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Business Education (040) Questions and Answers100% Solved
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Business Education (040)
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Business Education (040)23. If the U.S. Federal Reserve concludes that there is a significant risk of inflation, it
will most likely:
a. Raise interest rates
b. Lower interest rates
c. Keep interest rates the Same
d. Decrease bond yields - answerA
24. A combination of slow economic growth and high inflation is called:
a. Inflationary pressure
b. Deflation
c. Stagflation
d. Disinflation - answerC
25. A shareholder owns 200 shares of stock XYZ at $58 each. If there is a 2-1 stock
split, how many shares will that shareholder have, and what will the new share price
be?
a. 100 shares at $116 per share
b. 200 shares at $116 per share
c. 400 shares at $29 per share
d. 400 shares at $58 per share - answerC
26. Which of the following is not true of stock dividends?
a. They are usually taxable
b. They are offered voluntarily by companies in order to make their stock more attractive
c. Their amount and frequency are determined directly by shareholders at large
d. They may be discontinued or reduced at any time - answerC
27. If a stock has a high P/E ratio, this means that:
a. The stock's price is low considering the value of the company's earnings
b. The stock pays a high dividend based on its earnings per share
c. The stock's price is high considering the value of its earnings per share
d. The company's earnings per share are high - answerC
28. An individual who is about to retire and wants to earn interest without risking his or
her principal would most likely be advised to invest in:
a. Value stocks
b. An index fund
c. A mutual fund
d. U.S. Treasury bonds - answerD
,29. A company that is included in the Dow Jones Industrial Average most likely to be:
a. A well-known corporation with a large market capitalization
b. A foreign company
c. A start-up that was recently listed on the stock exchange
d. A small- to mid-sized technology company - answerA
30.
ABCD
Stock 20% 85% 70% 50%
Bonds 70% 10% 20% 50%
Cash 10% 5% 10% 0%
Which of the investors has the portfolio that is exposed to the greatest amount of risk?
a. Investor A
b. Investor B
c. Investor C
d. Investor D - answerB
31.
ABCD
Stock 20% 85% 70% 50%
Bonds 70% 10% 20% 50%
Cash 10% 5% 10% 0%
If Investor D's stocks have an average return of 8.8% during the year, and Investor D's
bonds have an average return of 5.2%, what is the average overall return on Investor
D's portfolio?
a. 14%
b. 7%
c. 5.6%
d. Cannot be determined - answerB
32. If one is planning to start a small business, which should one do first?
a. Obtain a business loan
b. Find a partner
c. Assess one's personal financial situation
d. Choose a location for one's business - answerC
33. Frank is 33 years old and married, with 2 children. He has $40,000 in his retirement
account, which is earning an average of 5% annually, and $10,000 in his personal
savings account, which is earning 2% annually. He is current with his mortgage, and
has $50,000 left to pay at a rate of 6%. Frank also has $30,000 in credit card debt with
an average rate of 13%. If Frank wants to increase his chances of retiring comfortably,
what would the best way be for him to spend a Christmas bonus of $10,000?
a. Put it in his retirement account
, b. Put it in his savings account
c. Use half to pay down his mortgage and save the other half
d. Use all of it to pay down his credit card debt - answerD
34. If a country is a net exporter, this means that:
a. The value of the goods that it imports exceeds the value of the goods that it exports
b. The value of the goods that it exports exceeds the value of the goods that it imports
c. It exports consumer products
d. It has high tariffs - answerB
35. If a government implements an import tariff on consumer electronics, What is it most
likely trying to accomplish?
a. It is trying to protect its domestic consumer electronics industry from competition
b. It is trying to decrease the cost of imported consumer electronics
c. It is trying to discourage domestic companies from producing consumer electronics
d. It is trying to increase competition and lower prices in the consumer electronics
industry - answerA
36. If a potential business owner projects that she will need to invest $100,000 in
equipment to start a dry cleaning business, and the business' monthly expenses on
rent, insurance, labor costs, and other incidentals are $5,000, how many months will it
take for her to earn back her initial investment if the average monthly gross revenue is
$8,000?
a. Less than 9 months
b. Less than 20 months
c. Less than 34 months
d. None of the above - answerC
37.
Sticker price Down payment Month Payment Term
A $8000 $0 $330 36 months
B $8000 $3000 $160 60 months
C $15000 $0 $250 60 months
D $15000 $5000 $400 36 months
A family wants to buy a new car, and is trying to decide between four different car and
car loan options. Which of the loans would require them to pay the least amount of
money overall, including the down payment and the monthly payments?
a. Option A
b. Option B
c. Option C
d. Option D - answerA
38.
Sticker price Down payment Month Payment Term
A $8000 $0 $330 36 months
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