Multiple Choice. Choose the best answer.
1. Which of the following groups or parties generally has taken the most initiative to evaluate the financial condition of a city?
a. Citizens.
b. Managers.
c. Credit market analysts.
d. Legislative and oversight bodies.
2. Which of the following terms or concepts focuses primarily on a government ability to generate enough cash over a 30- or 60-day period to pay its bills?
a. Interperiod equity.
b. Financial condition.
c. Budgetary solvency.
d. Cash solvency.
3. Which of the following environmental factors reveals the entity’s underlying philosophies regarding willingness to support higher taxes, issuances of long-term debt, and increased social services?
a. Political culture.
b. Community needs and resources.
c. External economic conditions.
d. Management practices and legislative policies.
4. The group of factors that largely determines how fiscal policy is influenced by environmental factors is:
a. Natural disasters and emergencies.
b. Unfunded liabilities.
c. External economic conditions.
d. Management practices and legislative policies.
5. Which of the following would be an effective means of benchmarking?
a Comparing the city’s key ratios to those of special purpose governments in the area.
b. Comparing current-period ratios to published medians of the same ratios for cities of similar size or in the same geographic region.
c. Comparing key ratios to published medians of the same ratios for larger cities in other parts of the country.
d. Comparing current-period ratios to estimates for future periods.
6. Which of the following conditions could signal impending fiscal stress?
a. Decreasing unemployment.
b. Increasing property values.
c. Decreasing revenues relative to expenditures.
d. Decreasing levels of unfunded pension obligations and other postemployment retirement benefits.
7. Credit rating agencies such as Moody’s, Standard & Poor’s, and Fitch exam- me factors in which of the following four major groups when assessing creditworthiness for purposes of rating tax-supported bonds?
a. Economic, financial, administrative/political, education.
b. Economic, financial, debt, administrative/political.
c. Economic, scope of services, financial, debt.
d. Economic, financial, debt, education.
8. Which of the following statements is correct regarding the relationship between financial condition and economic condition?
a. Economic condition is a broader term that includes concepts embedded in the term financial condition.
b. Financial condition as defined by the ICMA incorporates cash solvency, budgetary solvency, long-run solvency, and service-level solvency, making it broader than the term economic condition.
c. Financial condition and economic condition relate to the government’s ability to meet its short-term obligations.
d. None of the above.
9. Which of the following suggests a government that is relying primarily on revenues it directly controls?
a. Property taxes, 20%; charges for services, 70%; grants and contributions, 5%; investment income, 5%.
b. Property taxes, 20%; charges for services, 60%; grants and contributions, 10%; investment income. 10%.
c. Property taxes, 40%; charges for services, 40%; grants and contributions, 10%; investment income, 10%.
d. Property taxes, 60%; charges for services, 5%; grants and contributions, 30%; investment income. 5%.
10. Which of the following best defines financial position
a. The probability that a government will meet its financial obligations and sustain services in the future.
b. Current-year revenues are sufficient to pay for the services provided this year.
c. A composite of a government’s financial health and its ability and willingness to provide services.
d. Current assets are sufficient to pay current liabilities.