The correct answer is c when the federal reserve

34. The correct answer is (C). When the Federal Reserve Board raises
the discount rate, there is an economic slowdown.
35. The correct answer is (C). The primary functions of money are as a
store of value, medium of exchange, and measure of value.
36. The correct answer is (A). FDIC insurance insures $100,000 per
person per bank.
37. The correct answer is (B). Stability refers to money’s ability to retain
value over time. The U.S. dollar is far more stable than dollars from
regions of economic uncertainty.
38. The correct answer is (D). Common stock does not receive fixed
dividends like preferred stock.
39. The correct answer is (A). If ROE is high, then the firm is probably
getting funds through debt. Financial leverage is a measure of debts to
assets.
40. The correct answer is (C). 17,000(.98) 5 16,660
41. The correct answer is (A).
Retained earnings 5 undistributed profits
Dividends 5 distributed profits
Profits 2 dividends 5 retained earnings
42. The correct answer is (D). Mutual funds can be classified as low risk
and low yield.
43. The correct answer is (A). In a limit order, the broker is requested
to buy or sell at a price equal to or better than a specified price.
44. The correct answer is (B). A bull market is one that reflects rising
prices.
45. The correct answer is (C). Data processing is the transformation of
data into usable information.
46. The correct answer is (B). The intranet is a company’s internal
network.
47. The correct answer is (C). Amortization applies to intangible objects.
Goodwill is an intangible object.
48. The correct answer is (A). Insurance protects individuals from pure
risk.
49. The correct answer is (D). Conditions for an insurable loss include
that the loss be under the control of the insured, that the probability of
the loss be predictable, and that the loss be measurable.
50. The correct answer is (C). $125,000(.75) 5 $93,750
51. The correct answer is (A). Robbery involves a threat of violence;
burglary does not.
52. The correct answer is (A). Auto liability insurance is legally required

in most states.
53. The correct answer is (B). In a country based on socialism, goods
and services are purchased and owned by private individuals.
POSTTEST
Dantes/DSST Program 187
54. The correct answer is (C). U.S. isolation from global markets is not
an issue that affects the business system today.
55. The correct answer is (A). Establishing a subsidiary in a foreign
nation is one method of entering the global market by direct investment.
56. The correct answer is (B). Total quality management (TQM) policies
normally lead to a higher return on investment.
57. The correct answer is (D). The primary functions performed by
managers are planning, motivating, and controlling.
58. The correct answer is (C). Internal recruiting is the process of hiring
employees from inside the company, including through promotions
and transfers.
59. The correct answer is (D). Arbitration is binding; mediation is not.
60. The correct answer is (A).
A 5 L 1 OE
OE 5 creditors’ claims against resources
A 5 L 1 creditors’ claims against resources
INTRODUCTION TO BUSINESS
188 Dantes/DSST Program

FEEDBACK LIST FROM IC Mems:
1. A neutral party that renders a decision between two parties - Arbitrator
2. Annual reports, Financial, Non financial -
3. Autocratic
4. Balance sheet
5. Board of directors