The change in the quantity of money that results from a given change in the monetary base is determined by the

• A.currency drain.
• B.money multiplier.
• C.reserve ratio.

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At levels of output where the firm's short-run average cost curve is increasing,

• A.the marginal cost curve is above the short-run average cost curve.
• B.the marginal cost curve is below the short-run average cost curve.
• C.the marginal cost curve may be above or below the short-run average cost curve.

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Which relationship has a negative effect on a firm's market value of equity?

• A.Economic profit Normal profit.
• B.Economic profit Accounting profit.
• C.Normal profit > Accounting profit.

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Which of the following questions are considered a part of short-term finance?
I). How much credit should be extended to customers?
II). What is a reasonable level of cash for the firm to maintain?
III). How much of the firm's current income should be paid out as dividends?
IV). Should the firm issue commercial paper or obtain a bank loan?

• A.I, II and III.
• B.I, II, and IV.
• C.II, III and IV.

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Your research department has just made a sound presentation arguing that the equity markets are due for a sever correction in the short term. Which of the following strategies would be most suitable to safeguard the portfolio that you manage?

• A.Long futures contacts on an equity index.
• B.Buy put options on an equity index.
• C.Buy call options on an equity index.

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