QUESTION Which of the following BEST defines solvency? A) being able to pay debts when they become due B) managing money in the optimum way C) earning more money than the previous year D) assuring that gains outweigh losses E) predicting revenues, costs, and expenses accurately ANSWER Answer: A Explanation: A) To be solvent […]
QUESTION Insurance companies typically invest any excess funds in stocks, real estate, and other assets. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Because many insurance companies collect more in premiums than they pay out in insured claims or operating expenses, they typically invest any excess funds in stocks, real […]
QUESTION Pension funds tend to invest in short-term aggressive assets. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Pension funds tend to invest in long-term conservative assets such as common stock or government securities.
QUESTION Bank deposit insurance and other policies were adopted to protect depositors as a result of the many banking troubles leading up to the Great Depression. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: The many banking troubles leading up to the Great Depression did result in the creation of […]
QUESTION Because of FDIC insurance, a depositor’s $1,000,000 would be safe if he or she were to have it evenly deposited among four banks. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Because the SAIF, via the SDIC, insures up to $250,000 per depositor per bank, $1,000,000 divided up evenly […]
QUESTION Beginning in the 1980s and 1990s, as memories of the Great Depression faded, massive deregulation of our financial systems took place. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Beginning in the 1980s and 1990s, as memories of the Great Depression faded, massive deregulation of our financial systems took […]
QUESTION When a company sells stock to the general public for the first time, it is called an initial public offering. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Initial public offering is the name given to a company’s first-time sale of its stock to the general public.
QUESTION With deregulation, the willingness of financial institutions and individuals to take on risk decreased. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: With deregulation came the trend of financial institutions and individuals taking on great risk.
QUESTION One of the Fed’s roles is to clear checks between different banks. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: It is the role of the Fed to clear checks between different banks.
QUESTION Which of the following is one of the three parts of a financial plan? A) taxation B) spending C) saving D) forecasting E) financial leverage ANSWER Answer: D Explanation: D) A financial plan has three parts: forecasting, budgeting, and financial controls.
