Q1. What is “spam”?
a. a form of firewall
b. intellectual property
c. junk e-mail
d. a form of hacking
e. wireless mooching
Q2. What feature does a firewall provide?
a. Internet access
b. protection from electrical surges
c. connectivity between stations in a LAN
d. privacy protection
e. links to computers in a WAN
Q3. Which term refers to the unauthorized stealing of personal information from a computer system?
a. espionage
b. leverage
c. denial of service
d. identity theft
e. network flooding
Q4. In client-server networks, who is the usual client?
a. the computer through which users make requests for information
b. the application through which users answer information requests
c. the customer who does business online
d. the supplier who checks the availability of components
e. the network which supports the database and software systems
Q5. Which of the following best describes a decision support system?
a. a system that supports an organization’s managers by providing daily reports, schedules, plans, and budgets that can be used for making decisions
b. a quick-reference, easy-access application of information systems specifically designed for instant access by upper-level managers
c. a system of hardware and software that imitates human behavior
d. an interactive system that creates virtual business models for a particular kind of decision and tests them with different data to see how they respond
e. a processor that plans production and delivery schedules
Q6. Hypertext transfer protocol (HTTP) is a basic communications protocol used to receive e-mail.
a. True
b. False
Q7. System software tells the computer’s hardware how to interact with the software, what resources to use, and how to use them.
a. True
b. False
Q8. Which type of IT threat can spread without a computer user needing to open any software?
a. worms
b. Trojan horses
c. spam
d. spyware
e. computer viruses
Q9. What type of network links computers and workstations, usually within one building?
a. satellite communication
b. global positioning
c. personal digital
d. wide area
e. local area
Q10. What is the name of software and hardware that prevent hackers from accessing a company’s internal network?
a. partition
b. firewall
c. extranet
d. index
e. security
Q11. Which of the following financial institutions earn profits from loans taken from the funds in each of its depositors’ accounts?
a. securities investment firms
b. pension funds
c. credit unions
d. commercial banks
e. mutual savings banks
Q12. The M-2 money supply includes everything that is in the M-1 money supply.
a. True
b. False
Q13. Toyota, based in Japan, would like to build a new factory and a new retail distribution center. Both or either of these may be built in the United States and in Canada. Currently, the U.S. dollar is weak compared to the Canadian dollar. Which of the following would be in Toyota’s best interest?
a. build the cars in Canada and sell them in the United States
b. build the cars in the United States and sell them in Canada
c. build the cars in Canada and sell them in both countries
d. build the cars in the United States and sell them in both countries
e. build the cars in both countries and sell them in both countries
Q14. The reason why a savings account is not considered a component of the M-1 money supply is that it bears interest.
a. True
b. False
Q15. Which of the following laws has had significant effects in maintaining bank identity records?
a. the Check Clearing for the 21st Century Act
b. the USA Patriot Act
c. the Bank Secrecy Act
d. the Federal Reserve Act
e. the Emergency Economic Stabilization Act
Q16. Which of the following terms refers to the percentage of its deposits a bank must hold, in cash or on deposit, with a Federal Reserve bank?
a. discount rate
b. key rate
c. prime rate
d. federal insurance premium
e. reserve requirement
Q17. Regarding the international payments process, which statement is true?
a. In international trade, money will flow from the country with the strongest currency to that of the weakest.
b. The World Bank monitors the trade of its members to insure that money is flowing properly between the various countries.
c. The World Bank monitors the national banks of its members to insure that money is flowing properly between the various countries.
d. By international law, international trade must involve money flowing between two countries.
e. Money does not actually have to flow between two countries.
Q18. Which of the following statements best explains how financial institutions create money?
a. By opening new checking accounts and giving more people access to readily available cash, financial institutions expand the money supply.
b. By issuing money through government contracts, financial institutions expand the money supply.
c. By taking deposits and loaning out these funds, financial institutions expand the money supply.
d. By collecting interest on its accounts through investments, financial institutions expand the money supply.
e. By giving interest from its accounts to its clients, financial institutions expand the money supply.
Q19. Which of the following affects the value of money?
a. how much currency is in circulation
b. how many units the currency can be divided into
c. how portable the form of currency is
d. how durable the form of currency is
e. how much currency has been saved
Q20. Banks are subject to prosecution when they fail to maintain systems for identifying and reporting suspicious activities.
a. True
b. False
Q21. Bankruptcy is the court-granted permission not to pay some or all debts.
a. True
b. False
Q22. Which of the following receives and executes buy-and-sell orders for other people in return for commissions?
a. stock exchanges
b. stock brokers
c. investment banks
d. stock agents
e. savings banks
Q23. An investment bank is a financial institution that specializes in issuing and reselling new securities.
a. True
b. False
Q24. In a secondary securities market, new stocks and bonds are bought and sold by firms and governments.
a. True
b. False
Q25. “I am a chemist with the nation’s largest chemical company. We have secretly developed a cure for three of the world’s most serious epidemics. Before this news breaks out, I’m going to buy as many shares of stock in my company as I can get my hands on. Then I’ll sit back and watch the stock price head for the sky.” What is the person making this statement about to engage in?
a. selling shares of stock
b. insider trading
c. blue-sky trading
d. open-market operations
e. investment banking
Q26. Shawna has gotten into investing and is interested in aggressive growth funds. Which of the following must be true about Shawna?
a. She is interested in the best possible returns over time.
b. She is interested in making money as quickly as possible.
c. She has comparatively little money to invest.
d. She wants to make as secure an investment as possible.
e. She is investing for a financial thrill ride.
Q27. Which of the following is the name for a portion of the ownership of a corporation?
a. Schedule C
b. stock
c. partnership
d. LLC
e. dividend
Q28. The stock of Simonsen, Inc. is being bought up by an individual who intends to take over Simonsen and sell off its assets for a profit. What is the individual in this scenario called?
a. angel investor
b. corporate raider
c. inside trader
d. stock broker
e. bondholder
Q29. Because of the uncertainties involved in stock prices, investment professionals believe day-to-day prices to be a generally poor indicator of any stock’s real value.
a. True
b. False
Q30. Hugh is an investor who opts for no-risk U.S. Treasury Bills and intermediate-term high-grade corporate bonds. What kind of investor is Hugh?
a. professional
b. aggressive
c. amateur
d. conservative
e. sporadic
Q31. Which of the following areas of the Certified Fraud Examiner (CFE) exam includes theories of fraud prevention?
a. criminology and ethics
b. financial transactions
c. fraud investigation
d. fraud litigation
e. legal elements of fraud
Q32. An audit examines whether a firm’s financial statement conforms to generally accepted accounting principles.
a. True
b. False
Q33. Which of the following refers to the rules and procedures governing the content and form of financial reports?
a. national bookkeeping standards
b. core competencies for accounting
c. accounting and financial rules
d. national guidelines of accounting principles
e. generally accepted accounting principles
Q34. Which of the following describes assets such as land, building, and equipment?
a. liquid assets
b. fixed assets
c. intangible assets
d. current assets
e. limited assets
Q35. Which of the following ratios measures a firm’s ability to meet its current debt obligations?
a. short-term solvency ratio
b. long-term solvency ratio
c. profitability ratio
d. activity ratio
e. equity ratio
Q36. An asset is defined as any economic resource expected to benefit a firm or an individual who owns it.
a. True
b. False
Q37. Which of the following describes assets such as patents and trademarks?
a. liquid assets
b. fixed assets
c. intangible assets
d. current assets
e. limited assets
Q38. Bookkeeping is a comprehensive system for collecting, analyzing, and communicating financial information.
a. True
b. False
Q39. Which of the following documents would most likely come from a planning strategy meeting?
a. income statement
b. flow of cash statement
c. balance sheet
d. budget
e. statement of projected earnings
Q40. Which of the following refers to the financial statement detailing a firm’s assets, liabilities, and owners’ equity?
a. income statement
b. statement of cash flows
c. balance sheet
d. expense report
e. annual budget
