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series 86 practice exam 1A questions and answers verified 2024
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series 86 practice exam 1A questions and answers verified 2024
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series 86 practice exam 1AThe quick service restaurant segment is a cash business and is more likely to
be negatively influenced by:
A. Increases in gas pump prices
B. Interest rate changes
C. Longer time spent commuting
D. Baby boomers approaching peak earning years
A. Increases in gas pump prices
An increase in gas pump prices correlates well (negatively) with QSR sales as
it leaves less income available for fast food purchases, hurting those with
modest incomes. Baby boomers would and have gravitated toward casual
dining and spending patterns react to longer-term demographics as opposed
to short term influences. (18030)
The theory stating that government intervention is necessary to stimulate
economic activity is:
A Supply-side economics
B Monetary theory
C. Keynesian economic theory
D. The multiplier effect
C. Keynesian economic theory
,The basis of Keynesian economics is that the government must intervene in
the economy to stimulate activity. This is normally done by enacting fiscal
policies. Examples of such actions include implementing tax increases and
expenditure programs. (18014)
A company has revenue of $770 million, EBIT of $450 million, debt of $670
million, and equity of $505 million. If the tax rate is 40%, what is the
company's return on invested capital?
A 15%
B 19%
C. 23%
D 39%
C. 23%
The formula to calculate return on capital or return on invested capital is EBIT
(operating income) multiplied by the complement of the tax rate, which is then
divided by capital or invested capital. Although there are numerous formulas
used to calculate capital or invested capital, based on the information given in
this question, we would use total debt and equity. $450 million x (1.00 - .40) is
equal to $270 million. Total capital is $1,175 million ($670 + $505). The return
on capital is 23% ($270 million / $1,175 million).
When the demand curve moves to the right, this is probably due to:
A Changing elasticity
B Supply constraints
C Unavailability of substitute goods
, D Lower prices
C Unavailability of substitute goods
When the demand at any price increases, this is called a shift in demand. This
could be attributable to the unavailability of substitute goods. The lower price
of a good does not cause a demand curve to shift; instead, we move along the
existing demand curve to obtain the higher quantity of goods demanded. For
example, if the retail price of bananas were to increase dramatically, the
demand for other fruits would increase, causing the demand curve for apples
and oranges to shift to the right.
The Clemons Saxophone Corporation selected financial data: (first number is
2018 and second number is 2017)
Net Sales $5,400. $ 4,400
Cost of Goods Sold $3,900 $3,280
Accounts Receivable $438 $338
Inventory $820. $640
Accounts Payable $320. $240
A 5.34
B 4.75
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