K
C
LO
D076 ALL UNIT TESTS
QUESTIONS WITH CORRECT
YC
ANSWERS ALL VERIFIED BY
AN EXPERT A+ GRADED
D
U
(LATEST UPDATE)
ST
,What are the main services offered by financial institutions? - ANS Accepting a wide variety of
deposits, offering investment products, providing loans, and brokering financial transactions
What is the main objective of personal financial goals? - ANS To maximize individual utility
Which task does the financial manager of a firm perform that involves the issuance of new
stocks and bonds? - ANS Making financing decisions
Why is understanding the definition of finance important in managing personal finances? - ANS
It helps individuals compare the costs and benefits of an action to determine whether to take
K
that action.
In which type of market would a company issue bonds or stocks for the first time? - ANS
C
Primary market
Which type of financial institution is a mutual fund? - ANS Investment institution
LO
Which financial institution specializes in managing and administering retirement funds? - ANS
Pension funds
Which type of economic indicator is the consumer price index? - ANS Lagging indicator
YC
What does the term ethical refer to? - ANS The accepted standards of conduct that guide a
person's behavior
A company's officers and board of directors are selling their stocks in the firm at higher prices
due to false accounting reports that made the stock seem more valuable than it truly was. Which
D
ethical issue is occurring in this situation? - ANS Agency problem due to conflicting interests
Which area of finance involves deciding which assets to invest in to create wealth in the future?
U
- ANS Investments
What is the main goal of a firm? - ANS To maximize owner wealth
ST
What are financial managers doing if they evaluate whether it is worth spending money on
research and development for a new product? - ANS Making an investment decision
Which type of financial market is where securities such as stocks and bonds are traded after
their initial issuance? - ANS The secondary financial market
What type of financial institution is an insurance company? - ANS Contractual
Which financial institution invests funds contributed by a company to provide retirement funds
for the company's employees? - ANS Pension fund
, Personal income is which type of economic indicator? - ANS Coincident
Which term refers to something that conforms with accepted standards of conduct that guide a
person's behavior? - ANS Ethical
What is the second step in finding a solution to an ethical dilemma? - ANS Consider alternative
courses of action
Which type of interest rate includes interest on interest in addition to interest on the principal? -
K
ANS Compound interest
How can agency problems be reduced through corporate control? - ANS Executive
C
compensation
What is the rate at which the average price level of particular goods and services in an economy
LO
increases over a period of time? - ANS Inflation rate
You signed an apartment contract today. You are going to pay $1,500 at the beginning of each
month for the next 12 months, starting today. What type of cash flows is this contract? - ANS
An annuity due
YC
What is the term for the return over the entire period that an investor owns a financial security? -
ANS Holding period return
What is used to measure total risk? - ANS Standard deviation
D
What is the term for the risk that changes in interest rates will impact the value of a bond? -
ANS Interest rate risk
U
What is another name for the cost of capital? - ANS Discount rate
What is the name for the minimum rate of return that an investor or lender will accept for
ST
investments? - ANS Required rate of return
The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real
interest rate? - ANS 5%
Which action reduces the future value of cash flows? - ANS Receive all cash flows later than
expected.
How is risk defined in finance? - ANS The possibility that the realized or actual return will differ
from what we expect
C
LO
D076 ALL UNIT TESTS
QUESTIONS WITH CORRECT
YC
ANSWERS ALL VERIFIED BY
AN EXPERT A+ GRADED
D
U
(LATEST UPDATE)
ST
,What are the main services offered by financial institutions? - ANS Accepting a wide variety of
deposits, offering investment products, providing loans, and brokering financial transactions
What is the main objective of personal financial goals? - ANS To maximize individual utility
Which task does the financial manager of a firm perform that involves the issuance of new
stocks and bonds? - ANS Making financing decisions
Why is understanding the definition of finance important in managing personal finances? - ANS
It helps individuals compare the costs and benefits of an action to determine whether to take
K
that action.
In which type of market would a company issue bonds or stocks for the first time? - ANS
C
Primary market
Which type of financial institution is a mutual fund? - ANS Investment institution
LO
Which financial institution specializes in managing and administering retirement funds? - ANS
Pension funds
Which type of economic indicator is the consumer price index? - ANS Lagging indicator
YC
What does the term ethical refer to? - ANS The accepted standards of conduct that guide a
person's behavior
A company's officers and board of directors are selling their stocks in the firm at higher prices
due to false accounting reports that made the stock seem more valuable than it truly was. Which
D
ethical issue is occurring in this situation? - ANS Agency problem due to conflicting interests
Which area of finance involves deciding which assets to invest in to create wealth in the future?
U
- ANS Investments
What is the main goal of a firm? - ANS To maximize owner wealth
ST
What are financial managers doing if they evaluate whether it is worth spending money on
research and development for a new product? - ANS Making an investment decision
Which type of financial market is where securities such as stocks and bonds are traded after
their initial issuance? - ANS The secondary financial market
What type of financial institution is an insurance company? - ANS Contractual
Which financial institution invests funds contributed by a company to provide retirement funds
for the company's employees? - ANS Pension fund
, Personal income is which type of economic indicator? - ANS Coincident
Which term refers to something that conforms with accepted standards of conduct that guide a
person's behavior? - ANS Ethical
What is the second step in finding a solution to an ethical dilemma? - ANS Consider alternative
courses of action
Which type of interest rate includes interest on interest in addition to interest on the principal? -
K
ANS Compound interest
How can agency problems be reduced through corporate control? - ANS Executive
C
compensation
What is the rate at which the average price level of particular goods and services in an economy
LO
increases over a period of time? - ANS Inflation rate
You signed an apartment contract today. You are going to pay $1,500 at the beginning of each
month for the next 12 months, starting today. What type of cash flows is this contract? - ANS
An annuity due
YC
What is the term for the return over the entire period that an investor owns a financial security? -
ANS Holding period return
What is used to measure total risk? - ANS Standard deviation
D
What is the term for the risk that changes in interest rates will impact the value of a bond? -
ANS Interest rate risk
U
What is another name for the cost of capital? - ANS Discount rate
What is the name for the minimum rate of return that an investor or lender will accept for
ST
investments? - ANS Required rate of return
The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real
interest rate? - ANS 5%
Which action reduces the future value of cash flows? - ANS Receive all cash flows later than
expected.
How is risk defined in finance? - ANS The possibility that the realized or actual return will differ
from what we expect
