HFT 4464 Exam 2 With Correct
Answers
Which of the following statements is untrue? - ANSWER The stock market is
the only marketplace where value is created
Which of the following statement is not true? - ANSWER Hospitality
businesses, large and small alike, are challenged by financial instruments and
markets tremendously to survive
Futures are popular in the hospitality industry because many firms are
interested in "locking-in" purchase prices to reduce the likelihood of a loss
due to an unfavorable price change in the underlying commodity or assets -
ANSWER true
High risk and return expectations are consistent with an aggressive approach
- ANSWER true
Which of the following statement is true - ANSWER In essence, a bond is a
fixed income instrument delineating a load made by a creditor to a debtor. It
typically contains specified terms that dictate the loan term and interest rates
, Which of the following has an agency problem? - ANSWER Managers act to
maximize their earnings
If a restaurant chain secured a loan with variable interest rates and is
concerned about the rising interest rates, the chain would prefer to have the
choice of making fixed interest payments. Which of the following is most
likely the choice for the chain? - ANSWER A swap contract
When you prefer the expected value of the prospect to the prospect itself,
you are considered - ANSWER risk averse
When you would prefer the prospect with a 60% chance of generating
$240,000 and a 40% chance of generating $500,000 to generating $344,000
with certainty. You are considered - ANSWER risk seeking
Which of the following statements is true? - ANSWER If you would consider
the utility of getting the expected value of a prospect to be greater than the
expected utility of the prospect, your risk attitude is considered as risk
averse; On the other hand, your risk attitude would be risk seeking if you
prefer the prospect to the expected value of the prospect; If you care about
the expected value but don't about risk, then you are considered as risk
neutral
Answers
Which of the following statements is untrue? - ANSWER The stock market is
the only marketplace where value is created
Which of the following statement is not true? - ANSWER Hospitality
businesses, large and small alike, are challenged by financial instruments and
markets tremendously to survive
Futures are popular in the hospitality industry because many firms are
interested in "locking-in" purchase prices to reduce the likelihood of a loss
due to an unfavorable price change in the underlying commodity or assets -
ANSWER true
High risk and return expectations are consistent with an aggressive approach
- ANSWER true
Which of the following statement is true - ANSWER In essence, a bond is a
fixed income instrument delineating a load made by a creditor to a debtor. It
typically contains specified terms that dictate the loan term and interest rates
, Which of the following has an agency problem? - ANSWER Managers act to
maximize their earnings
If a restaurant chain secured a loan with variable interest rates and is
concerned about the rising interest rates, the chain would prefer to have the
choice of making fixed interest payments. Which of the following is most
likely the choice for the chain? - ANSWER A swap contract
When you prefer the expected value of the prospect to the prospect itself,
you are considered - ANSWER risk averse
When you would prefer the prospect with a 60% chance of generating
$240,000 and a 40% chance of generating $500,000 to generating $344,000
with certainty. You are considered - ANSWER risk seeking
Which of the following statements is true? - ANSWER If you would consider
the utility of getting the expected value of a prospect to be greater than the
expected utility of the prospect, your risk attitude is considered as risk
averse; On the other hand, your risk attitude would be risk seeking if you
prefer the prospect to the expected value of the prospect; If you care about
the expected value but don't about risk, then you are considered as risk
neutral
