November 2023 Question 1 Which one of the following is not a primary market function of investment bankers originating

  

Question 1 

Which one of the following is not a primary market function of investment bankers?

  

originating

 

underwriting

 

selling

 

making loans

Question 2 

Newly created securities are sold in the:

  

primary market

 

secondary market

 

third market

 

fourth market

Question 3 

Market stabilization is:

  

disallowed under the Securities Act   of 1934

 

permitted for underwriters if the market   price falls below the offering price

 

prohibited by the Securities Exchange   Commission

 

required by the Securities Act of   1948

Question 4 

A market has ________ if it can absorb large orders without disrupting prices; it has ___________ if it has many trades.

  

depth, breadth

 

breadth, depth

 

liquidity, quick execution

 

quick execution, liquidity

Question 5 

The regulation of new security sales by individual states is referred to as:

  

the registration process

 

a truth-in-securities requirement

 

the rating of security quality

 

Blue-sky laws

Question 6 

A stock that went from $40 per share at the beginning of the year to $45 at the end of the year and paid a $2 dividend provided an investor with a ____ return.

  

8.75%

 

14%

 

17.5%

 

7%

Question 7 

The effect on revenues and expenses from variations in the value of the U.S. dollar in terms of other currencies is called:

  

exchange rate risk

 

process risk

 

national risk

 

financial risk

Question 8 

If Stock A had a price of $120 at the beginning of the year, $150 at the end of the year and paid a $6 dividend during the year, what would be the annualized holding period return?

  

36%

 

30%

 

24%

 

20%

Question 9 

As defined in accordance with efficient markets notions, a weak-form efficient market would be a market in which asset prices reflect all:

  

current information

 

past information

 

inside information

 

public information

Question 10 

The risk caused by variations in interest expense unrelated to sales or operating income arising from changes in the level of interest rates in the economy is called:

  

financial risk

 

business risk

 

interest rate risk

 

economic rate risk

Question 11 

Suppose Ningbo Steel had sales revenue of $10,000 sales revenue, cost of goods sold of $5,000, operating expenses of $3000, interest expense of $1,000, a tax rate of 20%, and 1,000 shares of common stock outstanding. Based on this information, net profit after tax was:

  

$1,200

 

$1,000

 

$800

 

$400

Question 12 

All of the following accounts are considered to be current assets on the balance sheet except:

  

cash

 

short-term investments or marketable   securities

 

land

 

inventory

Question 13 

The goal of a business should be:

  

maximization of the owners’ wealth

 

maximization of accounting profit

 

maximization of sales

 

maximization of assets

Question 14 

Which one of the following balance sheet accounts would not be considered to be a current liability?

  

account payable

 

bank notes payable

 

accrued liabilities

 

mortgage debt

Question 15 

Of the following forms of business organization, which have the advantage of limited liability but no stockholders?

  

proprietorships

 

partnerships

 

corporations

 

limited partnerships

Question 16 

The extent to which assets are used to support sales is indicated by which of the following ratios:

  

liquidity ratios

 

asset utilization ratios

 

financial leverage ratios

 

profitability ratios

Question 17 

The ________ method of developing a pro forma income statement forecasts sales and values for the cost of goods sold, operating expenses, and interest expense that are expressed as a ratio of projected sales.

  

percent of sales

 

accrual

 

judgmental

 

cash

Question 18 

The primary purpose of the liquidity ratios is to determine:

  

the extent to which borrowed funds   are used to finance assets

 

the ability of the firm to meet   short-term obligations to creditors

 

the extent to which assets are used   to support sales

 

none of the above

Question 19 

The method of evaluating the firm’s performance over time is known as:

  

trend analysis

 

cross-sectional analysis

 

industry comparative analysis

 

Due Pont analysis

Question 20 

The quick ratio of a firm with current assets of $300,000, current liabilities of $100,000 and inventory of $100,000 is:

  

1:1

 

2:1

 

3:1

 

4:1