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


Business Finance


Question 1 

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








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.









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?









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:









Question 12 

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




short-term investments or marketable   securities





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?








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







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: