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Quiz 2: MCQ: Choose The One Alternative That Best Completes The Statement or Answers The Question

Uploaded by

Taleh Hasanzada

This is a multiple choice quiz about financial concepts. It contains 22 multiple choice questions about topics like the money market, primary and secondary markets, taxation of corporate income, and dividends.

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Quiz 2: MCQ: Choose The One Alternative That Best Completes The Statement or Answers The Question

Uploaded by

Taleh Hasanzada
30 views3 pages
This is a multiple choice quiz about financial concepts. It contains 22 multiple choice questions about topics like the money market, primary and secondary markets, taxation of corporate income, and dividends.

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Quiz 2

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This is a multiple choice quiz about financial concepts. It contains 22 multiple choice questions about topics like the money market, primary and secondary markets, taxation of corporate income, and dividends.

Copyright:

© All Rights Reserved
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
30 views3 pages

Quiz 2: MCQ: Choose The One Alternative That Best Completes The Statement or Answers The Question

Uploaded by

Taleh Hasanzada
This is a multiple choice quiz about financial concepts. It contains 22 multiple choice questions about topics like the money market, primary and secondary markets, taxation of corporate income, and dividends.

Copyright:

© All Rights Reserved
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
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Quiz 2

MCQ: Choose the one alternative that best completes the statement or answers the question.

1) As a key participant in financial transactions, individuals are ________.


A) net users of funds because they save less money than they borrow
B) net purchasers of funds because they save more money than they borrow
C) net demanders of funds because they save more money than they borrow
D) net suppliers of funds because they save more money than they borrow

2) Government is typically a ________.


A) net provider of funds because it borrows more than it saves
B) net demander of funds because it saves more than it borrows
C) net provider of funds because it can print money at will
D) net demander of funds because it borrows more than it saves

3) Government can obtain funds ________.


A) by issuing financial instruments such as futures and options
B) by trading in equity market
C) by selling debt securities
D) through forex market

4) Firms that require funds from external sources can obtain them ________.
A) from central bank directly B) through financial institutions
C) through forex market D) by issuing T-bills

5) Investment banks are institutions that ________.


A) perform all activities of commercial banks and retail banks
B) engage in trading and market making activities
C) are exempted from Securities and Exchange Commission regulations
D) are only limited to capital market activities

6) Which of the following assists companies in raising capital, advise firms on major transactions such as
mergers or financial restructuring, and engage in trading and market making activities?
A) investment banks B) commercial banks C) securities exchanges D) mutual funds

7) Which of the following is a means of selling bonds or stocks to the public?


A) private placement B) public offering C) direct placement D) organized selling

8) The ________ market is where securities are initially issued and the ________ market is where pre-
owned securities (not new issues) are traded.
A) secondary; primary B) money; capital C) primary; secondary D) primary; money

9) Which of the following is true of a primary market?


A) It is the only market in which the issuer is directly involved in the transaction.
B) It is a market where smaller, unlisted securities are traded.
C) It is regulated by The Sarbanes-Oxley Act.
D) It is an organized market in which all financial derivatives are traded.

10) A market that establishes correct prices for the securities that firms sell and allocates funds to their
most productive uses is called a(n) ________.
A) forex market B) efficient market C) future market D) weak-form market

11) The ________ is created by a financial relationship between suppliers and demanders of short-term
funds.
A) money market B) stock market C) capital market D) forex market

12) Most money market transactions are made in ________.


A) preferred stock B) marketable securities
C) commodities market D) common stock

13) In a ________ market, the buyer and seller are brought together to trade securities in an organization
called ________.
A) broker; over-the -counter market B) dealer; securities market
C) broker; securities market D) dealer; over-the-counter market

14) The Gramm-Leach-Bliley Act ________.


A) is created to monitor banks on a regular basis to ensure that they were safe and sound.
B) was signed during the Great Depression because of the financial crisis
C) allows business combinations between commercial banks, investment banks, and insurance companies
D) allows business combinations between commercial banks and investment banks, but not insurance
Companies

15) If a corporation sells certain capital equipment for more than their initial purchase price, the
difference between the sale price and the purchase price is called a(n) ________.
A) capital gain B) abnormal gain C) revenue gain D) ordinary gain

16) The money market is a market ________.


A) where smaller, unlisted securities are traded
B) where all derivatives are traded
C) which brings together suppliers and demanders of short-term funds
D) that enables suppliers and demanders of long-term funds to make transactions

17) The Glass-Steagall Act ________.


A) was intended to regulate the activities in the secondary market
B) was intended to regulate the activities in the primary market
C) created the Securities Exchange Commission
D) separated the activities of commercial and investment banks
18) The tax liability of a corporation with ordinary income of $105,000 is ________.
Range of taxable income Marginal rate
$0 to $50,000 15%
50,000 to 75,000 25
75,000 to 100,000 34
100,000 to 335,000 39
335,000 to 10,000,000 34
10,000,000 to 15,000,000 35
15,000,000 to 18,333,333 38
Over 18,333,333 35
A) $24,450 B) $23,950 C) $42,000 D) $35,700

19) The tax liability of a corporation with ordinary income of $1,500,000 is ________.
Range of taxable income Marginal rate
$0 to $50,000 15%
50,000 to 75,000 25
75,000 to 100,000 34
100,000 to 335,000 39
335,000 to 10,000,000 34
10,000,000 to 15,000,000 35
15,000,000 to 18,333,333 38
Over 18,333,333 35
A) $690,000 B) $585,000 C) $498,250 D) $510,000

20) The tax liability of a corporation with ordinary income of $1,100,000 is ________.
Range of taxable income Marginal rate
$0 to $50,000 15%
50,000 to 75,000 25
75,000 to 100,000 34
100,000 to 335,000 39
335,000 to 10,000,000 34
10,000,000 to 15,000,000 35
15,000,000 to 18,333,333 38
Over 18,333,333 35
A) $340,000 B) $374,000 C) $362,250 D) $390,000

21) Jennings, Inc. has a tax liability of $170,000 on pretax income of $500,000. What is the average tax rate
for Jennings, Inc.?
A) 25 percent B) 34 percent C) 40 percent D) 46 percent

22) Corporation A owns 15 percent of the stock of corporation B. Corporation B pays corporation A
$100,000 in dividends in 2002. Corporation A must pay tax on ________.
A) $ 30,000 of ordinary income B) $ 70,000 of ordinary income
C) $100,000 of ordinary income D) $ 70,000 of capital gain

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