If an online retailer lists shipping charges according to the dollar amount of merchandise purchased, you know that it is using _____ pricing.

a. quantity discount

b. freight absorption

c. zone

d. uniform delivered

e. FOB origin

Answer: D

A(n) _____ discount is a deduction from list prices that applies to the buyer's total purchases made during a specific period and is intended to encourage customer loyalty.

a. cumulative quantity

b. noncumulative quantitative

c. functional

d. cash

e. integrated

Answer: A

Home Depot's fall lawn mower sale is an example of which of the following pricing tactics?

a. Quantity discount

b. Seasonal discount

c. Temporal discount

d. Promotional allowance

e. Functional discount

Answer: B

Which type of discount is a price reduction offered to a consumer, an industrial user, or a marketing intermediary in return for prompt payment of a bill?

a. Quantity discount

b. Cash discount

c. Rebate

d. Functional discount

e. Promotional allowance

Answer: B

​"The unregulated financial derivatives market created a shadow banking system that performed some of the same functions as the real banking systemlong dash—but without the checks and balances that keep a banking system from spinning out of​ control." Which of the following lessons BEST supports this​ comment?

A. In every battle between economic theory and​ reality, reality wins.

B. Leverage can be​ dangerous, and massive leverage can be deadly.

C. Unregulated private contracts can have damaging public consequences.

D. Transferring risk does not reduce or eliminate the risk—and sometimes it can even increase risk.

E. Individual​ short-term incentives can overpower logic and collective​ long-term consequences.

Answer: C. Unregulated private contracts can have damaging public consequences.

What will the Dodddash-Frank bill do to ensure transparency in​ markets, hedge​ funds, and other financial​ products?

A. Support the Bureau of Consumer Financial Protection

B. Use clearer scrutiny of the derivatives market

C. End taxpayer bailouts of companies

D. Toughen regulation on credit rating agencies

E. Prohibit speculative trading

Answer: B. Use clearer scrutiny of the derivatives market

What is the goal of the Volcker Rule in Dodddash-​Frank?

A. Ending taxpayer bailouts of companies

B. Prohibiting speculation by commercial banks

C. Instilling tougher regulation of credit rating agencies

D. Scrutinizing derivatives markets

E. Protecting consumers

Answer: B. Prohibiting speculation by commercial banks

What is the task of the Bureau of Consumer Financial Protection within the Federal​ Reserve?

A. Ending taxpayer bailouts of companies

B. Protecting consumers

C. Monitoring for systemic risk

D. Scrutinizing derivatives markets

E. Adding tougher regulation of credit rating agencies

Answer: B. Protecting consumers

Which of the following was created to monitor systemic risks that might affect a significant portion of the​ economy?

A. The Financial Stability Oversight Council

B. The​ Dodd-Frank Act

C. The Bureau of Consumer Financial Protection

D. The Volcker Rule

E. The Wall Street Reform and Consumer Protection Act of 2010

Answer: A. The Financial Stability Oversight Council

_____ was established in 2010 in order to restructure and improve the finance industry by better monitoring systematic​ risk, safeguarding​ consumers, and more effectively examining market fluctuations.

A. The Bureau of Consumer Financial Protection

B. The Volcker Rule

C. The​ Glass-Steagall Act

D. The​ Dodd-Frank Act

E. The FDIC

Answer: D. The​ Dodd-Frank Act

In​ 2006, David had a very low credit​ score, insufficient​ income, and no collateral to offer for a loan.​ Yet, when he​ applied, he was approved by YourMoney Bank for a loan to buy a house. Which of the following describes this​ loan?

A. Subprime mortgage

B. Loan-to-value ratio

C. Mortgage-backed security

D. Option ARM

E. Adjustable rate mortgage

Answer: A. Subprime mortgage

When demand drives prices of an asset far beyond its intrinsic economic​ value, what has been​ created?

A. A loan to value​ (LTV)

B. A bubble

C. Teaser rates

D. Flipping

E. Securitization

Answer: B. A bubble

All The Best Financial recently developed an investment product where different types of​ debts, such as​ mortgages, are assembled together. All The​ Best's investment product exemplifies which of the​ following?

A. Loan-to-value ratios

B. Option ARM

C. Securitization

D. Subprime mortgage

E. Adjustable rate mortgages

Answer: C. Securitization

Adding to the housing​ bubble, lenders increased which of the following to determine how much of a loan a borrower could receive based on the​ home's value?

A. Mortgage-backed securities

B. Adjustable rate mortgages

C. Option ARM

D. ​Loan-to-value ratios

E. Subprime mortgages

Answer: D. ​Loan-to-value ratios

A​ ________ is an extreme deficiency of assets within an area of the economy during which businesses are not able to obtain enough funding to meet their operating requirements.

A. bubble

B. foreclosure

C. securitization

D. credit freeze

E. liquidity crisis

Answer: E. liquidity crisis

​A(n) ______ offers variable interest rates mortgages to consumers by creating attractive introductory rates which later rise dramatically.

A. subprime mortgage

B. ​loan-to-value package

C. adjustable rate mortgage

D. discount rate

E. mortgage-backed security

Answer: C. adjustable rate mortgage

Which of the following is the best type of institution to use to set up a scholarship fund or other type of philanthropic​ giving?

A.Merchant bank

B.Commercial bank

C. Credit union

D.vInvestment bank

E. Private bank

Answer: E. Private bank

Which of the following are also called savings and loan​ associations?

A. Investment banks

B. Private banks

C. Retail banks

D. Thrift banks

E. Merchant banks

Answer: D. Thrift banks

NFP Financial is a​ not-for-profit, member-owned cooperative that offers deposit accounts and lending services to customers and small businesses. Which of the following best describes​ NFP?

A. Thrift banks

B. Boutique investment bank

C. Regional investment bank

D. Private bank

E. Credit union

Answer: E. Credit union

Which of the following established the Federal Deposit Insurance​ Corporation?

A. The​ Glass-Steagall Act of 1933

B. The Financial Service Modernization Act of 1999

C. The Federal Reserve Board

D. The Federal Open Market Committee

E. The automated clearing house system

Answer: A. The​ Glass-Steagall Act of 1933