Which of the Following Statements About the Financial Services Industry

question 47

Multiple Choice

Which of the following statements about the financial services industry is not true?

• A)It is an information-intensive industry.
• B)It has been revolutionized more than any other industry by advances in information technology since the 1970s.
• C)It is now technologically possible for financial services companies to engage in 24-hour-a-day trading.
• D)It saw the real cost of recording,transmitting,and processing information increase by 25 percent between 1964 and 1990.

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Definitions:

Annual Interest Rate

The percentage increase in money charged per year for the use of borrowed funds or for delaying the repayment of a debt.

Interest Rate

The cost of borrowing money or the reward for saving, usually expressed as a percentage of the principal amount per period.

Economic Profit

The return flowing to those who provide the economy with the economic resource of entrepreneurial ability; the total revenue of a firm less its economic costs (which include both explicit costs and implicit costs); also called “pure profit” and “above-normal profit.”

X-Inefficiency

The difference between actual output and the maximum possible output that could be achieved with the same input of resources, due to inefficiencies within a firm.