1. Commercial paper ______.
A. is issued mainly by commercial banks
B.can be either short or long-term debt
C. is most typically issued in very short maturities, such as one or two months
D. ought to be considered a capital market instrument
2. The expectations hypothesis assumes that investors regard bonds of different maturities .
A. as perfect substitutes
B. as not substitutes at all
C. as substitutes, but not perfect substitutes
D. none of the above
3. If the yield on Treasury bills falls from 5.27% to 5.22%, then the yield will decrease by ______ basis points.
A. 0.05
B. 0.5
C. 5
D. 50
4. Liquidity of a business is measured by ______.
A. the rate of return on owner equity
B. the ratio of total revenue to total expenses incurred
C. the ratio of current assets to current liabilities
D. the ratio of income to costs
5. Which of the following is an example of an automatic stabilizer? ______.
A. A change in interest rates
B. An increase in government spending
C. Lowering income taxes
D. Unemployment insurance
6. Which of the following definitions fits depreciation? .
A. Allocation of the asset's market value to expense over its useful life
B. Allocation of the asset's cost to expense over its useful life
C. Decreases in the asset's market value over its useful life
D. Increases in the fund set aside to replace the asset when it is worn out
7. In the balance of payments accounts, ______ are unilateral transfers.
A. direct investments in another nation's businesses
B. international transactions in securities with maturities greater than one year
C. international transactions of securities with maturities of less than one year
D. gifts and grants
8. A self-employed person who wishes to make provisions for retirement and reduce current tax liabilities should invest in .
A. a money market mutual fund
B. a time deposit
C. Keogh Plan
D. a money market deposit account
9. The central problem in economics is that of______.
A. comparing the success of command versus market economies
B. guaranteeing that production occurs in the most efficient manner
C. guaranteeing a minimum level of income for every citizen
D. allocating scarce resources in such a manner that society's unlimited needs or wants are satisfied as well as possible
10. Which of the following is the most accurate measure of a bond's interest rates? ______.
A. Coupon rate
B. Yield to maturity
C. Current yield
D. Discount yield
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