TEST BANK FOR Financial Management: Core Concepts, 5th Edition by Raymond Brooks & Jimmy Yang.COMPLETE GUIDE All CHAPTERS COVERED 100% VERIFIED A+ GRADE ASSURED!!!!! NEW LATEST UPDATE!!!!!

TEST BANK FOR
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, 2
Copyright © 2025 Pearson Education, Inc.
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, Financial Management Core Concepts, 5th edition Raymond Brooks Jimmy
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Yang Chapter 1-18
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Chapter 1 bn b n b n Financial Management bn




1.1 The Cycle of Money bn bn bn




1) At its most basic level, the function of financial intermediaries is to
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A) track and report interest rates bn bn bn bn



B) move money from lenders to borrowers and back again
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C) report all financial transactions to the federal government
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D) effect a transfer of wealth in society bn bn bn bn bn bn bn



Answer: B b n



Diff: 1 bn



Topic: 1.1 The Cycle of Money AACS
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B: Analytical Thinking
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LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of borr
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owing and lending. bn bn




2) Which of the following is NOT an example of a financial transaction?
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A) Your parents use their credit card to pay for your current term's college tuition.
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B) You use the ATM at Heathrow airport in London to withdraw British pounds.
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C) Your roommate lends you $20 and you repay it in one week.
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D) All of the above are financial transactions.
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Answer: D b n



Diff: 2 bn



Topic: 1.1 The Cycle of Money AACS
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B: Analytical Thinking
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LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of borr
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owing and lending. bn bn




3) The movement of money from lender to borrower and back again is known as
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A) the circle of life bn bn bn



B) corporate finance bn



C) the cycle of money bn bn bn



D) money laundering bn b



Answer: C
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Diff: 1 bn



Topic: 1.1 The Cycle of Money AACS
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B: Analytical Thinking
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LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of borr
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owing and lending. bn bn



Hmwrk Questions: * Taken from "Prepping for Exams" questions at the end of the chapter.
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, 4) The common objective of borrowing and lending is to
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A) make all parties better off bn bn bn bn



B) gain a profit at the other's expense
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C) make a firm or individual appear more liquid than is really the case
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D) thwart regulatory authority bn bn bn



Answer: A b n



Diff: 1 bn



Topic: 1.1 The Cycle of Money AACS
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B: Analytical Thinking
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LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of borr
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owing and lending. bn bn




5) Which of the following is NOT a function of a financial intermediary in the
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lending/borrowing process? bn



A) To help establish terms of the lending/borrowing agreement
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B) To match the borrower and the lender
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C) To bear the risk that the lender will not repay
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D) To bear the risk that the borrower will not repay
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Answer: C b n



Diff: 1 bn



Topic: 1.1 The Cycle of Money AACS
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B: Analytical Thinking
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LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of borr
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owing and lending. bn bn




6) Professor Gaston, your History teacher, borrows money at a rate of 6% per year from the V
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alley State Bank for a tuition loan for her son. You have $1,200 deposited into your checking ac
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count at the same bank earning a rate of 0.5% per year. Which of the following statements is T
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RUE?
A) The bank is criminally liable to you for paying an interest rate lower than the expected rate of
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inflation.
B) You and your professor have an obvious conflict of interest because you have accounts at the
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same financial institution.
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C) You benefit from earning interest on your deposit, safety for your funds, and having a
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recognizable means for paying for your financial obligations without having to hold cash.
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D) Your professor is the only party to be made worse off by this example because she is the only
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party paying net interest.
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Answer: C b n



Explanation: Both you and your professor are using services typically provided by banks. There i
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s no conflict of interest.
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Diff: 2 bn



Topic: 1.1 The Cycle of Money AACS
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B: Analytical Thinking
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LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective of borr
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owing and lending. bn bn




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