FIN 300 Exam Actual Set Questions & Revised Correct Answers PASSED!! Profit maximization as a goal of the firm - ANSWER : Does not consider cash flow or risk Wealth maximization as a goal of the firm - ANSWER : Takes a long -run perspective and focuses on the owners of the firm A manager has responsibilities to stockholders - ANSWER : For legal and ethical issues Which of the following would least affect the value of a firm's stock - ANSWER : Mark et share Problems with seeking profit as a goal of the firm would include each of the following except - ANSWER : Profit is completely unrelated to cash flow Stocks that are offered for sale in a secondary market that consist of a network of dealers trading over computers - ANSWER : Traded on "over the counter market" Junk bonds are - ANSWER : Bonds that have been rated below investment grade Which of the following risk premiums are most likely to be included in a corporation's commercial paper yield - ANSWER : Inflation, default and liquidity risk premiums Which of the following are traded in money markets - ANSWER : Banker's acceptances Zero-coupon bond - ANSWER : Makes no periodic interest payments With respect to spreads, a dealer: - ANSWER : Has a spread representing his/her fee The treasury bill auction - ANSWER : Issues T-bills in minimum denominations of $100 The expected inflation ra te is 4% and the nominal risk -free rate is 6%; the real rate of interest is - ANSWER : 2% The real rate of interest tis 3% - ANSWER : The inflation rate is 3% and the nominal risk -
free rate is 6% The economy is suffering from a recession - ANSWER : A junk bond's interest rate increases relative to that of AAA corporate bonds The economy is experiencing a sever recession. The Fed will most likely - ANSWER : Buy treasury securities The economy is experiencing strong economic growth. The Fed will m ost likely: - ANSWER : Sell treasury securities National commercial banks are examined primarily by - ANSWER : The controller of the currency Commercial banks that are state member banks are examined primarily by - ANSWER : The federal reserve A bank needs ____ before it opens for business - ANSWER : A charter Open market operations - ANSWER : Are used in attempt to manipulate the economy through changes in short -term interest rates and the money - supply The Fed makes loads to financial in stitutions - ANSWER : At the discount window Each of the following items represents a liability with the exception of - ANSWER : Prepaid expenses Which of the following is a use of cash that would appear on the statement of cash flows? - ANSWER : Pu rchase of marketable securities
free rate is 6% The economy is suffering from a recession - ANSWER : A junk bond's interest rate increases relative to that of AAA corporate bonds The economy is experiencing a sever recession. The Fed will most likely - ANSWER : Buy treasury securities The economy is experiencing strong economic growth. The Fed will m ost likely: - ANSWER : Sell treasury securities National commercial banks are examined primarily by - ANSWER : The controller of the currency Commercial banks that are state member banks are examined primarily by - ANSWER : The federal reserve A bank needs ____ before it opens for business - ANSWER : A charter Open market operations - ANSWER : Are used in attempt to manipulate the economy through changes in short -term interest rates and the money - supply The Fed makes loads to financial in stitutions - ANSWER : At the discount window Each of the following items represents a liability with the exception of - ANSWER : Prepaid expenses Which of the following is a use of cash that would appear on the statement of cash flows? - ANSWER : Pu rchase of marketable securities
