Question: 1. Which of the following describes a

> Describe how a check drawn on a commercial bank but deposited for collection in another bank in a distant city might be cleared through the facilities of the Federal Reserve System.

> Explain the process by which the Federal Reserve Banks provide the economy with currency and coin.

> Describe the objectives of the Consumer Credit Protection Act of 1968. What is the Truth in Lending Section of the Act? What is Regulation Z?

> What federal agencies are responsible for supervising and regulating depository institutions that are not commercial banks?

> Explain the usual procedures for examining national banks. How does this process differ from the examination of member banks of the Federal Reserve System holding state charters?

> Describe the two “targets” that the Fed can use when establishing monetary policy. Which target has the Fed focused on in recent years?

> Reserve Banks have at times been described as bankers’ banks due to their lending powers. What is meant by this statement?

> Describe what is meant by quantitative easing by the Fed.

> Identify and briefly describe the three traditional instruments that may be used by the Fed to set monetary policy.

> Distinguish among the dynamic, defensive, and accommodative responsibilities of the Fed.

> 1. The ability to meet depositor withdrawals and to pay off other liabilities when they come due reflects a. bank liquidity. b. bank solvency. c. default risk. d. interest rate risk. 2. The risk associated with changing market interest rates on the

> Identify the seven individuals who served as chairs of the Fed Board of Governors since the early 1950s. Indicate each individual’s approximate time and length of service as chair.

> Discuss the structure, the functions, and the importance of the Federal Open Market Committee.

> How are members of the Board of Governors of the Federal Reserve System appointed? To what extent are they subject to political pressures?

> What is a Reserve Branch Bank? How many such branches exist, and where are most of them located?

> Explain how the banking interests and large, medium, and small businesses are represented on the board of directors of each Reserve Bank.

> Describe the organizational structure of the Federal Reserve System in terms of its five major components.

> What functions and activities do central banks usually perform?

> Describe the weaknesses of the national banking system that was in place prior to passage of the Federal Reserve Act of 1913.

> 1. All else the same, as a firm’s use of nondebt tax shields rises, the firm’s use of debt will most likely do which of the following? a. Decline b. Not change c. Rise d. Theory doesn’t give us any guidance in this area. 2. All else the same, higher ban

> 1. What are the effects of financial leverage on earnings per share? a. A higher degree of financial leverage increases earnings per share. b. A higher degree of financial leverage does not affect earnings per share. c. A higher degree of financial lever

> 1. What is usually the largest category of bank assets? a. Cash and balances due from depository institutions b. Securities c. Loans d. Other assets 2. What is usually the largest category of bank liabilities and stockholders’ equity? a. Deposits

> 1. What does EBIT/eps analysis indicate? a. It shows the relationship between EBIT and eps. b. It is a profitability ratio. c. It is a capital structure ratio. d. It can be used to compare the risk and earnings levels under different capital structures.

> 1. What does the internal growth rate measure? a. How quickly firm assets can grow without any new sales. b. How quickly sales can grow without issuing new shares of stock. c. How quickly sales can grow as the firm acquires new assets. d. How quickly ass

> 1. How is WACC computed? a. It is an average of bank loan interest rates. b. It is a weighted average of the after-tax cost of each long-term financing source used by the firm. c. It is a weighted average of the after-tax cost of all financing sources u

> 1. How is a firm’s after-tax cost of debt determined? a. It is the same as the before-tax cost of debt. b. It equals the pretax cost of debt estimate multiplied by one minus the firm’s tax rate. c. It equals the firm’s tax rate multiplied by the yield to

> 1. What is the relationship between a project’s cost of capital and its minimum required rate of return? a. The cost of capital is always greater than the minimum required return. b. The cost of capital is always less than the minimum required return. c.

> 1. What are the components of a firm’s capital structure? a. Current assets and fixed assets b. Current assets, fixed assets, current liabilities, and long-term debt c. Long-term debt, fixed assets, and stockholders’ equity d. Long-term debt and equity

> 1. What is the stand-alone principle? a. Mutually exclusive projects should be considered one at a time. b. Independent projects should be considered one at a time. c. Each capital budgeting project must have a manager to strongly support it to upper man

> 1. Why might managers prefer to use capital budgeting techniques other than the NPV? a. They give the manager an intuitive feel for a safety margin in case cash flow estimates are too high. b. Because they use all the project’s cash flows and the cost of

> 1. The payback period is the amount of time until a project achieves which of the following? a. Profits are positive b. Total cash flows (outflows and inflows) sum to zero c. Revenues equal operating expenses d. Revenues equal operating and financing exp

> 1. What is the profitability index (PI)? a. The benefit/cost ratio of a capital budgeting project, in present value terms. b. The benefit/cost ratio of a capital budgeting project, in future value terms. c. The benefit/cost ratio of a capital budgeting p

> 1. Which of the following depository institutions is only state-chartered? a. Commercial banks b. Savings and loan associations c. Savings banks d. Credit unions 2. Which of the following terms describes the degree of branch banking permitted in mo

> 1. How is MIRR computed? a. By finding the discount rate that equates the present value of the cash outflows with the terminal value of the cash inflows of a capital budgeting project b. By finding the discount rate that equates the present value of the

> 1. The relationship between the cost of capital and net present value can be described by which of the following? a. Upward sloping b. Rises, then falls c. Called the NPV profile d. Shows that NPV is always positive 2. The IRR measures which of the foll

> 1. How is NPV computed? a. Present value of future cash flows minus cost b. Sum of cash inflow minus cost c. Future value of cash inflows minus future value of cost d. Present value of profits from the project 2. What does the cost of capital represent

> 1. The stages of the capital budgeting process do not include which one of the following? a. Design b. Identification c. Development d. Follow-up 2. In which stage of the capital budgeting process are project cash flows estimated? a. Implementation b.

> 1. True or False? Net working capital changes will affect a project’s operating cash flow estimates. a. True because the project may affect levels of inventory or accounts receivable. b. True because changes in financing strategy will affect a project’s

> 1. The expense of developing initial outlay or cost estimates for a project should be considered which of the following? a. A sunk cost b. Part of the total initial outlay expenses c. An depreciable expense over the project’s life d. None of the choices

> 1. Risk-adjusted discount rates should be used to evaluate capital budgeting projects for which of the following reasons? a. The risk/expected return tradeoff in finance b. Otherwise low-risk, low-return projects will appear less attractive than high-ris

> 1. Which of the following types of cash flow, according to surveys, are the least likely to be audited? a. Initial investment b. Operating cash flow c. Financing costs d. Salvage value 2. Purposely overestimating a project’s operating cash flows—or unde

> 1. Capital budgeting is the process of doing which of the following? a. Allocating capital among bonds and stocks. b. Making certain adequate capital is available to pay bills when they come due. c. Budgeting for public finance projects. d. Identifying,

> 1. When determining the cost of a loan, the business owner should consider the effects of which of the following? a. Discounting the loan b. Compensating balance requirements c. Fees d. All of the choices are correct. 2. The correct way to compute

> 1. Which Act allowed banks to receive federal charters? a. National Banking At of 1864 b. Federal Reserve Act of 1913 c. Glass-Steagall Act of 1933 d. Depository Institutions Deregulation and Monetary Control Act of 1980 2. Which Act repealed the l

> 1. Which of the following is not a means for a business owner to personally guarantee a loan for his/her business? a. Co-maker loan b. Life insurance loan c. Stock and bonds as loan collateral d. Provide evidence of property insurance coverage on the

> 1. Which of the following are two types of accounts receivable financing? a. Accounts payable and notes payable b. Notes payable and promissory notes c. Factoring and accounts payable d. Pledging and factoring 2. Compared to factoring, which of the

> 1. Trade credit represents which of the following? a. The least formal of all forms of financing b. The most important form of short-term business financing c. Funds owed to a firm’s suppliers d. All of the choices are correct. 2. Which of the foll

> 1. Which of the following is a major difference between a bank line of credit and a revolving credit agreement? a. The line of credit cannot be renewed but the revolver automatically renews each year without further credit checks. b. Funds granted on a

> 1. A firm can estimate its short-term financing needs by which of the following? a. Using a cash budget b. Estimating its external financing needs c. Comparing credit sales to expenses d. The percentage-of-sales approach 2. Which one of the followi

> 1. RFID tags do which of the following? a. Help to track inventory and can reduce theft b. Indicate who the best-paying customers are c. Alert credit bureaus to improper credit card usage d. Reduce banking system float by using electronic data interc

> 1. Reducing working capital such as inventory can result in which of the following? a. Increased cash b. Higher profits c. Lower financing costs d. All of the choices are correct. 2. What does a just-in-time inventory system accomplish? a. It reduc

> 1. Which of the following is measured by viewing a person’s past credit history to see the person’s willingness to pay bills on time? a. Character b. Capacity c. Collateral d. Conditions 2. Examining liquidity ratios to gauge a firm’s ability to pa

> 1. What is float? a. The difference between cash inflows and cash outflows for a business. b. The difference between operating income and net income. c. The difference between accounts receivable and accounts payable. d. The delay between when funds

> 1. The first incorporated bank, the Bank of North America, was created in a. 1492. b. 1782. c. 1816. d. 1863. 2. The First Bank of the United States was established in a. 1791. b. 1811. c. 1816. d. 1863. 3. The first “thrift institutions” to

> 1. What are the four motives for holding cash? a. Paying suppliers, paying workers, paying back loans, and paying taxes b. Transactions, caution, paying taxes, and paying debts c. Transaction, precaution, speculation, and tax d. Global, international

> 1. Which of the following best describes a cash budget? a. A snapshot at a point in time of the firm’s cash balance b. A tool for forecasting cash flows c. Another name for the Statement of Cash Flows d. A fund for paying for incidental expenses in th

> 1. If all else remains constant, how should we expect a firm’s levels of accounts receivable and accounts payable to be affected by an increase in sales? a. Balances in both accounts receivables and accounts payables will rise. b. The accounts receivab

> 1. What is the operating cycle? a. Usually one year for a typical manufacturing firm b. The period of time to produce an item and place it in inventory c. Time to produce a good or service and collect cash from its sale d. Average age of inventory mi

> 1. Working capital is made up of which of the following? a. Current assets b. Fixed assets c. Machinery, trucks, and other equipment used to produce goods or offer services d. Cash and receivables 2. Which of these best describes a firm’s perceptio

> 1. What does break-even analysis = estimate? a. The price where supply will equal demand b. The level of sales revenue that covers variable costs c. The level of sales revenue that covers fixed costs d. The number of units to be sold so operating pro

> 1. Which of the following will the forecasted increase in assets equal? a. Forecasted sales multiplied by the total asset turnover b. Forecasted sales divided by the total asset turnover c. Forecasted change in sales divided by the total asset turnover

> 1. What is DuPont analysis? a. A specialized set of financial ratios. b. Financial ratio analysis for chemical firms. c. It separates profitability ratios into component parts. d. It relates changes in sales to changes in balance sheet assets. 2. A

> 1. What do market value ratios tell managers about the financial market's view of a firm? a. How investors value a firm relative to financial statement values b. How the market value of assets compares to the market value of liabilities c. What the firm

> 1. Which type of ratio indicates the firm’s ability to generate returns on its sales, assets, and equity? a. Profitability management ratios b. Liquidity ratios c. Financial leverage ratios d. Profitability ratios 2. The difference between operatin

> 1. The separation of commercial banking and investment banking activities in the U.S. was provided for under the a. Federal Reserve Act of 1913. b. Glass-Steagall Act of 1933. c. Gramm-Leach-Bliley Act of 1999. d. Dodd-Frank Wall Street Reform and Co

> 1. As defined in the chapter, how is the debt to asset ratio computed as follows? a. Total liabilities divided by total assets b. Total assets divided by total debts c. Long-term bond debt divided by total assets d. Long-term bond and bank loan debt

> 1. What do asset management ratios indicate? a. The quality of a firm’s human resources b. If a firm needs to purchase new trucks or computers c. The efficiency of the use of a firm’s assets to support or generate sales revenue. d. Whether a firm is p

> 1. Which type of ratio indicates the ability to meet short-term obligations to creditors as they mature, or come due? a. Profitability management ratios b. Liquidity ratios c. Market value ratios d. Financial leverage ratios 2. What does the averag

> 1. What does the degree of operating leverage measure? a. The sensitivity of operating income to a change in sales. b. The sensitivity of operating income to a change in costs. c. The sensitivity of sales to a change in operating income. d. The sensi

> 1. A cross-sectional analysis is used for what purpose? a. To evaluate a firm’s performance over time b. To compare different firms at the same point in time c. To compare a firm’s ratios against average ratios for other companies in the firm’s indust

> 1. What is the principal-agent problem? a. When people are hired to make decisions in the best interests of others b. When agents make incorrect decisions due to inadequate information c. When an employee uses company resources for personal use and lat

> 1. What should be the main goal of a firm? a. Create goods and services sustainably and “be green.” b. Improve the social welfare of our workers. c. Maximize accounting profits as ethically as possible. d. Maximize shareholder wealth. 2. What informa

> 1. Which of the following does a common-size financial statement allow analysts to do easily? a. Compare two firms in the same industry. b. Compare two firms with similar total asset amounts. c. Compare two firms with similar revenues. d. Compare two

> 1. What combination of income statements and balance sheets is needed to create the statement of cash flows? a. Two most recent balance sheets and most recent income statement b. Most recent balance sheet and income statement c. Two most recent income

> 1. What is the output of goods and services in the economy referred to as? a. Gross domestic product b. National income c. Inflation d. Velocity of money 2. When gross national product is divided by the money supply, what is the result called? a.

> 1. What topics do the three parts of this book cover? a. Institutions and markets b. Investments c. Financial management d. All of the choices are correct 2. In what part of this book is the financial management of businesses covered? a. Part 1 b

> 1. What are the major areas for possible careers in finance? a. Business financial management b. Depository financial institutions c. Contractual savings and real property organizations d. Securities markets and investment firms e. All the choices a

> 1. What are financial markets, where debt securities with maturities of one year or less are issued and traded, called? a. Money markets b. Capital markets c. Primary markets d. Secondary markets 2. What are financial markets that are physical loca

> 1. What are the four major components of the U.S. financial system? a. Policy makers, a monetary system, financial institutions, and financial markets b. Policy makers, a monetary system, a fiscal system, and real estate markets c. A monetary system,

> 1. Which of the following is the accounting identity? a. Revenues – Expenses = Income b. Liabilities = Assets + Equity c. Earnings before taxes – Taxes = Net Income d. Assets = Liabilities + Equity 2. Which of the following typically appears as a l

> 1. The major financial institutions categories include a. depository institutions. b. contractual savings organizations. c. securities firms. d. finance firms. e. All of the choices are correct. 2. What one of the following types of financial inst

> 1. A currency exchange rate reflects the value of a. a currency’s value in terms of gold. b. a currency’s value in terms of silver. c. one currency relative to another currency. d. the amount of a currency in circulation. 2. When several European c

> (a) What was it that Snowden disclosed? (b) What are the various opinions on Snowden’s disclosures and whether anti-terrorism surveillance is violating the privacy rights of American citizens? Check Republican, Democratic, journalist, pundit and public o

> (a) Who are the stakeholders in this situation? What are their interests? What would be their arguments, pro and con, regarding whistleblower protection for guest workers? (b) Mirna and the other fired guest workers filed a complaint with the National La

> (a). Do the Dodd-Frank anti-retaliation provisions apply to U.S. employees when they blow the whistle while working abroad? Asadi v. G.E. Energy (USA), LLC, 2012 WL 2522599 (S.D. Tex. June 28, 2012) (b). Was Asadi a “whistleblower” under Dodd-Frank? Asad

> (a). Find out what kind of case Cheryl Eckard won, and how much she was awarded. (b). http://online.wsj.com/news/articles/SB10001424052702303443904575578713255698500 What could GlaxoSmithKline have done instead to avoid this expensive outcome?

> The Whitehouse’s response to the State Department’s dissent channel memo disagreeing with President Trump’s executive order on immigration.

> An Illinois eavesdropping statute would have prevented recordings of police speaking audibly in public places. Research: Find ACLU v. Alvarez. What was the background to that law at issue in that case? What was going on to cause it to be passed? How did

> (a) Suppose this took place in New York. Would Donovan succeed in a wrongful discharge claim? (b) Would he succeed in New Jersey? (c) In Montana? (d) This case actually took place in Michigan. Find the Michigan laws protecting whistleblowers and determ

> (a) How would you articulate a claim on behalf of Maclean? What arguments might the TSA make? How should the court rule? (b) The Supreme Court recently decided whether his disclosure was protected under the Whistleblower Protection Act of 1989. How did t

> Supervisor decision regarding armored truck driver who left truck unaccompanied to thwart robbery in bank.

> In September 2016, Pittsburgh became the first U.S. city with an Uber fleet of driverless cars, some 100 modified Volvo SUVs. When hailed by riders, the vehicles will come with a human back-up driver. Pennsylvania transportation rules do not explicitly b

> 1. Following Redfin's lead, some technology firms, have switched from independent contractors to employees. Research: Find out how this is working for the parcel shipping service Shyp, the food delivery service Munchery, the on-demand service for home he

> Should undocumented immigrants be allowed to sue for violations of the FLSA? For discrimination? For trying to organize a union? Research: Find out how the court ruled in Lucas v. Jerusalem Cafe, 721 F.3d 927 (8th Cir. 2013).

> Which of the following should be treated as employees protected by FLSA minimum wage laws: (a) People who write and post reviews of local businesses for the online service, YELP! Jeung v. Yelp!, 2015 WL 4776424 (N.D.Ca. 2015). (b). Instacart is an on-d

> Which are parodies? (a) RADIANCE published an article entitled "The NAACP: the National Association for the Abortion of Colored People," criticizing the NAACP's stance on abortion. The Radiance Foundation v. National Association for the Advancement of Co

> Chen, a former Monsanto Company employee, was offered a job with a Chinese seed company. After he tendered his resignation to Monsanto, the company ran a routine check of his company-issued computers and found them loaded with highly sophisticated and un

> (a) Can anyone legally stop you from using your grandmother’s recipe for your dessert? (b) Can anyone legally stop you from calling it Susan’s Derbie Pie?

> Political campaigns are notorious for the intellectual property issues: (a) What legal and ethical rights do artists have if a candidate they strongly oppose uses their song without permission? (b) When comedian John Oliver learned that Donald Trump's a

> Some biotech inventions—cell-lines and bacteria for example—must continuously replicate in order to be maintained for any use. Something analogous to planting, watering and cultivating is required to keep these synthetic organisms alive. Would such care