The fact that coins can last a long time in circulation shows which characteristic of money?
A. Money is portable.
B. Money is durable.
C. Money is divisible.
D. Money is uniform.
Money isn't durable
Which of these is NOT one of the three uses of money?
A. A medium of exchange
B. A store of value
C. A means to barter
D. A unit of account
C. A means to barter
Which of the following is an example of money's divisibility?
A. Coins and bills can last a long time in circulation.
B. Twenty dollar bills are easy to carry around in a wallet or pocket.
C. A ten dollar bill can purchase a five dollar item, with five do
C. A ten dollar bill can purchase a five dollar item, with five dollars change coming back.
Which of the following is a negative aspect of bartering rather than using currency?
A. Bartering requires you to find someone who wants what you have.
B. Bartering does not require you to have any cash.
C. Bartering usually takes less time than using cur
Bartering requires you to find someone who wants what you have.
Which of the following is an example of commodity money put to use?
A. A cow used to purchase land
B. Mowing a lawn for a friend who, in turn, gives you a haircut
C. Giving a store clerk a five dollar bill for a $4 purchase
D. Writing an I.O.U. to a frien
A. A cow used to purchase land
In the early days of our nation, a strong centralized bank was favored by __________.
A. The Federalists
B. The Antifederalists
C. Thomas Jefferson
D. The entire nation
A. The Federalists
What purpose does the FDIC serve?
A. To insure customer deposits if a bank fails
B. To restrict the nation's money supply
C. To restrict interest rates that banks can pay
D. To provide loans to borrowers with unfavorable credit histories
A. To insure customer deposits if a bank fails
What did Congress do in 1816 to eliminate the financial chaos of the early nineteenth century?
A. Chartered the First Bank of the United States
B. Chartered the Second Bank of the United States
C. Authorized the president to enter into WWI
D. Voted to vet
B. Chartered the Second Bank of the United States
In the early 2000s, the number of home foreclosures increased because
A. many people paid off their mortgages early.
B. housing prices rose.
C. many borrowers could not repay their mortgages.
D. the government had to bail out large financial institutions.
C. many borrowers could not repay their mortgages.
Why did President Roosevelt want to take the United States off of the gold standard during the Great Depression?
A. He wanted to increase the value of the dollar.
B. He wanted to decrease the money supply.
C. He wanted to give the Treasury more power.
D.
D. He wanted to give the Fed more power.
The Federal Reserve System was created as a result of the need for financial stability shown by what event?
A. The collapse of the First Bank of the United States
B. The Panic of 1907
C. The Great Depression
D. World War II
B. The Panic of 1907
Which aspect of the Federal Reserve System helps establish its independence from the government?
A. Appointment of the Board of Governors by the president
B. Its division into 12 Federal Reserve Districts
C. Ownership of Federal Reserve System by member b
C. Ownership of Federal Reserve System by member banks
Which of the following is a tool that the Fed uses to regulate the money supply?
A. Bank examinations
B. Check clearing policies
C. Issuing of government checks
D. Reserve requirements
D. Reserve requirements
Why might ranchers want to lock in a price today for their cattle by signing a six-month futures contract?
A. To be able to pay off the put option when the futures contract expires.
B. To be able to buy a new herd of cattle when the six months is up.
C. T
D. To be able to plan on a certain amount of income in the future.
The Federal Reserve System acts as lender of last resort to what group?
A. Businesses in general
B. Consumers
C. Federal government
D. Financial institutions
D. Financial institutions
Which of the following situations would encourage people to invest their money in a savings account rather than keep it in cash?
A. Falling interest rates
B. Rising interest rates
C. Rising demand for money
D. Rising prices
B. Rising interest rates
What kinds of money are included in M1?
A. Money market funds
B. Currency
C. Savings deposits
D. Small-time deposits
B. Currency
In which situation would a family apply for a mortgage?
A. They want to buy a car.
B. They want to go on vacation.
C. They want to buy a house.
D. They want to send their daughter to college.
C. They want to buy a house.
Which is not example of a stored-value card?
A. Gift card
B. Credit card
C. Phone card
D. Subway smart card
Credit card
What service is available through home banking on the Internet?
A. Checking account balances.
B. Withdrawing cash.
C. Lending money to a friend.
D. Selling gold.
A. Checking account balances.
What relationship does risk have to return?
A. With lower risk, the potential for a return disappears.
B. The higher the risk, the lower the potential for return.
C. The lower the risk, the greater the potential for return.
D. The higher the risk, the gre
D. The higher the risk, the greater the potential for return.
Which of the following is a positive aspect of using a credit card?
A. The interest charged on credit cards is lower than interest on all other types of loans.
B. With a credit card, money is automatically deducted from the user's bank account.
C. Using a
C. Using a credit card allows consumers to buy goods even if they don't have cash.
Why do some people invest in hedge funds?
A. Because they want a fund that doesn't diversify.
B. Because they want to invest a small amount of money.
C. Because they want a fund with less risk.
D. Because they might make a huge profit.
D. Because they might make a huge profit.
A prospectus tells you
A. if you have a liquid investment.
B. how well your investment is performing.
C. whether or not you need a financial intermediary.
D. if you need a hedge fund.
B. how well your investment is performing.
What advantages do financial intermediaries offer an investor?
A. They offer liquidity, low interest rates, and risk-free investment.
B. They offer securities, interest-free loans, and diversification.
C. They share risks, provide information, and provide
C. They share risks, provide information, and provide liquidity.
When you evaluate an investment, you must balance
A. the interest you will earn with the prospectus you will gain.
B. the liquidity involved with the risk you take.
C. the risks involved with the rewards you expect to gain.
D. the diversification you are
C. the risks involved with the rewards you expect to gain.
Name one advantage of bonds for their issuers.
A. Bondholders can't share in the profits of a company.
B. Issuers must make fixed interest payments, even when it doesn't make a profit.
C. Issuers can't change interest payments even when rates have dropped
A. Bondholders can't share in the profits of a company.
Why does the United States government issue savings bonds?
A. To improve its bond rating
B. To earn interest
C. To pay for government projects
D. To raise taxes
C. To pay for government projects
What kinds of financial assets are sold on secondary markets?
A. Stocks
B. Small certificates of deposit
C. Savings bonds
D. Capital markets
A. Stocks
Why do you think ratings are helpful to investors?
A. They lower potential risk.
B. They raise potential risk.
C. They improve the yield for investors.
D. They help investors judge potential risk.
C. They improve the yield for investors.
How does the tax-exempt status of municipal bonds benefit consumers throughout the U.S. free enterprises system?
A. It makes people more likely to buy corporate bonds.
B. It makes people more likely to buy municipal bonds.
C. It increases the costs of pro
B. It makes people more likely to buy municipal bonds.
To raise money, a company is selling shares of "dividend growth" stock. What does the company MOST LIKELY do with its earnings?
A. Pays it all out to stockholders, four times a year.
B. Reinvests it quarterly in order to expand the company.
C. Pays out so
C. Pays out some to stockholders and reinvests the rest in its business.
How can you be MOST certain that a stock you own will allow you to vote at stockholder meetings and also earn dividends?
A. It must be both a common stock and an income stock.
B. It must be both a common stock and a growth stock.
C. It must be both a pref
A. It must be both a common stock and an income stock.
Which of the following is the WISEST strategy for a new investor in the stock market?
A. Buy growth stocks recommended by a relative.
B. Buy preferred stocks with a three-month call option.
C. Buy blue chip income stocks through a brokerage firm.
D. Buy t
C. Buy blue chip income stocks through a brokerage firm.
You bought a stock on January 1. At the end of the year, why might you analyze published data from the S&P 500?
A. To see whether the stock has just split.
B. To find out how the stock performed that year.
C. To decide whether to switch to the Dow next ye
B. To find out how the stock performed that year.