Principles of Finance II Exam with
detailed questions and answers|graded
A+
____________________________________________________________________________________
MULTIPLE CHOICES
Suppose you have $100 in a savings account earning 2 percent interest a year. After
five years, how much would you have?
More than $102
Exactly $102
Less than $102
Don't Know
➢ More than $102
Imagine that the interest rate on your savings account is 1 percent a year and inflation
is 2 percent a year. After one year, would the money in the account buy more than it
,does today, exactly the same or less than today?
More
Same
Less
Don't Know
➢ Less
If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the
same, or is there no relationship?
Rise
Fall
Stay the Same
No Relationship
Don't Know
➢ Fall
,A 15-year mortgage typically requires higher monthly payments than a 30-year
mortgage but the total interest over the life of the loan will be less.
True
False
➢ True
Buying a single company's stock usually provides a safer return than a stock mutual
fund.
True
False
➢ False
Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per
year compounded annually. If you didn't pay anything off, at this interest rate, how
many years would it take for the amount you owe to double?
, Less than 2 years
2-4 years
5-9 years
10 or more years
Don't Know
➢ 2-4 years
Net Profit Margin Formula
➢ Net Income/Sales
Liquidity: Current Ratio Formula
➢ Current Assets/ Current Liabilities
Leverage: Debt/Worth
➢ Total Liabilities/ Stockholders Equity
John bought some common stock in McKelly Inc. last year. The company has just
reported record earnings. This means John is guaranteed to receive an increase in his
dividend this year.
detailed questions and answers|graded
A+
____________________________________________________________________________________
MULTIPLE CHOICES
Suppose you have $100 in a savings account earning 2 percent interest a year. After
five years, how much would you have?
More than $102
Exactly $102
Less than $102
Don't Know
➢ More than $102
Imagine that the interest rate on your savings account is 1 percent a year and inflation
is 2 percent a year. After one year, would the money in the account buy more than it
,does today, exactly the same or less than today?
More
Same
Less
Don't Know
➢ Less
If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the
same, or is there no relationship?
Rise
Fall
Stay the Same
No Relationship
Don't Know
➢ Fall
,A 15-year mortgage typically requires higher monthly payments than a 30-year
mortgage but the total interest over the life of the loan will be less.
True
False
➢ True
Buying a single company's stock usually provides a safer return than a stock mutual
fund.
True
False
➢ False
Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per
year compounded annually. If you didn't pay anything off, at this interest rate, how
many years would it take for the amount you owe to double?
, Less than 2 years
2-4 years
5-9 years
10 or more years
Don't Know
➢ 2-4 years
Net Profit Margin Formula
➢ Net Income/Sales
Liquidity: Current Ratio Formula
➢ Current Assets/ Current Liabilities
Leverage: Debt/Worth
➢ Total Liabilities/ Stockholders Equity
John bought some common stock in McKelly Inc. last year. The company has just
reported record earnings. This means John is guaranteed to receive an increase in his
dividend this year.
