Exercise Topic 5 - Topic 5. Saving, Investment, and the...

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Topic 5. Saving, Investment, and the Financial System 1. Bond markets allow firms to pursue a. equity financing. b. debt financing. c. limited-growth policies. d. government loans and subsidy programs. 2. Junk bonds are issues by firms with a. high degrees of financial security. b. business ties to the trash-hauling industry. c. high degrees of financial insecurity. d. the ability to offer lower interest rates to lenders. 3. The stock market is an institution that promotes a. buying and selling of debt financing. b. the purchase and sale of firm equities. c. the purchase and sale of mutual funds. d. bank borrowing and lending. 4. The major advantage of mutual funds is that a. they allow people with limited funds to diversify. b. they encourage households to spend their money on current consumption. Topic 5 - 1 -
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c. fund managers are replaced by household administrators. d. they always use index funds to limit investor risk. 5. If an asset functions as a medium of exchange it a. holds its value over a long period of time. b. can be used by people to cover transactions. c. can be used by firms for debt financing. d. can be used by firms for equity financing. 6. The four categories of expenditures that make up GDP are consumption, a. investment, net exports, and government expenditures. b. investment, government purchases, and depreciation. c. interest, government purchases, and net exports. d. investment, exports, and rental expenditures. 7. Economists say that investment occurs when a. someone buys stock on the New York Stock Exchange. b. someone buys a U.S. government bond.
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This note was uploaded on 07/15/2011 for the course ACCT 122 taught by Professor Barry during the Spring '11 term at Universitas Pelita Harapan.

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Exercise Topic 5 - Topic 5. Saving, Investment, and the...

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