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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. What represents the original capital paid into or invested in the business by its founders?
(a) Bond.
(b) Stock.
(c) Pork barrel.
(d) Collateral.

2. According to the author, financial markets boil down to four basic simple needs. What is the first discussed in Chapter 7?
(a) Insuring against risk.
(b) Storing, protecting and making profitable use of excess capital.
(c) Speculation.
(d) Raising capital.

3. In Chapter 2, the author discusses how the black rhinoceros is nearly extinct and that the horns are considered what?
(a) An alkaloid.
(b) A poison.
(c) An aphrodesiac.
(d) An evil potion.

4. When was Burton G. Malkiel born?
(a) 1907.
(b) 1918.
(c) 1925.
(d) 1932.

5. Ross Perot ran for President of the United States in what year?
(a) 2002.
(b) 1988.
(c) 1992.
(d) 2000.

6. In finance, what is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price?
(a) Option.
(b) Bond.
(c) Portfolio.
(d) Trade-off.

7. According to the author in Chapter 2, the average annual income is what in the location where black rhinoceros horns are worth much on the black market?
(a) $8,700.
(b) $1,000.
(c) $6,000.
(d) $2,500.

8. In finance, what is a debt security in which the authorized issuer owes the holders a debt and, depending on the terms, is obliged to pay interest to use and/or to repay the principal at a later date?
(a) Option.
(b) Stock.
(c) Deductible.
(d) Bond.

9. When was Gary Becker born?
(a) 1956.
(b) 1930.
(c) 1945.
(d) 1922.

10. Gary Becker is a professor of economics, sociology at what institution?
(a) Harvard University.
(b) The University of Montana.
(c) Fordham University.
(d) The University of Chicago.

11. With uniform rules and regulations, the cost of doing business in the private sector is what, according to the author in Chapter 3?
(a) Prohibitive.
(b) Lowered.
(c) Raised.
(d) Maintained.

12. According to the author in Chapter 2, a horn from a black rhinoceros can fetch what amount on the black market?
(a) $15,000.
(b) $30,000.
(c) $50,000.
(d) $120,000.

13. What refers to the degree to which a correct forecast of a system's state can be made either qualitatively or quantitatively?
(a) Security.
(b) Index.
(c) Predictability.
(d) Recession.

14. According to the principles of a market economy, if it's raining, it's time to sell what?
(a) Boats.
(b) Loans.
(c) Houses.
(d) Umbrellas.

15. Arab members of OPEC alarmed the developed world when they used the "oil weapon" during what war by implementing oil embargoes?
(a) The Jerusalem War.
(b) The Torah War.
(c) The Gaza War.
(d) The Yom Kippur War.

Short Answer Questions

1. What does the author refer to as a situation where individuals work in their own best interest, leading to an improved standard of living for society in general?

2. When did Ross Perot found Electronic Data Systems?

3. The Lehman Brothers bank problem in 2008 occurred because the banks weren't what, according to the author?

4. Behavioral economics intertwine economics and what?

5. The horns of the black rhinoceros are used to make what for the Yemenese people, according to the author in Chapter 2?

(see the answer keys)

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