MGT 6201 FINANCE FUNDAMENTALS QUESTIONS & ANSWERS 2026-2027 EXAM
P R O F E S S I O N A L P R A C T I C E M AT E R I A L S
MGT 6201 Finance
Fundamentals Questions &
Answers 2026-2027
Verified Answers Exam Ready With Rationales
75 QUESTIONS
DOCUMENT OVERVIEW
This document provides 75 finance fundamentals questions with their correct answers, offering a
comprehensive resource for reviewing key concepts. It is suitable for study, exam preparation, and
certification review in corporate finance. The material directly aligns with learning essential financial
principles and their applications.
CONTENTS
01 Cost of Capital Q1–Q14
02 CAPM & Risk Q15–Q26
03 Firm Valuation Q27–Q38
04 Capital Budgeting Q39–Q47
05 Economic Value Added (EVA) Q48–Q55
Page 1
, 06 Stock Valuation Q56–Q68
07 Inflation & Returns Q69–Q71
08 Analysis & Decision Making Q72–Q75
E XA M Q U EST I O N S
Q1 QUESTION 1 OF 75
The minimum rate of return a corporation must earn on its invested capital to break even in economic terms
is called the _____.
CORRECT ANSWER
Cost of Capital
Q2 QUESTION 2 OF 75
Why is the cost of debt multiplied by (1 - Tax Rate) when calculating WACC?
CORRECT ANSWER
Interest paid on debt is tax-deductible.
Q3 QUESTION 3 OF 75
What two primary components determine a firm's cost of debt capital?
CORRECT ANSWER
The risk-free Treasury bond rate and a default risk premium.
Q4 QUESTION 4 OF 75
Page 2
, How is a 'basis point' defined in terms of percentage?
CORRECT ANSWER
One basis point equals 0.01% (or 100 basis points equal 1%).
Q5 QUESTION 5 OF 75
In bond ratings, any rating below _____ is considered a junk bond or speculative grade.
CORRECT ANSWER
Triple B (BBB/Baa)
Q6 QUESTION 6 OF 75
Formula: Weighted Average Cost of Capital (WACC)
CORRECT ANSWER
WACC = [(D/V) × R(d) × (1 - T)] + [(E/V) × R(e)]
Q7 QUESTION 7 OF 75
Concept: Capital Turnover
CORRECT ANSWER
Definition: A measure of capital efficiency calculated as Sales divided by Total Capital.
Q8 QUESTION 8 OF 75
What are the two primary components of Return on Total Capital (ROTC)?
CORRECT ANSWER
Return on Sales (operating efficiency) and Capital Turnover (capital efficiency).
Page 3
P R O F E S S I O N A L P R A C T I C E M AT E R I A L S
MGT 6201 Finance
Fundamentals Questions &
Answers 2026-2027
Verified Answers Exam Ready With Rationales
75 QUESTIONS
DOCUMENT OVERVIEW
This document provides 75 finance fundamentals questions with their correct answers, offering a
comprehensive resource for reviewing key concepts. It is suitable for study, exam preparation, and
certification review in corporate finance. The material directly aligns with learning essential financial
principles and their applications.
CONTENTS
01 Cost of Capital Q1–Q14
02 CAPM & Risk Q15–Q26
03 Firm Valuation Q27–Q38
04 Capital Budgeting Q39–Q47
05 Economic Value Added (EVA) Q48–Q55
Page 1
, 06 Stock Valuation Q56–Q68
07 Inflation & Returns Q69–Q71
08 Analysis & Decision Making Q72–Q75
E XA M Q U EST I O N S
Q1 QUESTION 1 OF 75
The minimum rate of return a corporation must earn on its invested capital to break even in economic terms
is called the _____.
CORRECT ANSWER
Cost of Capital
Q2 QUESTION 2 OF 75
Why is the cost of debt multiplied by (1 - Tax Rate) when calculating WACC?
CORRECT ANSWER
Interest paid on debt is tax-deductible.
Q3 QUESTION 3 OF 75
What two primary components determine a firm's cost of debt capital?
CORRECT ANSWER
The risk-free Treasury bond rate and a default risk premium.
Q4 QUESTION 4 OF 75
Page 2
, How is a 'basis point' defined in terms of percentage?
CORRECT ANSWER
One basis point equals 0.01% (or 100 basis points equal 1%).
Q5 QUESTION 5 OF 75
In bond ratings, any rating below _____ is considered a junk bond or speculative grade.
CORRECT ANSWER
Triple B (BBB/Baa)
Q6 QUESTION 6 OF 75
Formula: Weighted Average Cost of Capital (WACC)
CORRECT ANSWER
WACC = [(D/V) × R(d) × (1 - T)] + [(E/V) × R(e)]
Q7 QUESTION 7 OF 75
Concept: Capital Turnover
CORRECT ANSWER
Definition: A measure of capital efficiency calculated as Sales divided by Total Capital.
Q8 QUESTION 8 OF 75
What are the two primary components of Return on Total Capital (ROTC)?
CORRECT ANSWER
Return on Sales (operating efficiency) and Capital Turnover (capital efficiency).
Page 3
