1) Which of the following is true of financial institutions?

a.Financial institutions are the regulators of interest rates and other returns in financial markets.

b.Financial institutions require an understanding of factors that cause interest rates and other returns in the financial markets to rise and fall.

c.Financial institutions are accountable and responsible in reporting financial information for publicly traded corporations.

d.Financial institutions are required by the Sarbanes-Oxley Act to disclose the environment-friendly measures taken by investment corporations.

e.Financial institutions require public corporations to adopt socially responsible work practices.

2) Certificates representing ownership in stocks of foreign companies, which are held in a trust bank located in the country the stock is traded are called _____.

a.certificates of ownership

b.foreign stock funds

c.mutual funds

d.American depository receipts

e.investment bankers

3) What is the formula for calculating the full-capacity sales of a firm?

a.Full-capacity sales = Existing sales level Percent of capacity used to generate existing sales level

b.Full-capacity sales = Future sales level (1 - Percent of capacity used to generate future sales level)

c.Full-capacity sales = Existing sales level Percent of capacity used to generate future sales level

d.Full-capacity sales = Future sales level (1 + Percent of capacity used to generate existing level of assets)

e.Full-capacity sales = Existing sales level (1 - Percent of capacity used to generate future level of assets)

4) What is the other name for par value of a preferred stock?

a.Liquidation value

b.Interest

c.Preference value

d.Cumulative value

e.Hybrid value

5) Which of the following steps is a part of a company's Stage II decisions of raising capital?

a.Deciding whether to go for a competitive bid or negotiated deal with the investment bank

b.Deciding on the type of securities to be issued

c.Deciding whether to go for a best-efforts or underwritten issue

d.Deciding on an investment banker

e.Deciding on the amount of capital to be issued