Fundamentals of Corporate Finance 11th Ed. Ross Wes terfield
Jordan Ch 6, Fundamentals of Corporate Test 1Questions with
Answers
annuity due - correct answers>>>An annuity for which cash flows occur at the beginning of the period.
perpetuity - correct answers>>>An annuity in which the cash flows continue forever.
consol - correct answers>>>A type of perpetuity.
stated interest rate - correct answers>>>The interest rate expressed in terms of the interest payment
made each period. Also known as the 'quoted interest rate'.
effective annual rate (EAR) - correct answers>>>The interest rate expressed as if it were compounded
once per year.
annual percentage rate (APR) - correct answers>>>The interest rate charged per period multiplied by the
number of periods per year.
Time value of money - correct answers>>>the principle that a dollar received today is worth more than a
dollar received in the future
time zero - correct answers>>>The beginning of a transaction; often the current point in time
Future Value (FV) - correct answers>>>the value of an investment after it earns interest for one or more
periods
Simple interest - correct answers>>>interest earned only on the original principal amount invested
future value (FV) - correct answers>>>the amount an investment is worth after one or more periods
compounding - correct answers>>>the process of accumulating interest on an investment over time to
earn more interest
, interest on interest - correct answers>>>interest earned on the reinvestment of previous interest
payments
simple interest - correct answers>>>interest earned only on the original principal amount invested
present value (PV) - correct answers>>>the current value of future cash flows discounted as the
appropriate discount rate
discount - correct answers>>>calculate the present value of some future amount
discount rate - correct answers>>>the rate used to calculate the present value of future cash flows
discounted cash flow (DCF) valuation - correct answers>>>calculating the present value of a future cas
flow to determine its value today.
Compound annual growth rate - correct answers>>>the average annual growth rate over a specified
period of time.
Rule of 72 - correct answers>>>a rule proposing that the time required to double money invested
approximately equals 72/i, where i is the rate of return expressed as a percentage.
Public offer - correct answers>>>the sale of equity shares or other financial instruments to the public in
order to raise capital.
SEC registration - correct answers>>>-all corporate securities offered to the public in the US must be
registered with the SEC w/ following exceptions issues not offered to public, less than a million, and w/in
state
underwriters - correct answers>>>underwriters purchase securities from the issuing company and resell
them to the public
Jordan Ch 6, Fundamentals of Corporate Test 1Questions with
Answers
annuity due - correct answers>>>An annuity for which cash flows occur at the beginning of the period.
perpetuity - correct answers>>>An annuity in which the cash flows continue forever.
consol - correct answers>>>A type of perpetuity.
stated interest rate - correct answers>>>The interest rate expressed in terms of the interest payment
made each period. Also known as the 'quoted interest rate'.
effective annual rate (EAR) - correct answers>>>The interest rate expressed as if it were compounded
once per year.
annual percentage rate (APR) - correct answers>>>The interest rate charged per period multiplied by the
number of periods per year.
Time value of money - correct answers>>>the principle that a dollar received today is worth more than a
dollar received in the future
time zero - correct answers>>>The beginning of a transaction; often the current point in time
Future Value (FV) - correct answers>>>the value of an investment after it earns interest for one or more
periods
Simple interest - correct answers>>>interest earned only on the original principal amount invested
future value (FV) - correct answers>>>the amount an investment is worth after one or more periods
compounding - correct answers>>>the process of accumulating interest on an investment over time to
earn more interest
, interest on interest - correct answers>>>interest earned on the reinvestment of previous interest
payments
simple interest - correct answers>>>interest earned only on the original principal amount invested
present value (PV) - correct answers>>>the current value of future cash flows discounted as the
appropriate discount rate
discount - correct answers>>>calculate the present value of some future amount
discount rate - correct answers>>>the rate used to calculate the present value of future cash flows
discounted cash flow (DCF) valuation - correct answers>>>calculating the present value of a future cas
flow to determine its value today.
Compound annual growth rate - correct answers>>>the average annual growth rate over a specified
period of time.
Rule of 72 - correct answers>>>a rule proposing that the time required to double money invested
approximately equals 72/i, where i is the rate of return expressed as a percentage.
Public offer - correct answers>>>the sale of equity shares or other financial instruments to the public in
order to raise capital.
SEC registration - correct answers>>>-all corporate securities offered to the public in the US must be
registered with the SEC w/ following exceptions issues not offered to public, less than a million, and w/in
state
underwriters - correct answers>>>underwriters purchase securities from the issuing company and resell
them to the public
