Test Bank For Financial Management Core Concepts, 5th
Edition Author:Raymond Brooks Jimmy Yang All Chapters
1-18 Covered 100% Complete A+ Study Guide Latest
Version
1|Page
,Chapter 1 Financial Management
1.1 The Cycle of Money
1) At its most basic level, the function of financial intermediaries is to .
A) track and report interest rates
B) move money from lenders to borrowers and back again
C) report all financial transactions to the federal government
D) effect a transfer of wealth in
society Answer: B
Diff: 1
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
2) Which of the following is NOT an example of a financial transaction?
A) Your parents use their credit card to pay for your current term's college tuition.
B) You use the ATM at Heathrow airport in London to withdraw British pounds.
C) Your roommate lends you $20 and you repay it in one week.
D) All of the above are financial
transactions. Answer: D
Diff: 2
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
3) The movement of money from lender to borrower and back again is known as .
A) the circle of life
B) corporate finance
C) the cycle of money
D) money
laundering Answer:
C
2|Page
, Diff: 1
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
Hmwrk Questions: * Taken from "Prepping for Exams" questions at the end of the chapter.
3|Page
, 4) The common objective of borrowing and lending is to .
A) make all parties better off
B) gain a profit at the other's expense
C) make a firm or individual appear more liquid than is really the case
D) thwart regulatory
authority Answer: A
Diff: 1
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
5) Which of the following is NOT a function of a financial intermediary in
the lending/borrowing process?
A) To help establish terms of the lending/borrowing agreement
B) To match the borrower and the lender
C) To bear the risk that the lender will not repay
D) To bear the risk that the borrower will not
repay Answer: C
Diff: 1
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
6) Professor Gaston, your History teacher, borrows money at a rate of 6% per year from
the Valley State Bank for a tuition loan for her son. You have $1,200 deposited into your
checking account at the same bank earning a rate of 0.5% per year. Which of the following
statements is TRUE?
A) The bank is criminally liable to you for paying an interest rate lower than the expected
rate of inflation.
B) You and your professor have an obvious conflict of interest because you have accounts
at the same financial institution.
4|Page
Edition Author:Raymond Brooks Jimmy Yang All Chapters
1-18 Covered 100% Complete A+ Study Guide Latest
Version
1|Page
,Chapter 1 Financial Management
1.1 The Cycle of Money
1) At its most basic level, the function of financial intermediaries is to .
A) track and report interest rates
B) move money from lenders to borrowers and back again
C) report all financial transactions to the federal government
D) effect a transfer of wealth in
society Answer: B
Diff: 1
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
2) Which of the following is NOT an example of a financial transaction?
A) Your parents use their credit card to pay for your current term's college tuition.
B) You use the ATM at Heathrow airport in London to withdraw British pounds.
C) Your roommate lends you $20 and you repay it in one week.
D) All of the above are financial
transactions. Answer: D
Diff: 2
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
3) The movement of money from lender to borrower and back again is known as .
A) the circle of life
B) corporate finance
C) the cycle of money
D) money
laundering Answer:
C
2|Page
, Diff: 1
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
Hmwrk Questions: * Taken from "Prepping for Exams" questions at the end of the chapter.
3|Page
, 4) The common objective of borrowing and lending is to .
A) make all parties better off
B) gain a profit at the other's expense
C) make a firm or individual appear more liquid than is really the case
D) thwart regulatory
authority Answer: A
Diff: 1
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
5) Which of the following is NOT a function of a financial intermediary in
the lending/borrowing process?
A) To help establish terms of the lending/borrowing agreement
B) To match the borrower and the lender
C) To bear the risk that the lender will not repay
D) To bear the risk that the borrower will not
repay Answer: C
Diff: 1
Topic: 1.1 The Cycle of Money
AACSB: Analytical Thinking
LO: 1.1 Describe the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
6) Professor Gaston, your History teacher, borrows money at a rate of 6% per year from
the Valley State Bank for a tuition loan for her son. You have $1,200 deposited into your
checking account at the same bank earning a rate of 0.5% per year. Which of the following
statements is TRUE?
A) The bank is criminally liable to you for paying an interest rate lower than the expected
rate of inflation.
B) You and your professor have an obvious conflict of interest because you have accounts
at the same financial institution.
4|Page
