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FinancialcxManagementcxCorecxConcepts,cx5thcxeditioncxRaymondcxBrookscxJimmycxYangcx




1
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, 2
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,Chaptercx1c x c x FinancialcxManagement

1.1 ThecxCyclecxofcxMoney

1) Atcxitscxmostcxbasiccxlevel,cxthecxfunctioncxofcxfinancialcxintermediariescxiscxtocx .
A) trackcxandcxreportcxinterestcxrates
B) movecxmoneycxfromcxlenderscxtocxborrowerscxandcxbackcxagain
C) reportcxallcxfinancialcxtransactionscxtocxthecxfederalcxgovernment
D) effectcxacxtransfercxofcxwealthcxincxsocie
tycxAnswer:c x B
Diff:cx1
Topic:c x 1.1cxThecxCyclecxofcxMoneycxAAC
SB:c x AnalyticalcxThinking
LO:c x 1.1cxDescribecxthecxcyclecxofcxmoney,cxthecxparticipantscxincxthecxcycle,cxandcxthecxcommoncxobjectivecxo
fcxborrowingcxandcxlending.

2) WhichcxofcxthecxfollowingcxiscxNOTcxancxexamplecxofcxacxfinancialcxtransaction?
A) Yourcxparentscxusecxtheircxcreditcxcardcxtocxpaycxforcxyourcxcurrentcxterm'scxcollegecxtuition.
B) YoucxusecxthecxATMcxatcxHeathrowcxairportcxincxLondoncxtocxwithdrawcxBritishcxpounds.
C) Yourcxroommatecxlendscxyoucx$20cxandcxyoucxrepaycxitcxincxonecxweek.
D) Allcxofcxthecxabovecxarecxfinancialcxtransaction
s.cxAnswer:c x D
Diff:cx2
Topic:c x 1.1cxThecxCyclecxofcxMoneycxAAC
SB:c x AnalyticalcxThinking
LO:c x 1.1cxDescribecxthecxcyclecxofcxmoney,cxthecxparticipantscxincxthecxcycle,cxandcxthecxcommoncxobjectivecxo
fcxborrowingcxandcxlending.

3) Thecxmovementcxofcxmoneycxfromcxlendercxtocxborrowercxandcxbackcxagaincxiscxknowncxascx .
A) thecxcirclecxofcxlife
B) corporatecxfinance
C) thecxcyclecxofcxmoney
D) moneycxlaundering
cxAnswer:c x C

Diff:cx1
Topic:c x 1.1cxThecxCyclecxofcxMoneycxAAC
SB:c x AnalyticalcxThinking
LO:c x 1.1cxDescribecxthecxcyclecxofcxmoney,cxthecxparticipantscxincxthecxcycle,cxandcxthecxcommoncxobjectivecxo
fcxborrowingcxandcxlending.
HmwrkcxQuestions:c x *cxTakencxfromcx"PreppingcxforcxExams"cxquestionscxatcxthecxendcxofcxthecxchapter.




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, 4) Thecxcommoncxobjectivecxofcxborrowingcxandcxlendingcxiscxtocx .
A) makecxallcxpartiescxbettercxoff
B) gaincxacxprofitcxatcxthecxother'scxexpense
C) makecxacxfirmcxorcxindividualcxappearcxmorecxliquidcxthancxiscxreallycxthecxcase
D) thwartcxregulatorycxauthorit
ycxAnswer:c x A
Diff:cx1
Topic:c x 1.1cxThecxCyclecxofcxMoneycxAAC
SB:c x AnalyticalcxThinking
LO:c x 1.1cxDescribecxthecxcyclecxofcxmoney,cxthecxparticipantscxincxthecxcycle,cxandcxthecxcommoncxobjectivecxo
fcxborrowingcxandcxlending.

5) WhichcxofcxthecxfollowingcxiscxNOTcxacxfunctioncxofcxacxfinancialcxintermediarycxin
cxthecxlending/borrowingcxprocess?

A) Tocxhelpcxestablishcxtermscxofcxthecxlending/borrowingcxagreement
B) Tocxmatchcxthecxborrowercxandcxthecxlender
C) Tocxbearcxthecxriskcxthatcxthecxlendercxwillcxnotcxrepay
D) Tocxbearcxthecxriskcxthatcxthecxborrowercxwillcxnotcxre
paycxAnswer:c x C
Diff:cx1
Topic:c x 1.1cxThecxCyclecxofcxMoneycxAAC
SB:c x AnalyticalcxThinking
LO:c x 1.1cxDescribecxthecxcyclecxofcxmoney,cxthecxparticipantscxincxthecxcycle,cxandcxthecxcommoncxobjectivecxo
fcxborrowingcxandcxlending.

6) ProfessorcxGaston,cxyourcxHistorycxteacher,cxborrowscxmoneycxatcxacxratecxofcx6%cxpercxyearcxfromcx
thecxValleycxStatecxBankcxforcxacxtuitioncxloancxforcxhercxson.cxYoucxhavecx$1,200cxdepositedcxintocxyourcx
checkingcxaccountcxatcxthecxsamecxbankcxearningcxacxratecxofcx0.5%cxpercxyear.cxWhichcxofcxthecxfollowi
ngcxstatementscxiscxTRUE?
A) Thecxbankcxiscxcriminallycxliablecxtocxyoucxforcxpayingcxancxinterestcxratecxlowercxthancxthecxexpectedcxr
atecxofcxinflation.
B) Youcxandcxyourcxprofessorcxhavecxancxobviouscxconflictcxofcxinterestcxbecausecxyoucxhavecxaccountscxa
tcxthecxsamecxfinancialcxinstitution.
C) Youcxbenefitcxfromcxearningcxinterestcxoncxyourcxdeposit,cxsafetycxforcxyourcxfunds,cxandcxhavi
ngcxacxrecognizablecxmeanscxforcxpayingcxforcxyourcxfinancialcxobligationscxwithoutcxhavingcxtocx
holdcxcash.
D) Yourcxprofessorcxiscxthecxonlycxpartycxtocxbecxmadecxworsecxoffcxbycxthiscxexamplecxbecausecxshecxiscxth
ecxonlycxpartycxpayingcxnetcxinterest.
Answer:c x C
Explanation:c x Bothcxyoucxandcxyourcxprofessorcxarecxusingcxservicescxtypicallycxprovidedcxbycxbanks.cxT
herecxiscxnocxconflictcxofcxinterest.
Diff:cx2
Topic:c x 1.1cxThecxCyclecxofcxMoneycxAAC
SB:c x AnalyticalcxThinking
LO:c x 1.1cxDescribecxthecxcyclecxofcxmoney,cxthecxparticipantscxincxthecxcycle,cxandcxthecxcommoncxobjectivecxo
fcxborrowingcxandcxlending.


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