FNAN 522 EXAM STUDY GUIDE ACTUAL
SCRIPT WITH 100 PERCENT CORRECT
ANSWERS
◉ What is the primary goal of the Sarbanes-Oxley act according to
the Module 1 video "The Goal of Financial Management"?
Answer: To protect investors from corporate abuse.
◉ Which of the following is an accurate characteristic of a sole
proprietorship?
Answer: The owner is personally liable for the business's debt and
obligations.
◉ Which of the following is a source of agency costs in an
organization?
Answer: 1. Parties associated with the organization have different
risk preferences.
2. The managers of the organization have different objectives than
the other shareholders.
3. The people who make the day-to-day decisions are not the
owners
◉ Which of the following occurred during the financial crisis of
2007-2008?
, Answer: 1.Several major institutions failed or were subject to
government takeover.
2. Significant declines in consumer wealth and prolonged
unemployment.
3. A currency crisis, with investors transferring their wealth to
countries with stronger currencies.
◉ Which of the following terms describes the protection of
personal assets stemming from the corporate structure?
Answer: limited liability
◉ What will $250,000 grow to be in 11 years if it is invested today
in an account with an annual interest rate of 6%?
Answer: $474,574.64
◉ Approximately how many years will it take for $36,000 to grow
to be $68,000 if it is invested in an account with an annual interest
rate of 8%?
Answer: 8 years
◉ You are offered a loan with a quoted annual interest rate of
13% with monthly compounding of interest. What is your
effective annual interest rate?
Answer: EAR = ((1+(.13/12))^12) - 1 =13.8%
SCRIPT WITH 100 PERCENT CORRECT
ANSWERS
◉ What is the primary goal of the Sarbanes-Oxley act according to
the Module 1 video "The Goal of Financial Management"?
Answer: To protect investors from corporate abuse.
◉ Which of the following is an accurate characteristic of a sole
proprietorship?
Answer: The owner is personally liable for the business's debt and
obligations.
◉ Which of the following is a source of agency costs in an
organization?
Answer: 1. Parties associated with the organization have different
risk preferences.
2. The managers of the organization have different objectives than
the other shareholders.
3. The people who make the day-to-day decisions are not the
owners
◉ Which of the following occurred during the financial crisis of
2007-2008?
, Answer: 1.Several major institutions failed or were subject to
government takeover.
2. Significant declines in consumer wealth and prolonged
unemployment.
3. A currency crisis, with investors transferring their wealth to
countries with stronger currencies.
◉ Which of the following terms describes the protection of
personal assets stemming from the corporate structure?
Answer: limited liability
◉ What will $250,000 grow to be in 11 years if it is invested today
in an account with an annual interest rate of 6%?
Answer: $474,574.64
◉ Approximately how many years will it take for $36,000 to grow
to be $68,000 if it is invested in an account with an annual interest
rate of 8%?
Answer: 8 years
◉ You are offered a loan with a quoted annual interest rate of
13% with monthly compounding of interest. What is your
effective annual interest rate?
Answer: EAR = ((1+(.13/12))^12) - 1 =13.8%
