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BFIN 300 Exam Questions And Answers
|Latest 2025 | Guaranteed Pass.
When a company introduces a product that competes with one of its own existing products,
this is called: - Answer✔B) cannibalism.
4. The primary function of a business is to: - Answer✔C) enhance shareholder wealth over the
long term.
5. An investor wishing to decrease volatility should purchase securities with - Answer✔B) lower
risk premiums.
8. A disadvantage of the internal rate of return method of valuing capital budgets is it: -
Answer✔C) assumes all cash flows are reinvested at the IRR.
12. The rate of return required by investors in the market for owning a bond is called the: -
Answer✔C) yield to maturity.
15. The terms of a bond issue are spelled out in the bond: - Answer✔B) indenture.
16. A cost that has already been paid, or the liability to pay has already been incurred is a(n): -
Answer✔B) sunk cost.
19. The ratio that measures how much an investor is willing to pay for a dollar of earnings is
known as a _____________ ratio. - Answer✔A) market value
21. Which of the following is not a disadvantage of the discounted payback period method? -
Answer✔It ignores the time value of money.
22. Management may be hesitant to initiate regular dividends because: - Answer✔A) dividends
are sticky.
27. A security's beta is described as: - Answer✔C) a measure of how the returns of that security
co-vary with the returns of the market.
28. To determine cash flows for a capital budget, we must consider: - Answer✔B) changes in
net working capital.
29. The capital budgeting decision tool most commonly used by chief financial officers in
business today is: - Answer✔C) net present value.
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 11:08AM.
32. Because stocks represent ownership in the underlying company, they are considered to be:
- Answer✔C) riskier than bonds of the same company.
35. The underlying assumption of the dividend growth model is that a stock is worth: -
Answer✔A) the present value of the future income which the stock generates.
36. ____________________ are ways of returning cash to the shareholders. - Answer✔B) Cash
dividends and stock repurchases.
37. If a firm produces a twelve percent return on assets and a fourteen percent return on
equity, then the firm: - Answer✔B) has a debt-equity ratio less than 1.0.
38. In speaking with a client about an asset with an expected return of 12% and a standard
deviation of 12%, it would be appropriate to characterize the security's probability of loss as: -
Answer✔A) 16% or less. The range for one standard deviation is 0 - 24%, 1 SD = 68% of the
curve, leaving 32% between the two tails, 16% to the left, or below 0
40. The correlation coefficient of Snowy Tours Inc and Kalix Industries is 0.70. From this, we can
safely assume: - Answer✔A) both stocks will tend to trade down together.
. Estimates using the geometric average will probably tend to ___________ values over the
long-term while estimates using the arithmetic average will probably tend to ___________
values over the short-term. - Answer✔A) accurately reflect, accurately reflect
47. The relationship between cash flows received by the firm and cash flows paid by the firm is
not defined as CFFA equals: - Answer✔EBIT + NetDepreciation - Taxes
51. The financial ratio measured as net income divided by total shareholders' equity is known as
the firm's: - Answer✔B) return on equity
2. The internal rate of return is: - Answer✔B) the rate that makes the present value of an
investment exactly equal to zero.
5. Nominal rates are defined as real rates plus a premium for expected: - Answer✔inflation.
11. An annuity stream where the payments occur forever is called a(n): - Answer✔B)
perpetuity.
14. The financial ratio measured as market price divided by total revenues is known as the
firm's: - Answer✔A) price to sales ratio.
16. The underlying assumption of the dividend growth model is that a stock is worth: -
Answer✔B) the present value of the future income which the stock generates.
18. Nathaniel Banks is considering opening a brew pub near Lake George and may even take on
a partner. To protect his primary residence, his best choice for the form of the business would
be a: - Answer✔corporation
2
BFIN 300 Exam Questions And Answers
|Latest 2025 | Guaranteed Pass.
When a company introduces a product that competes with one of its own existing products,
this is called: - Answer✔B) cannibalism.
4. The primary function of a business is to: - Answer✔C) enhance shareholder wealth over the
long term.
5. An investor wishing to decrease volatility should purchase securities with - Answer✔B) lower
risk premiums.
8. A disadvantage of the internal rate of return method of valuing capital budgets is it: -
Answer✔C) assumes all cash flows are reinvested at the IRR.
12. The rate of return required by investors in the market for owning a bond is called the: -
Answer✔C) yield to maturity.
15. The terms of a bond issue are spelled out in the bond: - Answer✔B) indenture.
16. A cost that has already been paid, or the liability to pay has already been incurred is a(n): -
Answer✔B) sunk cost.
19. The ratio that measures how much an investor is willing to pay for a dollar of earnings is
known as a _____________ ratio. - Answer✔A) market value
21. Which of the following is not a disadvantage of the discounted payback period method? -
Answer✔It ignores the time value of money.
22. Management may be hesitant to initiate regular dividends because: - Answer✔A) dividends
are sticky.
27. A security's beta is described as: - Answer✔C) a measure of how the returns of that security
co-vary with the returns of the market.
28. To determine cash flows for a capital budget, we must consider: - Answer✔B) changes in
net working capital.
29. The capital budgeting decision tool most commonly used by chief financial officers in
business today is: - Answer✔C) net present value.
1
, ©THESTAR 2024/2025 ALL RIGHTS RESERVED 11:08AM.
32. Because stocks represent ownership in the underlying company, they are considered to be:
- Answer✔C) riskier than bonds of the same company.
35. The underlying assumption of the dividend growth model is that a stock is worth: -
Answer✔A) the present value of the future income which the stock generates.
36. ____________________ are ways of returning cash to the shareholders. - Answer✔B) Cash
dividends and stock repurchases.
37. If a firm produces a twelve percent return on assets and a fourteen percent return on
equity, then the firm: - Answer✔B) has a debt-equity ratio less than 1.0.
38. In speaking with a client about an asset with an expected return of 12% and a standard
deviation of 12%, it would be appropriate to characterize the security's probability of loss as: -
Answer✔A) 16% or less. The range for one standard deviation is 0 - 24%, 1 SD = 68% of the
curve, leaving 32% between the two tails, 16% to the left, or below 0
40. The correlation coefficient of Snowy Tours Inc and Kalix Industries is 0.70. From this, we can
safely assume: - Answer✔A) both stocks will tend to trade down together.
. Estimates using the geometric average will probably tend to ___________ values over the
long-term while estimates using the arithmetic average will probably tend to ___________
values over the short-term. - Answer✔A) accurately reflect, accurately reflect
47. The relationship between cash flows received by the firm and cash flows paid by the firm is
not defined as CFFA equals: - Answer✔EBIT + NetDepreciation - Taxes
51. The financial ratio measured as net income divided by total shareholders' equity is known as
the firm's: - Answer✔B) return on equity
2. The internal rate of return is: - Answer✔B) the rate that makes the present value of an
investment exactly equal to zero.
5. Nominal rates are defined as real rates plus a premium for expected: - Answer✔inflation.
11. An annuity stream where the payments occur forever is called a(n): - Answer✔B)
perpetuity.
14. The financial ratio measured as market price divided by total revenues is known as the
firm's: - Answer✔A) price to sales ratio.
16. The underlying assumption of the dividend growth model is that a stock is worth: -
Answer✔B) the present value of the future income which the stock generates.
18. Nathaniel Banks is considering opening a brew pub near Lake George and may even take on
a partner. To protect his primary residence, his best choice for the form of the business would
be a: - Answer✔corporation
2
