FNAN 522 Exam# 1 And 2 Prep
Questions With 100% Correct and Actual
Answers 2026-2027 Updated.
A company issued debt that did not grant the bondholders the ability to seize the company's
assets to settle the obligation. This debt can be traded on a public exchange. Which of the
following best describes this debt? - Answer Public, unsecured debt.
Which of the following is NOT a cash equivalent? - Answer A government bond that matures in
four months.
Which of the following occurred during the financial crisis of 2007-2008? - Answer All of these
answers
Which of the following statements regarding shareholder and market value is correct? - Answer
The idea of maximizing market value is related to the idea of maximizing shareholder value.
How is finance used in organizations? - Answer All of these answers.
Which of the following terms describes the protection of personal assets stemming from the
corporate structure? - Answer limited liability
Which of the following is a factor that contributes to the conflict of interest between a
company's bondholders and its shareholders? - Answer All of these answers
Which of the following is a legal characteristic of a general partnership? - Answer There must
be at least two business owners.
Which of the following is a type of financial market? - Answer All of these answers
Which of the following is an accurate characteristic of a sole proprietorship? - Answer The
owner is personally liable for the business's debt and obligations.
A company issues a bond with the provision that it may pay off the debt early. This bond is
subject to which type of risk? - Answer Prepayment risk.
What will $247,000 grow to be in 9 years if it is invested today in an account with an annual
interest rate of 11%? - Answer 631,835.12
,Approximately how many years will it take for $136,000 to grow to be $468,000 if it is invested
in an account with an annual interest rate of 8%? Choose the closest answer. - Answer 16
years.
At what annual interest rate must $137,000 be invested so that it will grow to be $475,000 in 14
years? Choose the closest rate. - Answer 9.29%
If you wish to accumulate $197,000 in 5 years, how much must you deposit today in an account
that pays a quoted annual interest rate of 13% with semi-annual compounding of interest?
Round to the nearest dollar. - Answer $104,947
What will $153,000 grow to be in 13 years if it is invested today in an account with a quoted
annual interest rate of 10% with monthly compounding of interest? Round to the nearest dollar.
- Answer $558,386
You are offered an investment with a quoted annual interest rate of 13% with quarterly
compounding of interest. What is your effective annual interest rate? - Answer 13.65%
You are offered an annuity that will pay $24,000 per year for 11 years (the first payment will
occur one year from today). If you feel that the appropriate discount rate is 13%, what is the
annuity worth to you today? Round to the nearest dollar. - Answer $136,487
You plan to buy a car that has a total "drive-out" cost of $25,700. You will make a down
payment of $3,598. The remainder of the car's cost will be financed over a period of 5 years.
You will repay the loan by making equal monthly payments. Your quoted annual interest rate is
8% with monthly compounding of interest. (The first payment will be due one month after the
purchase date.) What will your monthly payment be? - Answer $448.15
If you deposit $16,000 per year for 12 years (each deposit is made at the end of each year) in an
account that pays an annual interest rate of 14%, what will your account be worth at the end of
12 years? Round to the nearest dollar. - Answer $436,332
John and Peggy recently bought a house. They financed the house with a $125,000, 30-year
mortgage with a nominal annual interest rate of 7 percent with monthly compounding.
Mortgage payments are made at the end of each month. What is the monthly mortgage
payment? - Answer $831.63
By increasing the number of compounding periods in a year, while holding the stated annual
interest rate constant, you will... - Answer increase the effective annual rate.
, If you wish to accumulate $140,000 in 13 years, how much must you deposit today in an
account that pays an annual interest rate of 14%? - Answer $25,489.71
A portfolio has $70,000 of bonds and $30,000 of stock. The bonds are 80% likely to have a 10%
return and 20% likely to have a 0% return. The stock is 50% likely to have a 20% return and 50%
likely to have a 10% loss. What is the expected return? - Answer 7.10%
You are planning for retirement 34 years from now. You plan to invest $575 at the end of the
month for the following 34 years (assume all cash flows occur at the end of each month). If you
believe you will earn an annual percentage rate of return of 9.7%, what will your retirement
investment be worth 34 years from now? Round to the nearest dollar. - Answer $1,828,293
A portfolio is composed of 30% stock, 20% bonds, and 50% mutual funds. The stock is expected
to have a 10% return, the bonds a 5% return and the mutual funds a 7% return. What is the
expected return of the portfolio? - Answer 7.50%
A potential merger is announced between Company A and B. Which of the following is a
potential response to that announcement? - Answer All of these answers.
A stock has a beta of 0.75 in relation to the Dow Jones Industrial Index. Today, the Dow Jones
increased by 2%. Based on its beta, predict what happened to the stock's price. - Answer The
stock's price increased by less than 2%.
In which of the following ways can technical analysts use a company's announcements, news
and returns to determine whether to buy the company's stock? - Answer They can use the
returns to study the company's growth patterns and stock price fluctuations.
The adequately diversify your portfolio, you need to do more than just own a variety of
securities. Which of the following is a necessary component of a well-diversified portfolio that
has a low variance? - Answer All of these answers.
Under the capital asset pricing model (CAPM), what beta value is considered risky? - Answer A
beta above 1
What factors should be considered when weighting an investment portfolio? - Answer All of
these answers.
Which of the following statements accurately describes systemic risk? - Answer Systemic risk is
what provides a stock its risk premium.
Questions With 100% Correct and Actual
Answers 2026-2027 Updated.
A company issued debt that did not grant the bondholders the ability to seize the company's
assets to settle the obligation. This debt can be traded on a public exchange. Which of the
following best describes this debt? - Answer Public, unsecured debt.
Which of the following is NOT a cash equivalent? - Answer A government bond that matures in
four months.
Which of the following occurred during the financial crisis of 2007-2008? - Answer All of these
answers
Which of the following statements regarding shareholder and market value is correct? - Answer
The idea of maximizing market value is related to the idea of maximizing shareholder value.
How is finance used in organizations? - Answer All of these answers.
Which of the following terms describes the protection of personal assets stemming from the
corporate structure? - Answer limited liability
Which of the following is a factor that contributes to the conflict of interest between a
company's bondholders and its shareholders? - Answer All of these answers
Which of the following is a legal characteristic of a general partnership? - Answer There must
be at least two business owners.
Which of the following is a type of financial market? - Answer All of these answers
Which of the following is an accurate characteristic of a sole proprietorship? - Answer The
owner is personally liable for the business's debt and obligations.
A company issues a bond with the provision that it may pay off the debt early. This bond is
subject to which type of risk? - Answer Prepayment risk.
What will $247,000 grow to be in 9 years if it is invested today in an account with an annual
interest rate of 11%? - Answer 631,835.12
,Approximately how many years will it take for $136,000 to grow to be $468,000 if it is invested
in an account with an annual interest rate of 8%? Choose the closest answer. - Answer 16
years.
At what annual interest rate must $137,000 be invested so that it will grow to be $475,000 in 14
years? Choose the closest rate. - Answer 9.29%
If you wish to accumulate $197,000 in 5 years, how much must you deposit today in an account
that pays a quoted annual interest rate of 13% with semi-annual compounding of interest?
Round to the nearest dollar. - Answer $104,947
What will $153,000 grow to be in 13 years if it is invested today in an account with a quoted
annual interest rate of 10% with monthly compounding of interest? Round to the nearest dollar.
- Answer $558,386
You are offered an investment with a quoted annual interest rate of 13% with quarterly
compounding of interest. What is your effective annual interest rate? - Answer 13.65%
You are offered an annuity that will pay $24,000 per year for 11 years (the first payment will
occur one year from today). If you feel that the appropriate discount rate is 13%, what is the
annuity worth to you today? Round to the nearest dollar. - Answer $136,487
You plan to buy a car that has a total "drive-out" cost of $25,700. You will make a down
payment of $3,598. The remainder of the car's cost will be financed over a period of 5 years.
You will repay the loan by making equal monthly payments. Your quoted annual interest rate is
8% with monthly compounding of interest. (The first payment will be due one month after the
purchase date.) What will your monthly payment be? - Answer $448.15
If you deposit $16,000 per year for 12 years (each deposit is made at the end of each year) in an
account that pays an annual interest rate of 14%, what will your account be worth at the end of
12 years? Round to the nearest dollar. - Answer $436,332
John and Peggy recently bought a house. They financed the house with a $125,000, 30-year
mortgage with a nominal annual interest rate of 7 percent with monthly compounding.
Mortgage payments are made at the end of each month. What is the monthly mortgage
payment? - Answer $831.63
By increasing the number of compounding periods in a year, while holding the stated annual
interest rate constant, you will... - Answer increase the effective annual rate.
, If you wish to accumulate $140,000 in 13 years, how much must you deposit today in an
account that pays an annual interest rate of 14%? - Answer $25,489.71
A portfolio has $70,000 of bonds and $30,000 of stock. The bonds are 80% likely to have a 10%
return and 20% likely to have a 0% return. The stock is 50% likely to have a 20% return and 50%
likely to have a 10% loss. What is the expected return? - Answer 7.10%
You are planning for retirement 34 years from now. You plan to invest $575 at the end of the
month for the following 34 years (assume all cash flows occur at the end of each month). If you
believe you will earn an annual percentage rate of return of 9.7%, what will your retirement
investment be worth 34 years from now? Round to the nearest dollar. - Answer $1,828,293
A portfolio is composed of 30% stock, 20% bonds, and 50% mutual funds. The stock is expected
to have a 10% return, the bonds a 5% return and the mutual funds a 7% return. What is the
expected return of the portfolio? - Answer 7.50%
A potential merger is announced between Company A and B. Which of the following is a
potential response to that announcement? - Answer All of these answers.
A stock has a beta of 0.75 in relation to the Dow Jones Industrial Index. Today, the Dow Jones
increased by 2%. Based on its beta, predict what happened to the stock's price. - Answer The
stock's price increased by less than 2%.
In which of the following ways can technical analysts use a company's announcements, news
and returns to determine whether to buy the company's stock? - Answer They can use the
returns to study the company's growth patterns and stock price fluctuations.
The adequately diversify your portfolio, you need to do more than just own a variety of
securities. Which of the following is a necessary component of a well-diversified portfolio that
has a low variance? - Answer All of these answers.
Under the capital asset pricing model (CAPM), what beta value is considered risky? - Answer A
beta above 1
What factors should be considered when weighting an investment portfolio? - Answer All of
these answers.
Which of the following statements accurately describes systemic risk? - Answer Systemic risk is
what provides a stock its risk premium.
