phase of the business cycle? 1. Low interest rates and high unemployment are characteristic of what phase of the bus a. Expansion b. Peak. C. Contraction d. Trough 2. Increasing inflation rates and increasing interest rates would be characteristic of: a. Expansion b. Peak C. Contraction. d. Trough 3. When using a dividend discount model, the least likely included input variable is the a. Required return of the investor. b. Growth rate in the return on equity. c. Growth rate in dividends. d. Expected dividend stream. 4. If the Federal Reserve wants to increase interest rates, which of the following actions might it take? a. Buy government securities b. Sell government securities c. Decrease the reserve requirement. d. Decrease federal government spending, 5. For a firm that pays no dividends, a. Its return on equity will equal its sustainable growth rate. b. It is unable to pay any dividends. c. It will have restrictions on its sustainable growth. d. Its shareholders will require a return equal to its return on equity. 6. Financial leverage is a direct function of the ratio of a. Sales to assets. b. EBIT to sales. c Interest expense to EBIT. d. Fixed cost as a percent of total cost. 7. Which of the following is NOT one of the primary responsibilities of the Federal Reserve? a. Maintain price levels supported by the economy. b. Maintain long-term economic growth. c. Maintain full employment. d. Ensure consistent positive returns in the equity markets