FINA 3332 Top Hat Questions – Your Ultimate All-in-One
Exam Prep Resource Featuring the Latest 2026 Updated
Edition with 100% Correct Answers to Every Question | Covers
Every Module, Chapter, and Key Concept You Need to Know |
Designed to Help You Master the Material, Ace the Final
Exam, and Secure an A+ Grade | Perfect for Both Quick
Review and In-Depth Study | Trusted by Top Students and
Updated for the Current Semester.
Q1What is the primary goal of financial management?
A.Maximize market share
B.Maximize shareholder wealth✓ correct
C.Minimize costs
D.Maximize employee satisfaction
📖 Rationale: The primary goal is maximizing shareholder wealth, reflected in
stock price. Other goals are secondary.
Q2Which of the following is NOT a current asset?
A.Cash
B.Accounts receivable
C.Inventory
D.Machinery✓ correct
📖 Rationale: Machinery is a fixed (long-term) asset; current assets are cash,
receivables, inventory.
Q3The DuPont equation breaks ROE into three components: profit margin,
asset turnover, and:
A.Financial leverage✓ correct
B.Dividend payout
C.Current ratio
D.Quick ratio
📖 Rationale: DuPont: ROE = Profit margin × Asset turnover × Equity
multiplier (financial leverage).
Q4Which ratio measures a company's ability to pay short-term obligations?
A.Current ratio✓ correct
B.Debt ratio
,C.Price-earnings ratio
D.Return on equity
📖 Rationale: Current ratio (current assets/current liabilities) measures short-
term liquidity.
Q5What is the present value of $1,000 received in 5 years at a 10% discount
rate? (approx)
A.$621✓ correct
B.$1,611
C.$500
D.$950
📖 Rationale: PV = 1000/(1.10)^5 ≈ 620.92, closest to $621.
Q6Which of the following is an example of a capital budgeting decision?
A.Issuing bonds
B.Buying a new factory✓ correct
C.Paying dividends
D.Repurchasing stock
📖 Rationale: Capital budgeting involves long-term investment decisions like
purchasing fixed assets.
Q7The weighted average cost of capital (WACC) is used as the:
A.Required rate of return for all projects
B.Discount rate for projects with similar risk✓ correct
C.Risk-free rate
D.Cost of equity only
📖 Rationale: WACC is the appropriate discount rate for projects with similar
risk to the firm.
Q8Which of the following is a source of cash?
A.Increase in inventory
B.Decrease in accounts payable
C.Increase in accounts receivable
D.Decrease in inventory✓ correct
📖 Rationale: A decrease in inventory is a source of cash (selling inventory).
Q9What does the term 'beta' measure?
A.Systematic risk✓ correct
B.Unsystematic risk
C.Total risk
, D.Liquidity risk
📖 Rationale: Beta measures systematic risk (market risk) relative to the
market.
Q10In the CAPM, the expected return is equal to the risk-free rate plus:
A.Beta × market risk premium✓ correct
B.Beta × market return
C.Market risk premium
D.Risk premium × alpha
📖 Rationale: CAPM: E(Ri) = Rf + βi × (Rm – Rf).
Q11A company issues a 5-year bond with a 6% coupon. If market rates rise,
the bond price will:
A.Increase
B.Decrease✓ correct
C.Remain the same
D.Become more volatile
📖 Rationale: Bond prices and yields move inversely. Higher market rates →
lower bond price.
Q12Which of the following is a non-cash expense?
A.Interest expense
B.Depreciation✓ correct
C.Dividends
D.Taxes
📖 Rationale: Depreciation is a non-cash expense that reduces taxable
income but doesn't involve cash outflow.
Q13The internal rate of return (IRR) is the discount rate that makes NPV equal
to:
A.Zero✓ correct
B.One
C.Positive
D.The cost of capital
📖 Rationale: IRR is the discount rate that sets NPV = 0.
Q14If a firm has a D/E ratio of 0.5, what is the debt-to-assets ratio?
A.33.3%✓ correct
B.50%
C.66.7%
Exam Prep Resource Featuring the Latest 2026 Updated
Edition with 100% Correct Answers to Every Question | Covers
Every Module, Chapter, and Key Concept You Need to Know |
Designed to Help You Master the Material, Ace the Final
Exam, and Secure an A+ Grade | Perfect for Both Quick
Review and In-Depth Study | Trusted by Top Students and
Updated for the Current Semester.
Q1What is the primary goal of financial management?
A.Maximize market share
B.Maximize shareholder wealth✓ correct
C.Minimize costs
D.Maximize employee satisfaction
📖 Rationale: The primary goal is maximizing shareholder wealth, reflected in
stock price. Other goals are secondary.
Q2Which of the following is NOT a current asset?
A.Cash
B.Accounts receivable
C.Inventory
D.Machinery✓ correct
📖 Rationale: Machinery is a fixed (long-term) asset; current assets are cash,
receivables, inventory.
Q3The DuPont equation breaks ROE into three components: profit margin,
asset turnover, and:
A.Financial leverage✓ correct
B.Dividend payout
C.Current ratio
D.Quick ratio
📖 Rationale: DuPont: ROE = Profit margin × Asset turnover × Equity
multiplier (financial leverage).
Q4Which ratio measures a company's ability to pay short-term obligations?
A.Current ratio✓ correct
B.Debt ratio
,C.Price-earnings ratio
D.Return on equity
📖 Rationale: Current ratio (current assets/current liabilities) measures short-
term liquidity.
Q5What is the present value of $1,000 received in 5 years at a 10% discount
rate? (approx)
A.$621✓ correct
B.$1,611
C.$500
D.$950
📖 Rationale: PV = 1000/(1.10)^5 ≈ 620.92, closest to $621.
Q6Which of the following is an example of a capital budgeting decision?
A.Issuing bonds
B.Buying a new factory✓ correct
C.Paying dividends
D.Repurchasing stock
📖 Rationale: Capital budgeting involves long-term investment decisions like
purchasing fixed assets.
Q7The weighted average cost of capital (WACC) is used as the:
A.Required rate of return for all projects
B.Discount rate for projects with similar risk✓ correct
C.Risk-free rate
D.Cost of equity only
📖 Rationale: WACC is the appropriate discount rate for projects with similar
risk to the firm.
Q8Which of the following is a source of cash?
A.Increase in inventory
B.Decrease in accounts payable
C.Increase in accounts receivable
D.Decrease in inventory✓ correct
📖 Rationale: A decrease in inventory is a source of cash (selling inventory).
Q9What does the term 'beta' measure?
A.Systematic risk✓ correct
B.Unsystematic risk
C.Total risk
, D.Liquidity risk
📖 Rationale: Beta measures systematic risk (market risk) relative to the
market.
Q10In the CAPM, the expected return is equal to the risk-free rate plus:
A.Beta × market risk premium✓ correct
B.Beta × market return
C.Market risk premium
D.Risk premium × alpha
📖 Rationale: CAPM: E(Ri) = Rf + βi × (Rm – Rf).
Q11A company issues a 5-year bond with a 6% coupon. If market rates rise,
the bond price will:
A.Increase
B.Decrease✓ correct
C.Remain the same
D.Become more volatile
📖 Rationale: Bond prices and yields move inversely. Higher market rates →
lower bond price.
Q12Which of the following is a non-cash expense?
A.Interest expense
B.Depreciation✓ correct
C.Dividends
D.Taxes
📖 Rationale: Depreciation is a non-cash expense that reduces taxable
income but doesn't involve cash outflow.
Q13The internal rate of return (IRR) is the discount rate that makes NPV equal
to:
A.Zero✓ correct
B.One
C.Positive
D.The cost of capital
📖 Rationale: IRR is the discount rate that sets NPV = 0.
Q14If a firm has a D/E ratio of 0.5, what is the debt-to-assets ratio?
A.33.3%✓ correct
B.50%
C.66.7%
