BSNS114 Theory Exam with Questions and
100% Correct Answers
working capital management, capital budgeting, and choice of debt and equity mixed in
the capital structure. - Answer what three decisions are typically made by a financial
manager
mixture of long term debt and equity a firm use - Answer capital structure refers to
rise, fall - Answer interest rates affect bond prices. If interests rates ______, bond prices
will ______
long, short - Answer ___________ term bonds, have greater interest rate risk than
_______ term bonds
Lower, Higher - Answer ________ coupon rate bonds have higher interest rate risk than
________ coupon rate bonds.
AAA - BBB or Aaa - Baa - Answer investment grade bonds
BB - D or Ba - D - Answer speculative grade bonds
payments distributed to each shareholder out of the profits of the company based on
the number of shares they own - Answer what are dividends
a cost that has already been incurred and can't be recouped - Answer what is a sunk
cost
, most valuable alternative given up if an investment is undertaken - Answer what is an
opportunity cost
sales lost due to new product being introduced into the market. - Answer what are
cannibalisation costs
GDP, inflation changes, interest rate change, stock market crash - Answer examples of
systematic risk
warehouse fire, bad publicity about a company - Answer examples of unsystematic risk
spreading your investment across many assets will normally eliminate some risk -
Answer the principle of diversification is
cost of equity and its after tax cost of debt - Answer weighted average cost of capital is
defined as the weighted average of a firms
the reserve bank of New Zealand unexpectedly increased the shirt term interested rate.
Oil producing countries agree to reduce production of oil and push oil prices up. -
Answer factors that cause systematic risk are
based on historical data, there is a reward for bearing risk - Answer what is true about
risk and return
a share is a potentially long lived investment but a standard bond usually expires at a
fixed date - Answer one difference between shares and bonds
investment grade bonds have a lower default risk premium than speculative grade
bonds - Answer size of default risk premium regarding to different grade bonds
100% Correct Answers
working capital management, capital budgeting, and choice of debt and equity mixed in
the capital structure. - Answer what three decisions are typically made by a financial
manager
mixture of long term debt and equity a firm use - Answer capital structure refers to
rise, fall - Answer interest rates affect bond prices. If interests rates ______, bond prices
will ______
long, short - Answer ___________ term bonds, have greater interest rate risk than
_______ term bonds
Lower, Higher - Answer ________ coupon rate bonds have higher interest rate risk than
________ coupon rate bonds.
AAA - BBB or Aaa - Baa - Answer investment grade bonds
BB - D or Ba - D - Answer speculative grade bonds
payments distributed to each shareholder out of the profits of the company based on
the number of shares they own - Answer what are dividends
a cost that has already been incurred and can't be recouped - Answer what is a sunk
cost
, most valuable alternative given up if an investment is undertaken - Answer what is an
opportunity cost
sales lost due to new product being introduced into the market. - Answer what are
cannibalisation costs
GDP, inflation changes, interest rate change, stock market crash - Answer examples of
systematic risk
warehouse fire, bad publicity about a company - Answer examples of unsystematic risk
spreading your investment across many assets will normally eliminate some risk -
Answer the principle of diversification is
cost of equity and its after tax cost of debt - Answer weighted average cost of capital is
defined as the weighted average of a firms
the reserve bank of New Zealand unexpectedly increased the shirt term interested rate.
Oil producing countries agree to reduce production of oil and push oil prices up. -
Answer factors that cause systematic risk are
based on historical data, there is a reward for bearing risk - Answer what is true about
risk and return
a share is a potentially long lived investment but a standard bond usually expires at a
fixed date - Answer one difference between shares and bonds
investment grade bonds have a lower default risk premium than speculative grade
bonds - Answer size of default risk premium regarding to different grade bonds
