1. Managing the firm’s assets includes all of the following except:
a. Computer systems
b. Par value of common stock
c. Marketable securities
d. Raw material inventory
2. The primary financial goal of the corporation is:
a. Maximizing shareholder wealth
b. Maximizing stakeholder wealth
c. Maximizing employment opportunities
d. Maximizing profit
3. If I wanted to avoid the potential issue of “double taxation of profits” I
should avoid setting up my company as a:
a. Sole proprietorship
b. Corporation
c. Partnership
d. All of the above are potentially liable to “double taxation”
4. Risk & return are key determinants in the price of a share of common
stock. Increased risk, other things held constant, results in:
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, a. A lower share price
b. A higher share price
c. No change in share price – the concepts are “mutually
exclusive”
d. Price will change – but one cannot determine from the
information which way
5. Within the secondary market, which of the following Us Treasury
securities’ prices will react most violently to a change in market
interest rates (assume all securities were issued on the same date):
a. 90- day T bills
b. 10 year Treasury note
c. 30 year Treasury note
d. Being debt issues by the United States government – all will
react the same but with different maturity dates
6. All of the following could be used to measure the risk associated with
a share of common stock except:
a. Alpha
b. Beta
c. Standard deviation
d. Range
e. Coefficient of variation
7. If I were to use the Capital Asset Pricing Model to judge the required
return on a stock, which piece of information might I find useful:
a. The annual dividend paid
b. The current price of the stock
c. The company’s net income after tax
d. The yield on 90-day T bills
8. The common stock in the Smyrna Gold Mine Company, their slogan “If
you can find it in Smyrna, heck you can find it anywhere!”, is
considered to be twice as volatile as the “average stock”. This being
the case, you would expect the beta on Smyrna’s stock to be:
a. 1
b. 2
c. 200
d. 0.5
9. Next month when the FED’s Open Market Committee meets, some
economist are predicting that they will raise interest rates because
they fear inflation coming back into the US economy. If the FED does
this, the prices of existing corporate bonds should:
a. Go down
This study source was downloaded by 100000898717596 from CourseHero.com on 07-18-2025 07:30:31 GMT -05:00
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a. Computer systems
b. Par value of common stock
c. Marketable securities
d. Raw material inventory
2. The primary financial goal of the corporation is:
a. Maximizing shareholder wealth
b. Maximizing stakeholder wealth
c. Maximizing employment opportunities
d. Maximizing profit
3. If I wanted to avoid the potential issue of “double taxation of profits” I
should avoid setting up my company as a:
a. Sole proprietorship
b. Corporation
c. Partnership
d. All of the above are potentially liable to “double taxation”
4. Risk & return are key determinants in the price of a share of common
stock. Increased risk, other things held constant, results in:
This study source was downloaded by 100000898717596 from CourseHero.com on 07-18-2025 07:30:31 GMT -05:00
https://www.coursehero.com/file/250465105/FIN305-w7-finalpartAdocx/
, a. A lower share price
b. A higher share price
c. No change in share price – the concepts are “mutually
exclusive”
d. Price will change – but one cannot determine from the
information which way
5. Within the secondary market, which of the following Us Treasury
securities’ prices will react most violently to a change in market
interest rates (assume all securities were issued on the same date):
a. 90- day T bills
b. 10 year Treasury note
c. 30 year Treasury note
d. Being debt issues by the United States government – all will
react the same but with different maturity dates
6. All of the following could be used to measure the risk associated with
a share of common stock except:
a. Alpha
b. Beta
c. Standard deviation
d. Range
e. Coefficient of variation
7. If I were to use the Capital Asset Pricing Model to judge the required
return on a stock, which piece of information might I find useful:
a. The annual dividend paid
b. The current price of the stock
c. The company’s net income after tax
d. The yield on 90-day T bills
8. The common stock in the Smyrna Gold Mine Company, their slogan “If
you can find it in Smyrna, heck you can find it anywhere!”, is
considered to be twice as volatile as the “average stock”. This being
the case, you would expect the beta on Smyrna’s stock to be:
a. 1
b. 2
c. 200
d. 0.5
9. Next month when the FED’s Open Market Committee meets, some
economist are predicting that they will raise interest rates because
they fear inflation coming back into the US economy. If the FED does
this, the prices of existing corporate bonds should:
a. Go down
This study source was downloaded by 100000898717596 from CourseHero.com on 07-18-2025 07:30:31 GMT -05:00
https://www.coursehero.com/file/250465105/FIN305-w7-finalpartAdocx/
