exchange market by buying or selling currencies to accommodate customers.

Pension funds

International mutual funds

Insurance companies

Commercial banks

None of the above

39. In the Wall Street Journal, you observe that the British pound (£) is quoted for $1.65. The Australian dollar (A$) is quoted for $0.60. What is the value of the Australian dollar in British pounds?

A$2.75

A$0.36

£2.75

£0.36

none of the above

40. If European inflation suddenly becomes much higher than U.S. inflation, the U.S. demand for European goods will ____. In addition, the supply of euros to be sold for dollars will ____; both forces will place ____ pressure on the value of the euro.

increase; decline; upward

increase; decline; downward

decrease; increase; upward

decrease; increase; downward

none of the above

41. If British interest rates suddenly increase substantially relative to U.S. interest rates, the demand by U.S. investors for British pounds ____, the supply of British pounds to be sold in exchange for dollars ____, and the British pound will ____.

increases; decreases; appreciate

increases; decreases; depreciate

decreases; increases; appreciate

decreases; increases; depreciate

none of the above

42. Assume the following information.

•

Interest rate on borrowed euros is 5 percent annualized.

•

Interest rate on dollars loaned out is 6 percent annualized.

•

Spot rate is 1.10 euros per dollar (one euro = $0.909).

•

Expected spot rate in five days is 1.15 euros per dollar.

•

Fabrizio Bank can borrow 10 million euros.

If Fabrizio Bank attempts to capitalize on the above information, its profit over the five-day period is

2,653,597.22 euros.

455,266.81 euros.

452,426.04 euros.

none of the above

43. A country that pegs its exchange rate to another exchange rate does not have complete control over its interest rates.

a. True

b. False

44. The euro is presently pegged to the British pound in order to stabilize international payments between European countries.

a. True

b. False

45. Financial institutions rarely use the forward market.

a. True

b. False

46. If the quoted cross rate between two foreign currencies is not aligned with the two corresponding exchange rates, investors can profit from triangular arbitrage.

a. True

b. False

47. The indirect exchange rate specifies the value of the currency in U.S. dollars.

a. True

b. False

48. The forward rate premium is dictated by the national income differential of the two currencies.

a. True

b. False

49. The potential benefits from using foreign exchange derivatives are independent of the expected exchange rate movements.

a. True

b. False

50. The forward rate is the exchange rate for immediate delivery.

a. True

b. False

51. The Smithsonian Agreement allowed for a devaluation of the dollar and for a widening of the boundaries within which currencies were allowed to fluctuate.

a. True

b. False

52. A country that pegs its currency does not have complete control over its local interest rates, as its interest rates must be aligned with the interest rates of the currency to which it is tied.

a. True

b. False

53. Exchange rates usually change precisely as suggested by the purchasing power parity (PPP) theory.

a. True

b. False

54. Central bank intervention can be overwhelmed by market forces and may not always succeed in reversing exchange rate movements.

a. True

b. False

55. When countries experience substantial net outflows of funds, they commonly use indirect intervention by raising interest rates to discourage excessive outflows of funds and therefore limit any downward pressure on the value of their currency.

a. True

b. False

56. The forward rate premium reflects the percentage by which the spot rate exceeds the forward rate on an annualized basis.

a. True

b. False

57. The primary advantage of currency options over forward and futures contracts is that they provide a right rather than an obligation to purchase or sell a particular currency at a specified price within a given period.

a. True

b. False

58. A speculator who expects a foreign currency to appreciate could purchase the currency forward and, when received, sell it in the spot market.

a. True

b. False

59. The following information refers to Fresno Bank and Champaign Bank.

Bid Rate on Euros

Ask Rate on Euros

Fresno Bank

$1.002

$1.009

Champaign Bank

$0.997

$1.000

Based on this information, locational arbitrage would be profitable.

a. True

b. False

60. Purchasing power parity suggests that the forward rate premium (or discount) should be about equal to the differential in interest rates between the countries of concern.

a. True

b. False

61. ____ are not foreign exchange derivatives.

Forward contracts

Currency futures contracts

Currency swaps

Currency options

All of the above are foreign exchange derivatives.

62. ____ serve as financial intermediaries in the foreign exchange market by buying or selling currencies to accommodate customers.

Commercial banks

International mutual funds

Insurance companies

Pension funds

All of the above

63. In the Wall Street Journal, you observe that the British pound (£) is quoted for $1.67. The Australian dollar (A$) is quoted for $0.62. What is the value of the Australian dollar in British pounds?

A$2.69

£0.37

£2.69

A$0.37

none of the above

64. In a(n) ____ exchange rate system, the foreign exchange market is totally free from government intervention.

pegged

dirty floating

freely floating

Bretton Woods

none of the above

65. The supply and demand for a currency are influenced by all of the following, except

differential interest rates.

differential inflation rates.

direct government intervention.

indirect government intervention.

The supply and demand for a currency are affected by all of the above.

66. If U.S. inflation suddenly becomes much higher than European inflation, the U.S. demand for European goods will ____. In addition, the supply of euros to be sold for dollars will ____; both forces will place ____ pressure on the value of the euro.

increase; decline; upward

increase; decline; downward

decrease; increase; upward

decrease; increase; downward

none of the above

67. Assume an equilibrium state in which European inflation and U.S. inflation are both 4 percent. If U.S. inflation suddenly decreased to 2 percent, the euro will ____ against the dollar by approximately ____ percent, according to purchasing power parity.

appreciate; 2

depreciate; 2

appreciate; 4

depreciate; 4

none of the above

68. Which of the following is the least feasible strategy for a speculator who expects the Australian dollar to depreciate?

sell Australian dollars forward and then purchase them in the spot market just before fulfilling the forward obligation

sell futures contracts on Australian dollar; purchase Australian dollars in the spot market just before fulfilling the futures obligation

purchase put options on Australian dollars, at some point before the expiration date, when the spot rate is less than the exercise price, purchase Australian dollars in the spot market and then exercise the put option

purchase call options on Australian dollars; at some point before the expiration date, exercise the call option and then sell the Australian dollars received in the spot market

All of the above are possible strategies for a speculator who expects the Australian dollar to depreciate.

69. The act of capitalizing on the discrepancy between the forward rate premium and the interest rate differential is called

triangular arbitrage.

locational arbitrage.

covered interest arbitrage.

interest rate parity.

70. The indirect exchange rate is always the reciprocal of the direct exchange rate.

a. True

b. False

71. The exchange rate between two foreign (nondollar) currencies is known as a(n):

indirect dollar rate.

forward rate.

cross-exchange rate.

derived exchange rate.

72. The devaluation of a country’s currency:

makes foreign products more expensive for consumers in that country.

increases foreign demand for that country’s exports.

can lead to deflation in that country.

A and B

73. Currency futures contracts are standardized, whereas forward contracts are more flexible and can specify whatever amount and maturity date are desired.

a. True

b. False

74. When the Federal Reserve attempt to lower interest rates by increasing the U.S. money supply, it puts upward pressure on the value of the dollar.

a. True

b. False

75. A speculator who expects the euro to depreciate might:

sell euros forward and then purchase them in the spot market just before fulfilling the forward obligation.

purchase euros forward and, when they are received, sell them in the spot market.

purchase futures contracts on euros and, when the euros are received, sell them in the spot market.

all of the above

Chapter 17—Commercial Bank Operations

1. Which of the following statements is incorrect?

Banks have expanded their business across services over time.

Acquisitions have been a convenient method for banks to grow quickly and capitalize on economies of scale.

The banking industry has become less concentrated in recent years.

All of the statements above are correct.

2. Commercial banks have expanded in recent years not only by acquiring other banks but also by acquiring other types of financial service firms.

a. True

b. False

3. Commercial banks can be a lender or a borrower when using repurchase agreements and loans in the federal funds market.

a. True

b. False

4. The operations, management, and regulation of a financial conglomerate are the same irrespective of the types of services offered.

a. True

b. False

5. ____ are offered to bank customers who desire to write checks against their account.

Time deposit accounts

CDs

Demand deposit accounts

Money market deposit accounts

6. Which type of savings account transfers funds to a checking account when checks are written?

ATS

passbook savings

CDs

MMDAs

7. A(n) ____ account provides checking services as well as interest.

demand deposit

negotiable order of withdrawal (NOW)

passbook savings

time deposit

8. Protective covenants impose conditions in which the bank must provide additional loans to a borrower to protect the borrower from going bankrupt.

a. True

b. False

9. A ____ is a time deposit offered by some large banks to corporations, with a specific maturity date, minimum deposit of $100,000 or more, and a secondary market.

retail CD

negotiable CD

market CD

protective CD

10. A bank's sources of funds represent liabilities or equity of the bank.

a. True

b. False

11. Money market deposit accounts differ from conventional time deposits in that they

specify a maturity.

offer limited check writing privileges.

are less liquid.

none of the above

12. The intent of federal funds transactions is to

correct short-term fund imbalances experienced by banks.

correct long-term fund imbalances experienced by banks.

serve as a permanent source of bank capital.

serve as the primary depository source of funds.

13. For any given bank, federal funds ____ represent a(n) ____.

purchased; asset

sold; liability

purchased; liability

A and B

14. The federal funds rate is ____ the yield on a Treasury security with a similar term remaining until maturity.

substantially above

substantially below

close to

none of the above; the rate is much higher than the Treasury yield in some periods, and much lower than the Treasury yield in other periods

15. Obtaining funds through ____ is not a common source of funds for banks to satisfy a temporary deficiency of funds?

issuing bonds

the federal funds market

repurchase agreements

borrowing from the Federal Reserve

16. Which of the following is true?

The primary credit lending rate is set by the president of the United States.

The federal funds rate is set by the president of the United States.

The primary credit lending rate is set by commercial banks.

The primary credit lending rate is now set at a level above the federal funds rate.

A and B

17. The Federal Reserve provides loans to banks in order to

resolve permanent shortages of funds experienced by banks.

resolve temporary shortages of funds experienced by banks.

finance the shortages of funds of finance companies.

none of the above

18. When a bank in need of funds for a few days sells some of its government securities to a corporation with a temporary excess of funds, then buys them back shortly thereafter, this is a

federal funds loan.

discount window loan.

repurchase agreement.

commercial paper transaction.

19. When banks need funding for just a few days, they would most likely

issue bonds and then call them.

issue stock and then repurchase it.

borrow in the federal funds market.

issue NCDs.

20. Because U.S. dollars are widely used as an international medium of exchange, the Eurodollar market is very active.

a. True

b. False

21. Subordinated notes and debentures are examples of

primary capital.

secondary capital.

depository sources of funds.

repurchase agreements.

22. All other things equal, when banks issue new stock, they

increase reported earnings per share.

decrease their ability to absorb operating losses.

dilute the ownership of the bank.

A and B

23. As a source of funds, small banks rely more heavily on ____, and larger banks rely more heavily on ____.

time deposits and foreign deposits; savings deposits and short-term borrowings

savings deposits and short-term borrowings; foreign deposits and time deposits

savings and time deposits; foreign deposits and short-term borrowings

foreign deposits and short-term borrowings; savings and time deposits

24. Cash held ____ represents the major portion of a bank's required reserves.

at other commercial banks

in a bank's vault

on deposit at the federal funds window

on deposit with the Board of Governors

25. The main use of bank funds is for

loans.

investment securities.

fixed assets.

repurchase agreements.

26. Bank loans designed to support a firm's ongoing business operations are called

term loans.

working capital loans.

direct lease loans.

revolving credit loans.

27. ____ loans are primarily used to finance the purchase of fixed assets.

Term

Working capital

Informal line of credit

Revolving credit

28. Which of the following is most appropriate for a business that may experience a sudden need for funds but does not know precisely when?

working capital loan

direct lease loan

term loan

informal line of credit

29. A ____ loan may be especially appropriate when the bank wishes to avoid adding more debt to its balance sheet.

term

bullet

direct lease

revolving credit

30. The interest rate banks charge their most creditworthy customers is known as the

federal funds rate.

primary credit lending rate.

prime rate.

call money rate.

31. Transaction deposits do not include

demand deposits.

NCDs.

NOW accounts.

all of the above are transactions deposits

32. Commercial banks are not allowed to invest in

Treasury securities.

Freddie Mac securities.

Fannie Mae securities.

Banks can invest in all securities mentioned above.

33. Money market deposit accounts (MMDAs)

require a maturity of 6 months or longer.

allow a limited number of checks to be written against the account.

pay a higher interest rate than CDs.

none of the above

34. Which of the following accounts does not allow checks (at least a limited amount) to be written?

NOW accounts

money market deposit accounts (MMDAs)

retail CDs

all of the above allow checks to be written

35. Banks sometimes need funds and sometimes have excess funds available. Which of the following is commonly a source of bank funds and a use of bank funds?

MMDAs

federal funds

the discount window

retail CDs

36. The bank holding company structure allows more flexibility to borrow funds, issue stock, repurchase the company's own stock, and acquire other firms.

a. True

b. False

37. Like other market interest rates, the primary credit lending rate moves in reaction to changes in demand or supply of funds or both.

a. True

b. False

38. The yield on repurchase agreements is slightly higher than the federal funds rate at any given point in time.

a. True

b. False

39. Bank regulators are concerned that banks may maintain a higher level of capital than they should and have therefore imposed capital requirements on them.

a. True

b. False

40. In a revolving credit loan, the bank typically charges businesses a commitment fee on any unused funds.

a. True

b. False

41. Bank rates on credit card balances are usually not very different from the rate charged on business loans.

a. True

b. False

42. While U.S. banks have expanded into non-U.S. markets, few non-U.S. banks have entered U.S. markets.

a. True

b. False

43. ____ is (are) not a major source of funds for commercial banks.

Deposit accounts

Borrowed funds

Commercial loans

Bank capital

All of the above are commercial banks sources of funds.

44. Which of the following statements is incorrect with respect to the federal funds market?

It allows depository institutions to accommodate the short-term liquidity needs of other financial institutions.

Federal funds purchased represent an asset to the borrowing bank and a liability to the lending bank that sells them.

The federal funds market is typically most active on Wednesday, because that is the final day of each particular settlement period for which each bank must maintain a specified volume of reserves required by the Fed.

All of the above are true with respect to the federal funds market.

45. The federal funds rate is typically ____ the primary credit lending rate.

greater than

less than

equal to

none of the above

46. ____ are the largest bank source of funds as a percentage of total liabilities.

Small-denomination time deposits

Money market deposit accounts (MMDAs)

Transaction deposits

Borrowed funds

Savings deposits (including MMDAs)

47. ____ do not specify a maturity and provide limited check-writing ability (they allow only a limited number of transactions per month).

Money market deposit accounts (MMDAs)

Negotiable CDs (NCDs)

Retail CDs

Callable CDs

Negotiable order of withdrawal (NOW) accounts

48. ____ loans are extended primarily to finance the purchase of fixed assets such as machinery.

Term

Working capital

Federal fund

Direct lease

49. Which of the following is not an off-balance sheet activity for commercial banks?

consumer loans

loan commitments

standby letters of credit

swap contracts

All of the above are off-balance sheet activities.

50. A ____ is a type of loan commitment.

standby letter of credit (SLC)

note issuance facility (NIF)

forward contract

swap contract

none of the above

51. When a bank obtains funds through a ____, the provider of the funds receives collateral.

retail CD

NOW account

repurchase agreement

money market deposit account

52. When banks obtain funds in the federal funds market, the providers of the funds are

other depository institutions.

nonfinancial corporations.

consumers.

the Federal Reserve.

53. A single loan in the federal funds market is usually for ____; when a bank sells a single repurchase agreement, the maturity is usually ____.

just a few days; one year or more

several weeks; one year or more

several weeks; just a few days

just a few days; just a few days

54. The interest rate charged on loans between depository institutions is commonly referred to as the

federal funds rate.

discount rate.

primary credit lending rate.

none of the above

55. The interest rate charged on loans from the Federal Reserve to banks is commonly referred to as the

federal funds rate.

primary credit lending rate.

repo rate.

none of the above

56. The primary credit lending rate is determined by

the Federal Reserve.

Congress.

the Treasury.

the President of the United States.

57. Bank capital represents funds obtained through ____ and through ____.

issuing stock; offering long-term CDs

issuing repurchase agreements; issuing bonds

issuing stock; retaining earnings

offering long-term CDs; issuing bonds

58. Banks sometimes prefer to minimize their amount of capital since

interest payments must be paid by the bank on all capital that is held.

they try to avoid diluting ownership of the bank.

A and B

none of the above

59. When a bank obtains funds through ____, households are not a common provider of the funds.

NOW accounts

retail CDs

passbook savings accounts

NCDs

60. Which of the following is not an off-balance sheet activity?

highly leveraged transactions (HLTs)

standby letters of credit

forward contracts

swap contracts

61. A bank's uses of funds represent liabilities of a bank.

a. True

b. False

62. ____ are the largest bank source of funds (as a percentage of total liabilities).

Small-denomination time deposits

Large-denomination time deposits

Transaction deposits

Savings deposits (including MMDAs)

63. The five largest banks in the United States account for about one-tenth of all assets in U.S. banks.

a. True

b. False

STA: DISC.FMAI.MADU.15.03

64. From a bank manager’s perspective, the differential in interest between a bank’s loans and its deposits;

must not exceed the federal funds rate.

is called the primary credit lending rate.

must be sufficient to cover the bank’s other expenses and generate a reasonable profit for the bank’s owners.

must be sufficient to cover the bank’s deposit insurance premiums and its reserve requirements at the Federal Reserve.

65. In a loan participation arrangement, normally all of the participating banks are exposed to credit (default) risk.

a. True

b. False

66. Banks will not accept intangible assets, such as patents and brand names, as collateral for commercial loans.

a. True

b. False

67. Proprietary trading is generally less risky than a bank’s lending operations.

a. True

b. False

68. When a bank engages in proprietary trading, it:

uses its own funds to make investments.

is not subject to regulations.

lends the funds in the federal funds market.

normally uses the funds to build its capital.

69. In a standby letter of credit, a bank agrees to:

charge a fixed interest rate for a line of credit for a specified period.

back a customer’s obligation to a third party.

provide a customer with funds up to a specified maximum amount over a specified period.

service credit card loans originated by another bank.

70. A forward contract on currency:

is a way to hedge credit (default) risk.

is used to to swap fixed interest payments in euros for variable interest payments in dollars.

is an agreement between a customer and a bank to exchange one currency for another on a specified date at a specified exchange rate.

is an agreement between a customer and a bank to exchange one currency for another on a specified date at whatever the exchange rate is on that day.

71. Before the credit crisis, _________ were heavily used to protect against the credit (default) risk from investing in mortgage-backed securities.

standby letters of credit

interest rate swap contracts

credit default swap contracts

forward contracts on mortgages

72. Before establishing foreign branches, a U.S. bank must obtain the approval of the:

U.S. Treasury.

U.S. Commerce Department.

Federal Deposit Insurance Corporation.

Federal Reserve.

#FIN 350 Week 8 Quiz – Strayer

0 notes

transparentballoonpeach-blog · 8 years ago

Text

FIN 320 Week 8 Quiz – Strayer

Click on the Link Below to Purchase A+ Graded Course Material

http://budapp.net/FIN-320-Week-8-Quiz-Strayer-397.htm

Quiz 6 Chapter 14 and 15

Chapter 14: ___________________________________________________________________________

Which of the following assets is most liquid?

Cash equivalents

Receivables

Inventories

Plant and equipment

Cost of goods sold refers to ___________.

direct costs attributable to producing the product sold by the firm

salaries, advertising, and selling expenses

payments to the firm's creditors

payments to federal and local governments

Many observers believe that firms "manage" their income statements to _______.

minimize taxes over time

maximize expenditures

smooth their earnings over time

generate level sales

Depreciation expense is in what broad category of expenditures?

Operating expenses

General and administrative expenses

Debt interest expense

Tax expenditures

Firm A acquires firm B when firm B has a book value of assets of $155 million and a book value of liabilities of $35 million. Firm A actually pays $175 million for firm B. This purchase would result in goodwill for firm A equal to _____.

$175 million

$155 million

$120 million

$55 million

One of the biggest impediments to a global capital market has been _________.

volatile exchange rates

the lack of common accounting standards

lower disclosure standards in the United States than abroad

the lack of transparent reporting standards across the EU

Benjamin Graham thought that the benefits from detailed analysis of a firm's financial statements had _________ over his long professional life.

increased greatly

increased slightly

remained constant

decreased

If the interest rate on debt is higher than the ROA, then a firm's ROE will _________.

decrease

increase

not change

change but in an indeterminable manner

Which of the following is not one of the three key financial statements available to investors in publicly traded firms?

Income statement

Balance sheet

Statement of operating earnings

Statement of cash flows

10.

In 2006 Hewlett-Packard repurchased shares of common stock worth $5,241 million and made dividend payments of $894 million. Other financing activities raised $196 million, and Hewlett-Packard's total cash flow from financing was -$6,077 million. How much did the long-term debt accounts of Hewlett-Packard change?

Increased $138 million

Decreased $138 million

Increased $836 million

Decreased $836 million

11.

What must cash flow from financing have been in 2008 for Interceptors, Inc.?

$28

$30

$33

12.

Based on the cash flow data in the table for Interceptors Inc., which of the following statements is (are) correct? I. This firm appears to be a good investment because of its steady growth in cash. II. This firm has been able to generate growing cash flows only by borrowing or selling equity to offset declining operating cash flows. III. Financing activities have been increasingly important for this firm's operations, at least in the short run.

I only

II and III only

II only

I and II only

13.

Common-size balance sheets are prepared by dividing all quantities by ____________.

total assets

total liabilities

shareholders' equity

fixed assets

14.

Operating ROA is calculated as __________, while ROE is calculated as _________.

EBIT/Total assets; Net profit/Total assets

Net profit/Total assets; EBIT/Total assets

EBIT/Total assets; Net profit/Equity

Net profit/EBIT; Sales/Total assets

15.

A firm increases its financial leverage when its ROA is greater than the cost of debt. Everything else equal, this change will probably increase the firm's: I. Beta II. Earnings variability over the business cycle III. ROE IV. Stock price

I and II only

III and IV only

I, III, and IV only

I, II, and III only

16.

The highest possible value for the interest-burden ratio is ______, and this occurs when the firm _________.

0; uses as much debt as possible

1; uses debt to the point where ROA = interest cost of debt

1; uses no interest-bearing debt

-1; pays down its existing debts

17.

Which one of the following ratios is used to calculate the times-interest-earned ratio?

Net profit/Interest expense

Pretax profit/EBIT

EBIT/Sales

EBIT/Interest expense

18.

The process of decomposing ROE into a series of component ratios is called ______________.

DuPont analysis

technical analysis

comparative analysis

liquidity analysis

19.

Which of the following is not a ratio used in the DuPont analysis?

Interest burden

Profit margin

Asset turnover

Earnings yield ratio

20.

By 2008, over 100 countries had adopted financial reporting standards that are in conformance with ________.

GAAP

IFRS

FASB

GASB

21.

Operating ROA can be found as the product of ______.

Return on sales × ATO

Tax burden × Interest burden

Interest burden × Leverage ratio

ROE × Dividend payout ratio

22.

A firm has an ROE of 20% and a market-to-book ratio of 2.38. Its P/E ratio is _________.

8.4

11.9

17.62

47.6

23.

If a firm has a positive tax rate and a positive operating ROA, and the interest rate on debt is the same as the operating ROA, then operating ROA will be _________.

greater than zero, but it is impossible to determine how operating ROA will compare to ROE

equal to ROE

greater than ROE

less than ROE

24.

You find that a firm that uses debt has a compound leverage factor less than 1. This tells you that ________.

the firm's use of financial leverage is positively contributing to ROE

the firm's use of financial leverage is negatively contributing to ROE

the firm's use of operating leverage is positively contributing to ROE

the firm's use of operating leverage is negatively contributing to ROE

25.

A firm has a P/E ratio of 24 and an ROE of 12%. Its market-to-book-value ratio is _________.

2.88

1.75

.69

26.

A firm has an ROA of 8% and a debt/equity ratio of .5; its ROE is _________.

12%

27.

A firm has a tax burden of .7, a leverage ratio of 1.3, an interest burden of .8, and a return-on-sales ratio of 10%. The firm generates $2.28 in sales per dollar of assets. What is the firm's ROE?

12.4%

14.5%

16.6%

17.8%

28.

Economic value added (EVA) is:

the difference between the return on assets and the opportunity cost of capital times the capital base

ROA × ROE

a measure of the firm's abnormal return

largest for high-growth firms

29.

Which of the following statements is true concerning economic value added?

A growing number of firms tie managers' compensation to EVA.

A profitable firm will always have a positive EVA.

EVA recognizes that the cost of capital is not a real cost.

If a firm has positive present value of growth opportunities, it will have positive EVA.

30.

The financial statements of Flathead Lake Manufacturing Company are shown below: Note: The common shares are trading in the stock market for $15 per share Refer to the financial statements of Flathead Lake Manufacturing Company. The firm's current ratio for 2012 indicates that Flathead's liquidity has ________ since 2011.

risen

fallen

stayed the same

The answer cannot be determined from the information given.

31.

The financial statements of Flathead Lake Manufacturing Company are shown below: Note: The common shares are trading in the stock market for $15 per share Refer to the financial statements of Flathead Lake Manufacturing Company. The firm's inventory turnover ratio is _________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

11.6

10.2

9.5

7.7

32.

2.13

2.44

2.56

2.89

33.

$810,000

$775,000

$755,000

$735,000

34.

The financial statements of Flathead Lake Manufacturing Company are shown below: Note: The common shares are trading in the stock market for $15 per share Refer to the financial statements of Flathead Lake Manufacturing Company. The industry average ACP is 32 days. How is Flathead doing in its collections relative to the industry? (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

Flathead's receivables are outstanding about 9 fewer days than the industry average.

Flathead's receivables are outstanding about 15 fewer days than the industry average.

Flathead's receivables are outstanding about 12 more days than the industry average.

Flathead's receivables are outstanding about 6 more days than the industry average.

35.

The financial statements of Flathead Lake Manufacturing Company are shown below: Note: The common shares are trading in the stock market for $15 per share Refer to the financial statements of Flathead Lake Manufacturing Company. The firm's total asset turnover for 2012 is _________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

3.56

3.26

3.14

3.02

36.

$.075

$.086

$.092

$.099

37.

The financial statements of Flathead Lake Manufacturing Company are shown below: Note: The common shares are trading in the stock market for $15 per share Refer to the financial statements of Flathead Lake Manufacturing Company. The firm's return on equity ratio for 2012 is _________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

6.5%

26.5%

33.4%

38%

38.

3.39

3.6

13.33

10.67

39.

The financial statements of Flathead Lake Manufacturing Company are shown below: Note: The common shares are trading in the stock market for $15 per share Refer to the financial statements of Flathead Lake Manufacturing Company. The firm's compound leverage ratio is __________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

1.5

2.5

40.

1.3

1.5

1.69

2.83

41.

1.3

1.5

1.69

2.83

42.

1.3

1.5

1.69

2.83

43.

2.8

11.11

44.

The financial statements of Burnaby Mountain Trading Company are shown below. Note: The common shares are trading in the stock market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's fixed-asset turnover ratio for 2012 is _________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

2.8

11.11

45.

The financial statements of Burnaby Mountain Trading Company are shown below. Note: The common shares are trading in the stock market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's asset turnover ratio for 2012 is _________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

1.3

1.5

1.69

2.83

46.

.0409

.0429

.0475

.0753

47.

The financial statements of Burnaby Mountain Trading Company are shown below. Note: The common shares are trading in the stock market for $27 each. Refer to the financial statements of Burnaby Mountain Trading Company. The firm's return-on-equity ratio for 2012 is _________. (Please keep in mind that when a ratio involves both income statement and balance sheet numbers, the balance sheet numbers for the beginning and end of the year must be averaged.)

.0409

.0429

.0462

.0923

48.

2.8

3.6

11.11

49.

.1708

.1529

.1462

.1636

50.

A firm has a net profit/pretax profit ratio of .6, a leverage ratio of 1.5, a pretax profit/EBIT of .7, an asset turnover ratio of 4, a current ratio of 2, and a return-on-sales ratio of 6%. Its ROE is _________.

7.56%

15.12%

20.16%

30.24%

51.

A firm has an ROA of 19%, a debt/equity ratio of 1.8, and a tax rate of 30%, and the interest rate on its debt is 7%. Its ROE is _________.

15.12%

28.42%

37.24%

40.6%

52.

The level of real income of a firm can be distorted by the reporting of depreciation and interest expense. During periods of low inflation, the level of reported depreciation tends to __________ income, and the level of interest expense reported tends to __________ income.

understate; overstate

understate; understate

overstate; understate

overstate; overstate

53.

If a firm's ratio of stockholders' equity/total assets is lower than the industry average and its ratio of long-term debt/stockholders' equity is also lower than the industry average, this would suggest that the firm _________.

has more current liabilities than the industry average

has more leased assets than the industry average

will be less profitable than the industry average

has more current assets than the industry average

54.

A firm has a lower inventory turnover, a longer ACP, and a lower fixed-asset turnover than the industry averages. You should not be surprised to find that this firm has: I. Lower ATO than the industry average II. Lower ROA than the industry average III. Lower ROE than the industry average

I only

I and II only

II and III only

I, II, and III

55.

A high price-to-book ratio may indicate which one of the following?

The firm expanded its plant and equipment in the past few years.

The firm is doing a poorer job controlling its inventory expense than other related firms.

Investors may believe that this firm has opportunities for earning a rate of return in excess of the market capitalization rate.

All of these options.

56.

A firm has an ROE equal to the industry average, but its price-to-book ratio is below the industry average. You know that the firm's _________.

earnings yield is above the industry average

P/E ratio is above the industry average

dividend payout ratio is too high

interest burden must be below the industry average

57.

Use the following cash flow data of Haven Hardware for the year ended December 31, 2012. What is the net cash provided by operating activities of Haven Hardware?

-$30,000

$220,000

$320,000

$780,000

58.

Use the following cash flow data of Haven Hardware for the year ended December 31, 2012. What is the net cash provided by or used in investing activities of Haven Hardware?

-$12,000

-$62,000

$12,000

$164,000

59.

Use the following cash flow data of Haven Hardware for the year ended December 31, 2012. What is the net cash provided by or used in financing activities of Haven Hardware?

-$10,000

-$120,000

$10,000

$120,000

60.

Use the following cash flow data of Haven Hardware for the year ended December 31, 2012. What is the net increase or decrease in cash for Haven Hardware for 2012?

-$94,000

-$88,000

$88,000

$188,000

61.

Use the following cash flow data of Haven Hardware for the year ended December 31, 2012. What is the cash at the end of 2012 for Haven Hardware?

$6,000

$94,000

$736,000

$188,000

62.

All of the following ratios are related to efficiency except _______.

total asset turnover

fixed-asset turnover

average collection period

cash ratio

63.

Which of the following would result in a cash inflow under the heading "Cash flow from investing" in the statement of cash flows?

Purchase of capital equipment

Payments to suppliers for inventory

Collections on receivables

Sale of production machinery

64.

When assessing the sustainability of a firm's cash flows, analysts will prefer to see cash growth generated from which of the following sources?

Cash flow from investment activities

Cash flow from operating activities

Cash flow from financing

Cash flow from extraordinary events

65.

The ABS company has a capital base of $100 million, an opportunity cost of capital (k) of 15%, a return on assets (ROA) of 9%, and a return on equity (ROE) of 18%. What is the economic value added (EVA) for ABS?

$8 million

-$6 million

$3 million

-$4 million

66.

Another term for EVA is ______.

net income

operating income

residual income

market-based income

67.

Which of the following transactions will result in a decrease in cash flow from operations?

Increase in accounts receivable

Decrease in inventories

Decrease in taxes payable

Decrease in bonds outstanding

68.

Which of the following transactions will result in a decrease in cash flow from investments?

Acquisition of another business

Capital gain from sale of a subsidiary

Decrease in net investments

Sale of equipment

69.

Which of the following will result in an increase in cash to the firm?

Dividends paid

A delay in collecting on accounts receivable

Net new investments

An increase in accounts payable

70.

The table below shows some data for Key Biscuit Company: What must have caused the firm's ROE to drop?

The firm began using more debt as a percentage of financing.

The firm began using less debt as a percentage of financing.

The compound leverage ratio was less than 1.

The operating ROA was declining.

71.

A firm purchases goods on credit worth $150. The same firm pays off $100 in old credit purchases. An investment is made via the purchase of a new facility, and equity is issued in the amount of $300 to pay for the purchase. What is the change in net cash provided by operations?

$50 increase

$100 increase

$150 increase

$250 increase

72.

A firm purchases goods on credit worth $100. The same firm pays off $80 in old credit purchases. An investment is made via the purchase of a new facility, and equity is issued in the amount of $200 to pay for the purchase. What is the change in net cash provided by financing?

$20 increase

$80 increase

$100 increase

$200 increase

73.

A firm purchases goods on credit worth $90. The same firm pays off $100 in old credit purchases. An investment is made via the purchase of a new facility, and equity is issued in the amount of $180 to pay for the purchase. What is the change in net cash provided by investments?

$10 decrease

$90 decrease

$180 decrease

$190 decrease

74.

The net income of the company is $120. Accounts payable increase by $20, depreciation is $15, and equipment is purchased for $40. If the firm issued $110 in new bonds, what is the total change in cash for the firm for all activities?

Increase of $225

Increase of $130

Decrease of $195

Decrease of $110

75.

The term quality of earnings refers to ________.

how well reported earnings conform to GAAP

the realism and sustainability of reported earnings

whether actual earnings matched expected earnings

how well reported earnings fit a trend line of earnings growth

76.

The practice of "selling" large quantities of goods to customers in order to get quarterly sales up while allowing these customers to return the goods next quarter is termed _____________.

channel stuffing

clogging the network

spamming the johns

artificial sales

77.

What ratio will definitely increase when a firm increases its annual sales with no corresponding increase in assets?

Asset turnover

Current ratio

Liquidity ratio

Quick ratio

78.

A firm's leverage ratio is 1.2, interest-burden ratio is .81, and profit margin is .25, and its asset turnover is 1.1. What is the firm's compound leverage factor?

.243

.267

.826

.972

79.

The tax burden of the firm is .4, the interest burden is .65, the return on sales is .05, the asset turnover is .90, and the leverage ratio is 1.35. What is the ROE of the firm?

1.58%

5.68%

12.2%

13.33%

80.

The tax burden of the firm is .5, the interest burden is .55, the profit margin is .25, the asset turnover is 1.5, and the leverage ratio is 1.65. What is the ROE of the firm?

1.88%

6.68%

12.15%

17.02%

81.

The major difference between IFRS and GAAP is that U.S. standards are ___________ and IFRS standards are _________.

strictly enforced; weakly enforced

rules-based; principles-based

evolutionary; devolutionary

based on government standards; based on corporate practice

82.

The quick ratio is a measure of a firm's __________.

asset turnover

market valuation

liquidity

interest burden

83.

The firm's leverage ratio is 1.2, interest-burden ratio is .81, and profit margin is .24, and its asset turnover is 1.25. What is the firm's ROA?

.25

.335

.372

84.

A firm has a compound leverage factor greater than 1; this indicates that ______.

the firm has no interest payments

the firm uses less debt as a percentage of financing

the firm's interest payments are equal to the firm's pretax profits

the firm's debt has a positive contribution to the firm's ROA

Chapter 15: ___________________________________________________________________________

You purchase one IBM July 120 call contract for a premium of $5. You hold the option until the expiration date, when IBM stock sells for $123 per share. You will realize a ______ on the investment.

$200 profit

$200 loss

$300 profit

$300 loss

You purchase one IBM July 125 call contract for a premium of $5. You hold the option until the expiration date, when IBM stock sells for $123 per share. You will realize a ______ on the investment.

$200 profit

$200 loss

$500 profit

$500 loss

You purchase one IBM July 120 put contract for a premium of $3. You hold the option until the expiration date, when IBM stock sells for $123 per share. You will realize a ______ on the investment.

$300 profit

$300 loss

$500 loss

$200 profit

You write one IBM July 120 call contract for a premium of $4. You hold the option until the expiration date, when IBM stock sells for $121 per share. You will realize a ______ on the investment.

$300 profit

$200 loss

$600 loss

$200 profit

______ option can only be exercised on the expiration date.

A Mexican

An Asian

An American

A European

All else the same, an American style option will be ______ valuable than a ______ style option.

more; European-

less; European-

more; Canadian-

less; Canadian-

At contract maturity the value of a call option is ___________, where X equals the option's strike price and ST is the stock price at contract expiration.

Max (0, ST - X)

Min (0, ST - X)

Max (0, X - ST)

Min (0, X - ST)

At contract maturity the value of a put option is ___________, where X equals the option's strike price and ST is the stock price at contract expiration.

Max (0, ST - X)

Min (0, ST - X)

Max (0, X - ST)

Min (0, X - ST)

An American put option gives its holder the right to _________.

buy the underlying asset at the exercise price on or before the expiration date

buy the underlying asset at the exercise price only at the expiration date

sell the underlying asset at the exercise price on or before the expiration date

sell the underlying asset at the exercise price only at the expiration date

10.

An Asian call option gives its holder the right to ____________.

buy the underlying asset at the exercise price on or before the expiration date

buy the underlying asset at a price determined by the average stock price during some specified portion of the option's life

sell the underlying asset at the exercise price on or before the expiration date

sell the underlying asset at a price determined by the average stock price during some specified portion of the option's life

11.

An Asian put option gives its holder the right to ____________.

buy the underlying asset at the exercise price on or before the expiration date

buy the underlying asset at a price determined by the average stock price during some specified portion of the option's life

sell the underlying asset at the exercise price on or before the expiration date

sell the underlying asset at a price determined by the average stock price during some specified portion of the option's life

12.

A time spread may be executed by _____.

selling an option with one exercise price and buying a similar one with a different exercise price

buying two options that have the same expiration dates but different strike prices

selling two options that have the same expiration dates but different strike prices

selling an option with one expiration date and buying a similar option with a different expiration date

13.

Which of the following statements about convertible bonds are true? I. The conversion price does not change over time. II. The associated stocks may not pay dividends as long as the bonds are outstanding. III. Most convertibles are also callable at the discretion of the firm. IV. They may be thought of as straight bonds plus a call option.

I and III only

I and IV only

I, II, and IV only

III and IV only

14.

A quanto provides its holder with the right to ______________.

participate in the payoffs from a portfolio of gambling casino stocks

exchange a fixed amount of a foreign currency for dollars at a specified exchange rate

participate in the investment performance of a foreign security

exchange the payoff from a foreign investment for dollars at a fixed exchange rate

15.

You purchase a call option on a stock. The profit at contract maturity of the option position is ___________, where X equals the option's strike price, ST is the stock price at contract expiration, and C0 is the original purchase price of the option.

Max (-C0, ST - X - C0)

Min (-C0, ST - X - C0)

Max (C0, ST - X + C0)

Max (0, ST - X - C0)

16.

Strips and straps are variations of __________.

straddles

collars

money spreads

time spreads

17.

You write a put option on a stock. The profit at contract maturity of the option position is ___________, where X equals the option's strike price, ST is the stock price at contract expiration, and P0 is the original premium of the put option.

Max (P0, X - ST - P0)

Min (-P0, X - ST - P0)

Min (P0, ST - X + P0)

Max (0, ST - X - P0)

18.

Longer-term American-style options with maturities of up to 3 years are called __________.

warrants

LEAPS

GICs

CATs

19.

The initial maturities of most exchange-traded options are generally __________.

less than 1 year

less than 2 years

between 1 and 2 years

between 1 and 3 years

20.

A futures call option provides its holder with the right to ___________.

purchase a particular stock at some time in the future at a specified price

purchase a futures contract for the delivery of options on a particular stock

purchase a futures contract at a specified price for a specified period of time

deliver a futures contract and receive a specified price at a specific date in the future

21.

Exchange-traded stock options expire on the _______________ of the expiration month.

second Monday

third Wednesday

second Thursday

third Friday

22.

The writer of a put option _______________.

agrees to sell shares at a set price if the option holder desires

agrees to buy shares at a set price if the option holder desires

has the right to buy shares at a set price

has the right to sell shares at a set price

23.

Advantages of exchange-traded options over OTC options include all but which one of the following?

Ease and low cost of trading

Anonymity of participants

Contracts that are tailored to meet the needs of market participants

No concerns about counterparty credit risk

24.

Each listed stock option contract gives the holder the right to buy or sell __________ shares of stock.

100

1,000

25.

Exercise prices for listed stock options usually occur in increments of ____ and bracket the current stock price.

$20

$25

26.

You buy a call option and a put option on General Electric. Both the call option and the put option have the same exercise price and expiration date. This strategy is called a _________.

time spread

long straddle

short straddle

money spread

27.

In 1973, trading of standardized options on a national exchange started on the _________.

AMEX

CBOE

NYSE

CFTC

28.

An American call option gives the buyer the right to _________.

buy the underlying asset at the exercise price on or before the expiration date

buy the underlying asset at the exercise price only at the expiration date

sell the underlying asset at the exercise price on or before the expiration date

sell the underlying asset at the exercise price only at the expiration date

29.

A put option on Dr. Pepper Snapple Group, Inc., has an exercise price of $45. The current stock price is $41. The put option is _________.

at the money

in the money

out of the money

knocked out

30.

You buy a call option on Merritt Corp. with an exercise price of $50 and an expiration date in July, and you write a call option on Merritt Corp. with an exercise price of $55 and an expiration date in July. This is called a ________.

time spread

long straddle

short straddle

money spread

31.

A call option on Brocklehurst Corp. has an exercise price of $30. The current stock price of Brocklehurst Corp. is $32. The call option is _________.

at the money

in the money

out of the money

knocked in

32.

You invest in the stock of Rayleigh Corp. and write a call option on Rayleigh Corp. This strategy is called a _________.

covered call

long straddle

naked call

money spread

33.

You buy a call option on Summit Corp. with an exercise price of $40 and an expiration date in September, and you write a call option on Summit Corp. with an exercise price of $40 and an expiration date in October. This strategy is called a _________.

time spread

long straddle

short straddle

money spread

34.

A European call option gives the buyer the right to _________.

buy the underlying asset at the exercise price on or before the expiration date

buy the underlying asset at the exercise price only at the expiration date

sell the underlying asset at the exercise price on or before the expiration date

sell the underlying asset at the exercise price only at the expiration date

35.

You invest in the stock of Valleyview Corp. and purchase a put option on Valleyview Corp. This strategy is called a _________.

long straddle

naked put

protective put

short stroll

36.

The value of a listed call option on a stock is lower when: I. The exercise price is higher. II. The contract approaches maturity. III. The stock decreases in value. IV. A stock split occurs.

II, III, and IV only

I, III, and IV only

I, II, and III only

I, II, III, and IV

37.

The Option Clearing Corporation is owned by _________.

the exchanges on which stock options are traded

the Federal Deposit Insurance Corporation

the Federal Reserve System

major U.S. banks

38.

The value of a listed put option on a stock is lower when: I. The exercise price is higher. II. The contract approaches maturity. III. The stock decreases in value. IV. A stock split occurs.

II only

II and IV only

I, II, and III only

I, II, III, and IV

39.

The maximum loss a buyer of a stock call option can suffer is the _________.

call premium

stock price

stock price minus the value of the call

strike price minus the stock price

40.

Which one of the statements about margin requirements on option positions is not correct?

The margin required will be higher if the option is in the money.

If the required margin exceeds the posted margin, the option writer will receive a margin call.

A buyer of a put or call option does not have to post margin.

Even if the writer of a call option owns the stock, the writer will have to meet the margin requirement in cash.

41.

A European put option gives its holder the right to _________.

buy the underlying asset at the exercise price on or before the expiration date

buy the underlying asset at the exercise price only at the expiration date

sell the underlying asset at the exercise price on or before the expiration date

sell the underlying asset at the exercise price only at the expiration date

42.

The potential loss for a writer of a naked call option on a stock is _________.

equal to the call premium

larger the lower the stock price

limited

unlimited

43.

A writer of a call option will want the value of the underlying asset to __________, and a buyer of a put option will want the value of the underlying asset to _________.

decrease; decrease

decrease; increase

increase; decrease

increase; increase

44.

Buyers of listed options __________ required to post margins, and writers of naked listed options __________ required to post margins.

are; are not

are; are

are not; are

are not; are not

45.

An option with a payoff that depends on the average price of the underlying asset during at least some portion of the life of the option is called ______ option.

an American

a European

an Asian

an Australian

46.

Which of the following expressions represents the value of a call option to its holder on the expiration date?

ST - X if ST>X, 0 if ST ≤ X

- (ST - X) if ST> X, 0 if ST ≤ X

0 if ST ≥ X,X - ST if ST<X

0 if ST ≥ X, - (X - ST) if ST<X

47.

A "bet" option is also called a ____ option.

barrier

lookback

digital

foreign exchange

48.

Which one of the following is the ticker symbol for the CBOE option contract on the S&P 100 Index?

SPX

DJX

CME

OEX

49.

The May 17, 2012, price quotation for a Boeing call option with a strike price of $50 due to expire in November is $20.80, while the stock price of Boeing is $69.80. The premium on one Boeing November 50 call contract is _________.

$1,980

$4,900

$5,000

$2,080

50.

You purchase one IBM March 120 put contract for a put premium of $10. The maximum profit that you could gain from this strategy is _________.

$120

$1,000

$11,000

$12,000

51.

You buy one Hewlett Packard August 50 call contract and one Hewlett Packard August 50 put contract. The call premium is $1.25, and the put premium is $4.50. Your highest potential loss from this position is _________.

$125

$450

$575

unlimited

52.

You sell one Hewlett Packard August 50 call contract and sell one Hewlett Packard August 50 put contract. The call premium is $1.25 and the put premium is $4.50. Your strategy will pay off only if the stock price is __________ in August.

either lower than $44.25 or higher than $55.75

between $44.25 and $55.75

higher than $55.75

lower than $44.25

53.

Suppose you purchase one Texas Instruments August 75 call contract quoted at $8.50 and write one Texas Instruments August 80 call contract quoted at $6. If, at expiration, the price of a share of Texas Instruments stock is $79, your profit would be _________.

$150

$400

$600

$1,850

54.

__________ is the most risky transaction to undertake in the stock-index option markets if the stock market is expected to fall substantially after the transaction is completed.

Writing an uncovered call option

Writing an uncovered put option

Buying a call option

Buying a put option

55.

Which one of the following is a correct statement?

Exercise of warrants results in more outstanding shares of stock, while exercise of listed call options does not.

A convertible bond consists of a straight bond plus a specified number of detachable warrants.

Call options always have an initial maturity greater than 1 year, while warrants have an initial maturity less than 1 year.

Call options may be convertible into the stock, while warrants are not convertible into the stock.

56.

A put on Sanders stock with a strike price of $35 is priced at $2 per share, while a call with a strike price of $35 is priced at $3.50. The maximum per-share loss to the writer of an uncovered put is __________, and the maximum per-share gain to the writer of an uncovered call is _________.

$33; $3.50

$33; $31.50

$35; $3.50

$35; $35

57.

You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of the stock is $50 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes: To establish a bull money spread with calls, you would _______________.

buy the 55 call and sell the 45 call

buy the 45 call and buy the 55 call

buy the 45 call and sell the 55 call

sell the 45 call and sell the 55 call

58.

You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of the stock is $50 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes: Ignoring commissions, the cost to establish the bull money spread with calls would be _______.

$1,050

$650

$400

$400 income rather than cost

59.

You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of the stock is $50 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes: If in June the stock price is $53, your net profit on the bull money spread (buy the 45 call and sell the 55 call) would be ________.

$300

-$400

$150

$50

60.

sell the 55 put and buy the 45 put

buy the 45 put and buy the 55 put

buy the 55 put and sell the 45 put

sell the 45 put and sell the 55 put

61.

You are cautiously bullish on the common stock of the Wildwood Corporation over the next several months. The current price of the stock is $50 per share. You want to establish a bullish money spread to help limit the cost of your option position. You find the following option quotes: Suppose you establish a bullish money spread with the puts. In June the stock's price turns out to be $52. Ignoring commissions, the net profit on your position is _______________.

$500

$700

$200

$250

62.

The common stock of the Avalon Corporation has been trading in a narrow range around $40 per share for months, and you believe it is going to stay in that range for the next 3 months. The price of a 3-month put option with an exercise price of $40 is $3, and a call with the same expiration date and exercise price sells for $4. What would be a simple options strategy using a put and a call to exploit your conviction about the stock price's future movement?

Sell a call.

Purchase a put.

Sell a straddle.

Buy a straddle.

63.

The common stock of the Avalon Corporation has been trading in a narrow range around $40 per share for months, and you believe it is going to stay in that range for the next 3 months. The price of a 3-month put option with an exercise price of $40 is $3, and a call with the same expiration date and exercise price sells for $4. Selling a straddle would generate total premium income of _____.

$300

$400

$500

$700

64.

The common stock of the Avalon Corporation has been trading in a narrow range around $40 per share for months, and you believe it is going to stay in that range for the next 3 months. The price of a 3-month put option with an exercise price of $40 is $3, and a call with the same expiration date and exercise price sells for $4. Suppose you write a strap and the stock price winds up to be $42 at contract expiration. What was your net profit on the strap?

$200

$300

$700

$400

65.

The common stock of the Avalon Corporation has been trading in a narrow range around $40 per share for months, and you believe it is going to stay in that range for the next 3 months. The price of a 3-month put option with an exercise price of $40 is $3, and a call with the same expiration date and exercise price sells for $4. How can you create a position involving a put, a call, and riskless lending that would have the same payoff structure as the stock at expiration?

Buy the call, sell the put; lend the present value of $40.

Sell the call, buy the put; lend the present value of $40.

Buy the call, sell the put; borrow the present value of $40.

Sell the call, buy the put; borrow the present value of $40.

66.

A stock is trading at $50. You believe there is a 60% chance the price of the stock will increase by 10% over the next 3 months. You believe there is a 30% chance the stock will drop by 5%, and you think there is only a 10% chance of a major drop in price of 20%. At-the-money 3-month puts are available at a cost of $650 per contract. What is the expected dollar profit for a writer of a naked put at the end of 3 months?

$300

$200

$475

67.

A covered call strategy benefits from what environment?

Falling interest rates

Price stability

Price volatility

Unexpected events

68.

You sell one IBM July 90 call contract for a premium of $4 and two puts for a premium of $3 each. You hold the position until the expiration date, when IBM stock sells for $95 per share. You will realize a ______ on this strip.

$300 profit

$100 loss

$500 profit

$200 profit

69.

Which strategy benefits from upside price movement and has some protection should the price of the security fall?

Bull spread

Long put

Short call

Straddle

70.

What combination of puts and calls can simulate a long stock investment?

Long call and short put

Long call and long put

Short call and short put

Short call and long put

71.

An investor purchases a long call at a price of $2.50. The expiration price is $35. If the current stock price is $35.10, what is the break-even point for the investor?

$32.50

$35

$37.50

$37.60

72.

An investor is bearish on a particular stock and decided to buy a put with a strike price of $25. Ignoring commissions, if the option was purchased for a price of $.85, what is the break-even point for the investor?

$24.15

$25

$25.87

$27.86

73.

Which of the following strategies makes a profit if the stock price stays stable?

Long call and short put

Long call and long put

Short call and short put

Short call and long put

74.

Which of the following strategies makes a profit when the stock price declines and loses money when the stock price increases?

Long call and short put

Long call and long put

Short call and short put

Short call and long put

75.

If you combine a long stock position with selling an at-the-money call option, the resulting net payoff profile will resemble the payoff profile of a _______.

long call

short call

short put

long put

76.

What strategy could be considered insurance for an investment in a portfolio of stocks?

Covered call

Protective put

Short put

Straddle

77.

What strategy is designed to ensure a value within the bounds of two different stock prices?

Collar

Covered Call

Protective put

Straddle

78.

You are convinced that a stock's price will move by at least 15% over the next 3 months. You are not sure which way the price will move, but you believe that the results of a patent hearing are definitely going to have a major effect on the stock price. You are somewhat more bullish than bearish however. Which one of the following options strategies best fits this scenario?

Buy a strip.

Buy a strap.

Buy a straddle.

Write a straddle.

79.

When issued, most convertible bonds are issued _____________.

deep in the money

deep out of the money

slightly out of the money

slightly in the money

80.

A convertible bond is deep in the money. This means the bond price will closely track the __________.

straight debt value of the bond

conversion value of the bond

straight debt value of the bond minus the conversion value

straight debt value of the bond plus the conversion value

81.

Warrants differ from listed options in that: I. Exercise of warrants results in dilution of a firm's earnings per share. II. When warrants are exercised, new shares of stock must be created. III. Warrant exercise results in cash flows to the firm, whereas exercise of listed options does not.

I only

I and II only

II and III only

I, II, and III

82.

Suppose you find two bonds identical in all respects except that bond A is convertible to common stock and bond B is not. Bond A is priced at $1,245, and bond B is priced at $1,120. Bond A has a promised yield to maturity of 5.6%, and bond B has a promised yield to maturity of 6.7%. The stock of bond A is trading at $49.80 per share. Which of the following statements is (are) correct? I. The value of the conversion option for bond A is $125. II. The lower promised yield to maturity of bond A indicates that the bond is priced according to its straight debt value rather than its conversion value. III. If bond A can be converted into 25 shares of stock, the investor would break even at the current prices.

II only

I and III only

III only

I, II, and III

83.

You find digital option quotes on jobless claims. You can buy a call option with a strike price of 300,000 jobless claims. This option pays $100 if actual claims exceed the strike price and pays zero otherwise. The option costs $68. A second digital call with a strike price of 305,000 jobless claims is available at a cost of $53. Suppose you buy the option with the 300,000 strike and sell the option with the 305,000 strike and jobless claims actually wind up at 303,000. Your net profit on the position is ______.

-$15

$200

$85

$185

84.

Bill Jones inherited 5,000 shares of stock priced at $45 per share. He does not want to sell the stock this year due to tax reasons, but he is concerned that the stock will drop in value before year-end. Bill wants to use a collar to ensure that he minimizes his risk and doesn't incur too much cost in deferring the gain. January call options with a strike of $50 are quoted at a cost of $2, and January puts with a $40 exercise price are quoted at a cost of $3. If Bill establishes the collar and the stock price winds up at $35 in January, Bill's net position value including the option profit or loss and the stock is _________.

$195,000

$220,000

$175,000

$215,000

85.

You own a stock portfolio worth $50,000. You are worried that stock prices may take a dip before you are ready to sell, so you are considering purchasing either at-the-money or out-of-the-money puts. If you decide to purchase the out-of-the-money puts, your maximum loss is __________ than if you buy at-the-money puts and your maximum gain is __________.

greater; lower

greater; greater

lower; greater

lower; lower

86.

You purchase one IBM July 90 call contract for a premium of $4. The stock has a 2-for-1 split prior to the expiration date. You hold the option until the expiration date, when IBM stock sells for $48 per share. You will realize a ______ on the investment.

$300 profit

$100 loss

$400 loss

$200 profit

87.

You own $75,000 worth of stock, and you are worried the price may fall by year-end in 6 months. You are considering using either puts or calls to hedge this position. Given this, which of the following statements is (are) correct? I. One way to hedge your position would be to buy puts. II. One way to hedge your position would be to write calls. III. If major stock price declines are likely, hedging with puts is probably better than hedging with short calls.

I only

II only

I and III only

I, II, and III

#FIN 320 Week 8 Quiz – Strayer

0 notes