BEEM119: Problem Set 4¡ªIndicative Answers
1. Suppose that country X¡¯s GDP evolves as follows during a four-year period: 50bn ¡ú 100bn ¡ú 150bn ¡ú 200bn. Which of the following is true?
(a) X is growing faster and faster.
(b) X keeps a constant rate of growth.
(c) X is growing but growth is slowing down. (d) X is not growing.
2. Which of the following statements are true?
(a) A bank¡¯s assets are its sources of funds.
(b) A bank¡¯s liabilities are its uses of funds.
(c) A bank¡¯s balance sheet shows that total assets equal total liabilities plus equity capital.
(d) A bank¡¯s balance sheet indicates whether or not the bank is profitable.
3. Which of the following statements concerning external sources of financing for nonfi- nancial businesses in the United States is true?
(a) Issuing marketable securities is the primary way that they finance their activities.
(b) Bonds are the least important source of external funds to finance their activities.
(c) Stocks are a relatively unimportant source of finance for their activities.
(d) Selling bonds directly to the American household is a major source of funding for American businesses.
4. Collateralized debt is also know as
(a) unsecured debt.
(b) secured debt.
(c) unrestricted debt. (d) promissory debt.
5. Twitter¡¯s IPO is an example of a company raising funds by
(a) Getting a bank loan.
(b) Issuing repurchase agreements.
(c) Issuing debt.
(d) Getting a non-bank loan. (e) Issuing equity.