1.When the Federal Reserve raises the bank lending rate, which of the following occur in the short run?

A)   The availability of funds declines and costs decline.

B)   Costs decline and interest rates rise.

C)   The availability of funds declines and costs increase.

D)   Interest rates decline and costs rise.

2.If the federal government wanted to expand economic growth, it would promote policies that:

A)   raise taxes.

B)   reduce taxes.

C)   raise interest rates.

D)   reduce federal subsidies.

3.Which of the following would NOT be a reason for market, industry, and company analysis?

A)   Firms within a given industry perform differently.

B)   The market is generally a very important component of security returns.

C)   Single industries perform consistently over time.

D)   Different industries have different exposures to economic risk factors

A)   Inflation risk.

B)   Exchange rate risk.

C)   Liquidity risk.

D)   Country risk.

5.Which of the following is NOT one of the three steps in the top-down approach to security valuation?

A)   Market analysis.

B)   Industry analysis.

C)   Product analysis.

D)   Company analysis.

答案和详解如下：

1.When the Federal Reserve raises the bank lending rate, which of the following occur in the short run?

A)   The availability of funds declines and costs decline.

B)   Costs decline and interest rates rise.

C)   The availability of funds declines and costs increase.

D)   Interest rates decline and costs rise.

The correct answer was C)

Increases in interest rates by the Fed is considered a restrictive economy policy. It is attempting to limit the availability of funds, causing interest rates and costs to rise.

2.If the federal government wanted to expand economic growth, it would promote policies that:

A)   raise taxes.

B)   reduce taxes.

C)   raise interest rates.

D)   reduce federal subsidies.

The correct answer was B)

In theory, tax cuts lead to more spending which leads to economic growth.

3.Which of the following would NOT be a reason for market, industry, and company analysis?

A)   Firms within a given industry perform differently.

B)   The market is generally a very important component of security returns.

C)   Single industries perform consistently over time.

D)   Different industries have different exposures to economic risk factors

The correct answer was C)

The second step in the top-down, three-step valuation process is to identify those industries that will prosper or suffer during the time frame of your economic forecast.  You should consider the cyclical nature of the industry under study.  Some industries are cyclical, some are contra-cyclical and some are non-cyclical.  Finally, your analysis should also account for foreign economic shifts.  In general, an industry’s prospects within the global business environment determine how well or poorly individual firms in the industry do.  Thus, industry analysis should precede company analysis.

4.Which of the following is NOT typically regarded as a component of the risk premium portion of the required rate of return “k”?

A)   Inflation risk.

B)   Exchange rate risk.

C)   Liquidity risk.

D)   Country risk.

The correct answer was A)

The risk premium can be broken down into internal and external factors:

  Internal sources of risk (diversifiable): business risk, financial risk, liquidity risk, exchange-rate risk, and country risk.

  External sources of risk: market risk (non-diversifiable).

5.Which of the following is NOT one of the three steps in the top-down approach to security valuation?

A)   Market analysis.

B)   Industry analysis.

C)   Product analysis.

D)   Company analysis.

The correct answer was C)

The other three choices comprise the steps of the top-down approach, or fundamental analysis.