Monetary policy actions that can be taken by the Federal Reserve Board include changing: I the discount rate

II reserve requirements

III margin requirements

IV open market operations levels

Answer: 

I the discount rate

II reserve requirements

III margin requirements

IV open market operations levels

Which of the following economic events would have a positive long term impact on common stock prices?

I Rising interest rates

II Rising capital gains tax rates

III Rising employment rates

IV Falling inflation rates

Answer: 

III Rising employment rates

IV Falling inflation rates

Which of the following information sources would be used to evaluate a corporate security trading in the Secondary Market?

I Feasibility Study

II Income Statement

III Balance Sheet

IV Prospectus

Answer: 

II Income Statement

III Balance Sheet

If the price of a stock breaks out through the support level, it is expected that the stock's price will:

A. rise

B. fall

C. remain stable

D. become volatile

Answer: B

An extended period where there is no discernible trend in prices is termed:

A. overbought

B. oversold

C. consolidation

D. resistance

Answer: C

The use of multiple asset classes when constructing a portfolio reduces:

A. regulatory (legislative) risk

B. market (capital) risk

C. interest rate risk

D. purchasing power risk

Answer: B. market (capital) risk

The largest component of the Standard and Poor's 500 Average is the:

A. banking and finance

B. transportations

C. utilities

D. industrials

Answer: D. industrials

The Bank of England is concerned that the British Pound is weakening against the U.S. Dollar. The appropriate action for the British central bank is to:

I buy British Pounds

II buy U.S. Dollars

III sell British Pounds

IV sell U.S. Dollars

Answer: 

I buy British Pounds

IV sell U.S. Dollars

If the federal reserve tightens credit via open market operations, which of the following interest rates will increase?

I Fed Funds Rate

II Discount Rate

III Broker Loan Rate

IV Prime Rate

Answer: 

I Fed Funds Rate

II Discount Rate

III Broker Loan Rate

IV Prime Rate

Gross Domestic Product is measured in:

A. constant dollars

B. inflated dollars

C. dollars deflated by the gold standard

D. dollars deflated by the sterling standard

Answer: A. constant dollars

Which of the following is a leading economic indicator?

A. Personal Income

B. Employment Duration

C. Labor Cost Per Manufactured Unit

D. Contracts for plant and equipment

Answer: D. Contracts for plant and equipment

An investor holds an international bond fund. Regarding the performance of the fund, which of the following statements are TRUE?

I If the foreign currency value rises against the dollar, the fund's Net Asset Value will increase

II If the foreign currency value rises against the dollar, the fund's Net Asset Value will decrease

III If the dollar falls against the foreign currency, the fund will have an inferior performance relative to dollar denominated funds

IV If the dollar falls against the foreign currency, the fund will have a superior performance relative to dollar denominated funds

Answer: 

I If the foreign currency value rises against the dollar, the fund's Net Asset Value will increase

IV If the dollar falls against the foreign currency, the fund will have a superior performance relative to dollar denominated funds

A balance of payments deficit would be widened by which of the following?

I Increased levels of U.S. imports

II Decreased sales of U.S. securities to foreign holders

III Decreased levels of foreign tourists visiting the United States

IV Decreased dividends paid to foreign holders of U.S. securities

Answer: 

I Increased levels of U.S. imports

II Decreased sales of U.S. securities to foreign holders

III Decreased levels of foreign tourists visiting the United States

Which of the investments listed below has historically offered the greatest hedge against purchasing power risk?

A. Common Stocks

B. Treasury Bills

C. Preferred Stocks

D. Treasury Bonds

Answer: A. Common Stocks

A "saucer" formation is a(n):

A. uptrend

B. downtrend

C. reverse upward trend

D. reverse downward trend

Answer: D. reverse downward trend

A corporation issues convertible debentures at par. Which of the choices are affected?

I Current Assets

II Current Liabilities

III Net Worth

IV Net Working Capital

Answer: 

I Current Assets

IV Net Working Capital

If a corporation declares a cash dividend, which of the following statements are TRUE?

I Net working capital increases

II Net working capital decreases

III Stockholder's equity increases

IV Stockholder's equity decreases

Answer: 

II Net working capital decreases

IV Stockholder's equity decreases

Investing in a manner that will emulate the performance of the S&P 500 Index as closely as possible is an example of:

A. active management

B. passive management

C. fundamental analysis

D. technical analysis

Answer: B. passive management

In a period of deflation, which of the following statements about fixed income securities are TRUE?

I Issuers are more likely to sell fixed income securities

II Issuers are likely to sell non-callable issues

III Holders are likely to realize capital appreciation on fixed income securities that are not close to maturity

IV Holders receive payments on fixed income securities that buy more in real terms

Answer: 

I Issuers are more likely to sell fixed income securities

II Issuers are likely to sell non-callable issues

III Holders are likely to realize capital appreciation on fixed income securities that are not close to maturity

IV Holders receive payments on fixed income securities that buy more in real terms

A corporation's annual report shows that the reported net income before tax is falling at a faster rate than operating income. Which of the following expenses must have grown at a faster rate?

A. Depreciation

B. Bond Interest

C. Preferred Dividend

D. Cost of Goods Sold

Answer: B. Bond Interest