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FIN 330 Final Exam MCQ Solution

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FIN 330 Final Exam MCQ Solution;1. At its most basic level, the function of financial intermediaries is to ________.;A) track and report interest rates;B) move money from lenders to borrowers and back again;C) report all financial transactions to the federal government;D) effect a transfer of wealth in society;2. Which of the following is NOT an example of a financial transaction?;A) Your parents use their credit card to pay this term's college tuition.;B) You use the ATM to withdraw British pounds so you can fly to London.;C) Your roommate lends you $20 and you repay it in one week.;D) All of the above are financial transactions.;3. The movement of money from lender to borrower and back again is known as ________.;A) the circle of life;B) corporate finance;C) the cycle of money;D) money laundering;4. The fundamental starting point of all the accounting statements is the ________.;A) accounting identity;B) computing identity;C) investing identity;D) financing identity;5. Which of the statements below is TRUE?;A) Accounting Identity is: Assets? Liabilities - Owners' Equity.;B) Accounting Identity is: Assets? Liabilities + Owners' Equity.;C) Accounting Identity is: Assets? Owners' Equity - Liabilities.;D) Accounting Identity is: Liabilities? Assets + Owners' Equity.;6. To determine the interest paid each compounding period, we take the advertised annual percentage rate and simply divide it by the ________ to get the appropriate periodic interest rate.;A) number of compounding periods for the length of an investment;B) number of discounting periods for the length of an investment;C) number of compounding periods per year;D) number of compounding periods per month;7. Suppose you invest $1,000 today, compounded quarterly, with the annual interest rate of 5.00%. What is your investment worth in one year?;A) $1,025.00;B) $1,500.95;C) $1,025.27;D) $1,050.95;8. Suppose you invest $2,000 today, compounded monthly, with an annual interest rate of 7.50%. What is your investment worth in one year?;A) $2,150.00;B) $2,152.81;C) $2,155.27;D) $2,154.77;9. The four steps to determining the price of a bond are;A) determine the amount and timing of the present cash flows, determine the appropriate discount rate, find the present value of the lump-sum principal and the annuity stream of coupons, and add the PVs of the principal and coupons.;B) determine the amount and timing of the future cash flows, determine the appropriate discount rate, find the future value of the lump-sum principal and the annuity stream of coupons, and add the FVs of the principal and coupons.;C) determine the amount and timing of the future cash flows, determine the appropriate discount rate, find the present value of the lump-sum principal and the annuity stream of coupons, and multiply the PVs of the principal and coupons.;D) determine the amount and timing of the future cash flows, determine the appropriate discount rate, find the present value of the lump-sum principal and the annuity stream of coupons, and add the PVs of the principal and coupons.;10. Blackburn Inc. has issued 30-year $1,000 face value, 10% annual coupon bonds, with a yield to maturity of 9.0%. The annual interest payment for the bond is ________.;A) $100;B) $90;C) $50;D) $45;11. Stocks are different from bonds because ________.;A) stocks, unlike bonds, are major sources of funds;B) stocks, unlike bonds, represent residual ownership;C) stocks, unlike bonds, give owners legal claims to payments;D) bonds, unlike stocks, represent voting ownership;12. Stocks differ from bonds because;A) bond cash flows are known while stock cash flows are uncertain.;B) firms pay bond cash flows prior to paying taxes while stock cash flows are after tax.;C) the ending par value of a bond is known at purchase while the ending value of a share of stock is unknown at purchase.;D) of all of the above.;13. Bonds are different from stocks because ________.;A) bonds promise fixed payments for the length of their maturity;B) bonds give payments only after other owners are paid;C) bonds do not have maturity dates;D) bonds promise growth in earnings;14. Jarvis bought a share of stock for $15.75 that paid a dividend of $.45 and sold three months later for $18.65. What was his dollar profit or loss and holding period return?;A) $2.90, 18.41%;B) $3.35, 21.27%;C) -$2.90, -18.41%;D) $.45, 2.86%;15. Amy bought a share of stock for $64.50 that paid a dividend of $.50 and sold nine months later for $64.00. What was her dollar profit or loss and holding period return?;A) $0.50, 0.78%;B) -$0.50, -0.78%;C) $0.00, 0.00%;D) There is no correct solution to this question.;16. ________ is at the heart of corporate finance, because it is concerned with making the best choices about project selection.;A) Capital budgeting;B) Capital structure;C) Payback period;D) Short-term budgeting;17. The ________ model is usually considered the best of the capital budgeting decision-making models.;A) Internal Rate of Return (IRR);B) Net Present Value (NPV);C) Profitability Index (PI);D) Discounted Payback Period;18. A major metric of a company's health and its prospects for a long life is how much ________ it can generate.;A) cash flow;B) depreciation;C) tax deferral;D) net income;19. Most businesses fail because their ________ dries up.;A) net working capital;B) cash flow;C) liabilities;D) tax shield;20. The ________ are critical to business decisions, business growth, and ultimately business success.;A) risk and timing but not the amount of cash flow;B) the currency denomination of profits;C) risk and profits but not the amount of cash flow;D) timing and amount of cash flow;21. There are two primary tools used to forecast and set in action a company plan. Which of the tools below is one of these?;A) Statements of retained earnings;B) Profit budgets;C) Income statements;D) Pro forma statements;22. As with a lot of planning, the financial forecast begins with ________ estimates and ________ schedules.;A) sales, production;B) sales, profit;C) dividends, production;D) profits, dividend;23. The ________ starts at the time production begins and ends with the collection of cash from the sale of the product.;A) accounts receivable cycle;B) business operating cycle;C) cash conversion cycle;D) production cycle;24. The ________ begins at the time a firm first starts to make a product and lasts until the time the customer buys the product.;A) business operating cycle;B) accounts receivable cycle;C) cash conversion cycle;D) production cycle;25. Which of the statements below is FALSE?;A) Financial statements are a collection of historical and current activities of the company.;B) The collection of value over time found in financial statements requires us to pay attention to how we construct financial ratios so as to glean information for analysis.;C) We want to analyze financial statements so as to compare different companies and their performance relative to our company.;D) All of the above statements are TRUE.;26. An example of a financial statement is ________.;A) the Income Statement;B) the Sources and Uses of Cash;C) the Statement of Financial Position (Balance Sheet);D) All of these;27. Typically, shares of stock are stored in the vault of the brokerage firm and you, as owner, will not take physical possession. Under these circumstances the brokerage firm is the ________ and you are the ________.;A) street owner, settlement owner;B) settlement owner, street owner;C) owner of record, beneficiary owner;D) beneficiary owner, owner of record;28. A common practice today is to have shares of stock in the ________, using the name of the broker as owner rather than you.;A) street name;B) bearer name;C) broker name;D) beneficiary name;29. The difficulties of managing international business operations stem from three special issues. Which of the choices below is NOT one of these?;A) Political risk;B) Differences in business practices;C) Social fads;D) Cultural differences;30. ________ arise(s) from differences in customs, social norms, attitudes, assumptions, and expectations of the local society in a host country.;A) Cultural risk;B) Political risk;C) Social fads;D) Similarities in business beliefs

 

Paper#78117 | Written in 18-Jul-2015

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