Principles of Finance – Final Exam
Question 1 points
____ occurs when the government spends more than it collects in taxes.
Question options:
a) Deficit spending
b) Fiscal policy
c) Monetary policy
d) Gross domestic product
e) Business cycle
Question 2 points
Industries generally go through life cycles similar to the human life cycle⎯in the first
years of an industry's life growth is substantial, yet operations are somewhat unstable,
while in its later years, the industry has attained greater stability, but growth slows and
perhaps even declines.
Question options:
True
False
Question 3 points
The fiscal policy of the United States is formulated and carried out by the Federal
Reserve.
Question options:
True
False
Question 4 points
, An investor purchased a share of AutheTec stock (AUTH) for $12.50. Three months
later the stock was sold for $14.25. What is the holding period return earned by the
investor?
Question options:
a) 14%
b) 20%
c) 18%
d) 16%
Question 5 points
When the market is rising, it is called a bull market.
Question options:
True
False
Question 6 points
Ski Lifts Inc. is a highly seasonal business. The following summary balance sheet
provides data for peak and off-peak seasons (in thousands of dollars):
From this data, we may conclude that
Question options:
a) Ski Lifts has a working capital financing policy of exactly
matching asset and liability maturities.
b) Ski Lifts' working capital financing policy is relatively
aggressive; that is, the company finances some of its
permanent assets with short-term discretionary debt.
c) Off-peak Ski Lifts follows a relatively conservative approach to
working capital financing; that is, some of its short-term needs
are met by permanent capital.
Question 1 points
____ occurs when the government spends more than it collects in taxes.
Question options:
a) Deficit spending
b) Fiscal policy
c) Monetary policy
d) Gross domestic product
e) Business cycle
Question 2 points
Industries generally go through life cycles similar to the human life cycle⎯in the first
years of an industry's life growth is substantial, yet operations are somewhat unstable,
while in its later years, the industry has attained greater stability, but growth slows and
perhaps even declines.
Question options:
True
False
Question 3 points
The fiscal policy of the United States is formulated and carried out by the Federal
Reserve.
Question options:
True
False
Question 4 points
, An investor purchased a share of AutheTec stock (AUTH) for $12.50. Three months
later the stock was sold for $14.25. What is the holding period return earned by the
investor?
Question options:
a) 14%
b) 20%
c) 18%
d) 16%
Question 5 points
When the market is rising, it is called a bull market.
Question options:
True
False
Question 6 points
Ski Lifts Inc. is a highly seasonal business. The following summary balance sheet
provides data for peak and off-peak seasons (in thousands of dollars):
From this data, we may conclude that
Question options:
a) Ski Lifts has a working capital financing policy of exactly
matching asset and liability maturities.
b) Ski Lifts' working capital financing policy is relatively
aggressive; that is, the company finances some of its
permanent assets with short-term discretionary debt.
c) Off-peak Ski Lifts follows a relatively conservative approach to
working capital financing; that is, some of its short-term needs
are met by permanent capital.
