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 […]
QUESTION What are the nondeposit companies called that make short-term loans at higher interest rates to individuals or businesses that don’t meet the credit requirements of regular banks? A) insurance companies B) pension funds C) finance companies D) brokerage firms E) money market firms ANSWER Answer: C Explanation: C) Finance companies are nondeposit companies […]
QUESTION As your firm’s controller, you review an invoice that says “2/10, Net 30.” What does that mean? What will be an ideal response? ANSWER Answer: When an invoice says “2/10, Net 30,” that means that the buyer can take a 2% discount for paying the bill within 10 days, but in any case […]
QUESTION What are the nondeposit institutions that provide retirement benefits to workers and their families called? A) insurance companies B) pension funds C) finance companies D) brokerage firms E) money market firms ANSWER Answer: B Explanation: B) Pension funds are nondeposit institutions that provide retirement benefits to workers and their families.
QUESTION How do lenders make money? What will be an ideal response? ANSWER Answer: The main way lenders make money is by charging interest on their loans. Explanation: Lenders make money by charging interest on their loans.
QUESTION What is the process called that insurance companies use to decide who should be insured? A) underwriting B) evaluating C) financing D) insuring E) accounting ANSWER Answer: A Explanation: A) The process that insurance companies use to determine who should be insured is called underwriting.
QUESTION What are the three types of loans available from commercial finance companies? What will be an ideal response? ANSWER Answer: The three types of loans available from commercial finance companies are lines of credit, revolving credit agreements, and transaction loans. Explanation: The three types of loans available from commercial finance companies are lines […]
QUESTION Which of the following is an example of a nonbank? A) finance company B) savings and loan C) mutual savings D) commercial E) credit union ANSWER Answer: A Explanation: A) Nonbanks are financial institutions—insurance companies, pension funds, finance companies, and brokerage firms—that offer many of the same services banks provide.
QUESTION Would it be considered a barter if Sheila, a personal chef, cooked a five-course dinner for friends and, since they were friends, charged them half what she usually charges? What will be an ideal response? ANSWER Answer: This would not be considered a barter because Sheila would still be compensated with money, not […]
QUESTION For which types of banks does the NCUA provide insurance coverage? A) federal banks B) savings and loans C) local banks D) investment banks E) credit unions ANSWER Answer: E Explanation: E) The NCUA (National Credit Union Administration) provides insurance coverage for credit union accounts.
