QUESTION When is taking out a subprime loan to buy a house most likely to be a reasonable financial decision? A) Qualifying for a conventional loan is impossible. B) Owning a home is an important life goal for the borrower. C) Adjustable rates are likely to be higher than fixed rates. D) The borrower reasonably […]
Date: September 3rd, 2020
QUESTION A no-load mutual fund can still have costs for its investors. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: No-load mutual fees have no sales charges for investors; however, they may charge management fees to cover operating costs.
Date: September 3rd, 2020
QUESTION Which of the following, if true, strengthens the argument of Domino Grace’s management? A) Higher revenues would lead to higher profits for Domino Grace. B) If the derivative investments perform poorly, managers at Domino Grace will not pay any financial penalties. C) Domino Grace financial advisors are well-trained in handling complicated investment options. D) […]
Date: September 3rd, 2020
QUESTION Suppose that investments in derivatives generated $5 million of revenue for Domino Grace during this calendar year. The managers who proposed offering derivatives contend that this statistic demonstrates that offering derivatives increased Domino Grace revenues this calendar year by $5 million. Which of the following points out a flaw in this argument? A) It […]
Date: September 3rd, 2020
QUESTION How do you think derivatives helped cause the 2008 financial meltdown? What will be an ideal response? ANSWER Answer: Derivatives required the use of computers, which led to financial products that were far too complex, making it difficult to properly value them. These complex, difficult-to-value products were then sold to others, and yet […]
Date: September 3rd, 2020
QUESTION Which of the following, if true, undermines Groh’s point about diversification? A) Not every investor can afford every stock. B) The value of some stocks drop and never recover. C) When one stock value drops, others tend to also drop. D) Some investors prefer as little risk as possible when investing. E) The value […]
Date: September 3rd, 2020
QUESTION Which of the following assumptions does Ryerson have to make to support his statements? A) Some people make money by investing. B) Interest is the only thing that changes the value of a savings account. C) Most people want to save money instead of spending it. D) Companies issue stock only if there is […]
Date: September 3rd, 2020
QUESTION Greenmax’s chief financial officer likes the idea of expanding into markets in the southern hemisphere because he argues that this will help the company generate a consistent year-round cash flow. Which of the following, if true, strengthens the CFO’s argument? A) Energy drinks are popular in many different parts of the world. B) Demand […]
Date: September 3rd, 2020
QUESTION A corporate consultant concludes that a Disney business unit deserves heavy investment because three of its four product lines are highly profitable and have high market share. Which of the following, if true, most undermines this conclusion? A) The product lines making high profits sell goods with lower prices than the goods sold by […]
Date: September 3rd, 2020
QUESTION Which of the following, if true, strengthens the case for Munschausen’s seeking to acquire capital by debt financing? A) Munschausen will have very slim profit margins in its international sales. B) Munschausen will hire many new salespeople to work internationally. C) Munschausen will have a steady stream of revenue from its international sales. D) […]
Date: September 3rd, 2020
