1)You are in a fabulous new discount store that accepts returned merchandise for exchange, with no questions asked and with a smile. In fact, if you desire they will even refund the retail price of an item. Through a local radio station you have won a free compact disc of your choice. Which of the following CDs will you select?

a. Greatest Chants of the 11th Century - $14.99

b. Greatest Rock Hits of the 20th Century - $12.99

c. Saddest Country Hits of the 80s - $11.99

d. Most Exciting Vice-Presidential Memoirs - $19.99

2)You are in a fabulous financial market where financial securities trade without transaction costs. You own one hundred shares of a firm called Machiavellian Motors, which sells for $20 per share. The chief executive officer (CEO) of Machiavellian Motors suddenly makes an announcement. Which of the following announcements and reactions would you prefer?

a. The firm has been bought out. The CEO says that there is nothing that can be done to prevent it and predicts that the new owners will destroy the company. The price of the stock rises to $35 per share.

b. The firm is altering its financial strategy in a move that the CEO predicts will generate huge gains in the future. The price of the stock remains at $20 per share.

c. The firm is dramatically changing its product lines in a move that the CEO predicts will save the company. The stock price falls to $19 per share.

d. The firm is fighting a takeover bid with every means at its disposal in order to protect itself from a corporate raider. The price of the stock falls to $18 per share.

3)Which of the following is the most liquid?

a. An antique car

b. IBM Corporation common stock

c. Modern gold coins

4)Which of the following is the least liquid?

a. An antique car

b. IBM Corporation common stock

c. Modern gold coins

5)Which of the following items from SAC Corporations perspective should be label as real assets (R):

a. Accounts receivable: money owed to SAC Corporation by other corporations who have purchased products on credit

b. SAC Corporations administration building, which houses the finance department.

c. SAC Corporations corporate checking accounts.

d. Land purchased by SAC Corporation from a local finance company.

e. SAC Corporations inventories of raw materials.

6)Which of the following following items from SAC Corporations perspective should be label as being financial assets:

a. Accounts receivable: money owed to SAC Corporation by other corporations who have purchased products on credit.

b. SAC Corporations administration building, which houses the finance department.

c. SAC Corporations corporate checking accounts.

d. Land purchased by SAC Corporation from a local finance company.

e. SAC Corporations inventories of raw materials.

7)Identify the groups of people that are correctly identified that will financially gain or suffer in the following financial transactions:

a. Bigstuff Corporation uses a technical loophole to avoid paying $2,500,000 in real estate taxes to the county government. So, Bigstuff Corporation shareholders will gain and the citizens of the county will loose.

b. Dangerous Products, Inc., unexpectedly loses a $20,000,000 lawsuit for punitive damages for selling faulty snow angels to the City of West Rochester. Assume that Dangerous Products, Inc., is uninsured and that the city retained the prestigious local law firm of Gopher, Thummuny, & Runn. So, Dangerous Products, Inc. shareholders gain while the citizens of West Rochester and the lawyers lose.

c. Through a technical error, Creditor Corporation permanently loses track of the fact that it is owed $1,000,000 by Debtor Corporation. So, the shareholders of Creditor Corp. gain to shareholders of Debtor Corp.

d. U.S. Senator Barrelpork slips in a provision to a bill that passes and grants $9,000,000 to the Town Government of Herbanna for a particular project. So, citizens of United States gain while citizens of Herbanna lose.

8)Based upon your understanding of typical laws, which of the following actions are better described as oughttas (unrequired):

NOTE: Some of the actions below could be both oughttas (unrequired) and as gottas (legal requirements).

a. Making donations to orphans.

b. Paying income taxes.

c. Selling safe and reliable products.

d. Paying employees wages for work performed.

e. Producing products that perform as advertised.

f. Paying wages that permit dignity.

g. Giving a thank you wave when someone lets you into a line of traffic.

9)Based upon your understanding of typical laws, which of the following actions would be better described as gottas (legal requirements):

NOTE: Some of the actions below could be both oughttas (unrequired) and as gottas (legal requirements).

a. Making donations to orphans.

b. Paying income taxes.

c. Selling safe and reliable products.

d. Paying employees wages for work performed.

e. Producing products that perform as advertised.

f. Paying wages that permit dignity.

g. Giving a thank you wave when someone lets you into a line of traffic.

10)For Problems 1-3, complete the table given the following information and select the best answer for each below:

Problem Number	PV	FV	r	n	m
1.	$100	___	.10	1	1
2.	$100	___	.10	2	1
3.	$125	___	.10	1	1

a.$110.00;$121.00; and 137.50

b. $137.50;121.00;and$110.00

c.$121.00;$137.50;and$110.00

d. $137.50;121.00;and $110.00