Financial Management: Core Concepts, 2e (Brooks)

Financial Management: Core Concepts, 2e (Brooks)

Chapter 1 Financial Management

1.1 The Cycle of Money

1) At its most basic level, the function of financial intermediaries is to ________.

A) track and report interest rates

B) move money from lenders to borrowers and back again

C) report all financial transactions to the federal government

D) effect a transfer of wealth in society

Answer: B

Diff: 1

Topic: 1.1 The Cycle of Money

AACSB : 3 Analytic Skills

2) Which of the following is NOT an example of a financial transaction?

A) Your parents use their credit card to pay this term's college tuition.

B) You use the ATM to withdraw British pounds so you can fly to London.

C) Your roommate lends you $20 and you repay it in one week.

D) All of the above are financial transactions.

Answer: D

Diff: 2

Topic: 1.1 The Cycle of Money

AACSB : 3 Analytic Skills

3) The movement of money from lender to borrower and back again is known as ________.

A) the circle of life

B) corporate finance

C) the cycle of money

D) money laundering

Answer: C

Diff: 1

Topic: 1.1 The Cycle of Money

AACSB : 3 Analytic Skills

Hmwrk Questions: * Taken from "Prepping for Exams" questions at the end of the chapter.

4) The common objective of borrowing and lending is to ________.

A) make all parties better off

B) gain a profit at the other's expense

C) make a firm or individual appear more liquid than is really the case

D) thwart regulatory authority

Answer: A

Diff: 1

Topic: 1.1 The Cycle of Money

AACSB : 3 Analytic Skills

5) Which of the following is NOT a function of a financial intermediary in the lending/borrowing process?

A) To help establish terms of the lending/borrowing agreement

B) To match the borrower and the lender

C) To bear the risk that the borrower will not repay

D) All of the above are functions of the financial intermediary.

Answer: D

Diff: 1

Topic: 1.1 The Cycle of Money

AACSB : 3 Analytic Skills

6) You...