Question 25

A clause in a loan contract that restricts the borrower from further borrowing during the term of the loan is an example of a(n):

Select one:

a. negative covenant.

b. positive covenant.

c. collateral agreement.

d. guarantee.

e. adverse selection.

Question 26

Which of the following statements about fiscal policy is INCORRECT?

Select one:

a. Governments are responsible for maintaining all roads in their countries.

b. When government expenditure exceeds government revenue, the government runs a budget deficit.

c. In recessions, governments usually increase their expenditure.

d. In 2014, the government of New Zealand mentioned that after the 20% of GDP target is reached, it would maintain net debt within the range of 10-20% of GDP over the economic cycle.

e. Taxes and government expenditure are tools of fiscal policy.

Question 27

If a buyer of a particular stock purchased a put option at a strike price of $48 and the stock is selling for $45 on the expiration date, the put option is worth:

Select one:

a. $0

b. $3

c. $93

d. $48

e. $45

Question 28

Banks typically have

Select one:

a. liabilities as much as assets.

b. equity as much as assets.

c. more equity than liabilities.

d. less equity than liabilities.

e. equity as much as liabilities.

Question 29

Which of the following would NOT relate to agency costs involving management's desire to maximise own benefits?

Select one:

a. Administrative costs for preparing and holding meetings with shareholders.

b. Management goals to achieve sales growth.

c. Management orders hotel upgrades on business trips.

d. Expenses associated with meetings between the management and the board of directors.

e. Management goals to achieve market share.

Question 30

Which of the following payment systems govern large payments that cannot be reversed?

Select one:

a. The High Value Clearing System

b. The Consumer Electronic Clearing System

c. The Paper Clearing System

d. The Bulk Electronic Clearing System

e. The Electronic Funds Transfer at Point of Sale System