FNAN 522 Midterm Exam With 100%
Correct and Detailed Answers 2026-2027
Updated.
A company issued debt that did not grant the bondholders the ability to seize the company's
assets to settle the obligation. This debt can be traded on a public exchange. Which of the
following best describes this debt?
a. Private, secured debt.
b. Public, unsecured debt.
c. Private, unsecured debt.
d. Public, secured debt. - Answer b. Public, unsecured debt.
Which of the following is NOT a cash equivalent?
a. A treasury bill that matures in two months
b. Preferred stock that will be redeemed in a month
c. A government bond that matures in four months.
d. A banknote - Answer c. A government bond that matures in four months.
Which of the following occurred during the financial crisis of 2007-2008?
a. Several major institutions failed or were subject to government takeover.
b. A currency crisis, with investors transferring their wealth to countries with stronger
currencies.
c. All of these answers
d. Significant declines in consumer wealth and prolonged unemployment. - Answer c. All of
these answers
Which of the following statements regarding shareholder and market value is correct?
a. Short-term focus on shareholder value is never detrimental to long-term shareholder value.
b. The idea of maximizing market value is related to the idea of maximizing shareholder value.
c. All of these answers.
d. Market value is the price at which a shareholder is willing to sell. - Answer b. The idea of
maximizing market value is related to the idea of maximizing shareholder value.
, How is finance used in organizations?
a. To maximize shareholder value.
b. All of these answers.
c. To choose between different potential investments.
d. To ensure that money is at the right place at the right time. - Answer b. All of these answers.
Which of the following terms describes the protection of personal assets stemming from the
corporate structure?
a. double taxation
b. simple transference
c. articles of incorporation
d. limited liability - Answer d. limited liability
Which of the following is a factor that contributes to the conflict of interest between a
company's bondholders and its shareholders?
a. All of these answers
b. Shareholders are only paid if the company makes a profit, bondholders are paid regardless.
c. Shareholders generally want the company to pursue riskier projects; bondholders do not.
d. Shareholders have a vote in how the company conducts its business; bondholders generally
do not. - Answer a. All of these answers
Which of the following is a legal characteristic of a general partnership?
a. The partnership is taxed as a separate entity from its partners.
b. Partners are not personally liable for the business's debts and obligations.
c. All of these answers.
d. There must be at least two business owners. - Answer d. There must be at least two
business owners.
Which of the following is a type of financial market?
a. All of these answers
Correct and Detailed Answers 2026-2027
Updated.
A company issued debt that did not grant the bondholders the ability to seize the company's
assets to settle the obligation. This debt can be traded on a public exchange. Which of the
following best describes this debt?
a. Private, secured debt.
b. Public, unsecured debt.
c. Private, unsecured debt.
d. Public, secured debt. - Answer b. Public, unsecured debt.
Which of the following is NOT a cash equivalent?
a. A treasury bill that matures in two months
b. Preferred stock that will be redeemed in a month
c. A government bond that matures in four months.
d. A banknote - Answer c. A government bond that matures in four months.
Which of the following occurred during the financial crisis of 2007-2008?
a. Several major institutions failed or were subject to government takeover.
b. A currency crisis, with investors transferring their wealth to countries with stronger
currencies.
c. All of these answers
d. Significant declines in consumer wealth and prolonged unemployment. - Answer c. All of
these answers
Which of the following statements regarding shareholder and market value is correct?
a. Short-term focus on shareholder value is never detrimental to long-term shareholder value.
b. The idea of maximizing market value is related to the idea of maximizing shareholder value.
c. All of these answers.
d. Market value is the price at which a shareholder is willing to sell. - Answer b. The idea of
maximizing market value is related to the idea of maximizing shareholder value.
, How is finance used in organizations?
a. To maximize shareholder value.
b. All of these answers.
c. To choose between different potential investments.
d. To ensure that money is at the right place at the right time. - Answer b. All of these answers.
Which of the following terms describes the protection of personal assets stemming from the
corporate structure?
a. double taxation
b. simple transference
c. articles of incorporation
d. limited liability - Answer d. limited liability
Which of the following is a factor that contributes to the conflict of interest between a
company's bondholders and its shareholders?
a. All of these answers
b. Shareholders are only paid if the company makes a profit, bondholders are paid regardless.
c. Shareholders generally want the company to pursue riskier projects; bondholders do not.
d. Shareholders have a vote in how the company conducts its business; bondholders generally
do not. - Answer a. All of these answers
Which of the following is a legal characteristic of a general partnership?
a. The partnership is taxed as a separate entity from its partners.
b. Partners are not personally liable for the business's debts and obligations.
c. All of these answers.
d. There must be at least two business owners. - Answer d. There must be at least two
business owners.
Which of the following is a type of financial market?
a. All of these answers
