FINANCE 301 Exam study Test |Questions all
with 100% Correct Answers-A+
Time Value of Money - ANSWER an economic principle stating that dollars to be
recieved or paid out through time are different commodities that cannot simply be
added together or subtracted from each other
Opportunity Cost - ANSWER an alternative forgone because a particular course of action
is persued
Investing - ANSWER the trading of dollars today for dollars in the future (deferring
consumption)
Borrowing - ANSWER the trading of dollars in the future for dollars today
Discounting - ANSWER the process of turning future cash flows into current cash flows
Compounding - ANSWER the process of turning current cash flows into future cash flows
Simple Interest - ANSWER the dollar amount of interest recieved on the original
investment only
Compound Interest - ANSWER the dollar amount of interest earned not only on the
original principal but also on interest earned over previous periods
Effective Annual Interest Rate - ANSWER an interest rate expressed as if it were earned
once per year
, Discount Rate - ANSWER Another name for the interest rate. Because to discount is to
deduct, this is used to reduce a future value to a present value
Multiple Cash Flows - ANSWER more than one cash flow, as opposed to a lump-sum
cash flow
Annuity - ANSWER a series of equal cash flows to be recieved through time
Annuity Due - ANSWER an annuity with a first payment occurring at the beginning of
period one
Modern Corporate Finance - ANSWER an approach to the study of finance that
integrates financial decisions of business firms within a logical framework
Economics - ANSWER the study of the allocation of scarce resources i.e. the study of
people acting individually or through the businesses and governments they form, make
decisions regarding the production and use of scarce resources
Finance - ANSWER applied economics i.e. the economics of time and risk
Valuation - ANSWER the process of placing a value/worth on resources such as
buildings, resources, and ideas; the central process of finance
corporation - ANSWER a distinct legal entity defined by a collection of contracts set up
by one or more persons for the purpose of engaging in economic activity
Sole Proprietorship - ANSWER a type of business organization in which an individual,
acting alone, conducts business. Legal rights + responsibilities of the business = legal
rights + responsibilities of the owner
with 100% Correct Answers-A+
Time Value of Money - ANSWER an economic principle stating that dollars to be
recieved or paid out through time are different commodities that cannot simply be
added together or subtracted from each other
Opportunity Cost - ANSWER an alternative forgone because a particular course of action
is persued
Investing - ANSWER the trading of dollars today for dollars in the future (deferring
consumption)
Borrowing - ANSWER the trading of dollars in the future for dollars today
Discounting - ANSWER the process of turning future cash flows into current cash flows
Compounding - ANSWER the process of turning current cash flows into future cash flows
Simple Interest - ANSWER the dollar amount of interest recieved on the original
investment only
Compound Interest - ANSWER the dollar amount of interest earned not only on the
original principal but also on interest earned over previous periods
Effective Annual Interest Rate - ANSWER an interest rate expressed as if it were earned
once per year
, Discount Rate - ANSWER Another name for the interest rate. Because to discount is to
deduct, this is used to reduce a future value to a present value
Multiple Cash Flows - ANSWER more than one cash flow, as opposed to a lump-sum
cash flow
Annuity - ANSWER a series of equal cash flows to be recieved through time
Annuity Due - ANSWER an annuity with a first payment occurring at the beginning of
period one
Modern Corporate Finance - ANSWER an approach to the study of finance that
integrates financial decisions of business firms within a logical framework
Economics - ANSWER the study of the allocation of scarce resources i.e. the study of
people acting individually or through the businesses and governments they form, make
decisions regarding the production and use of scarce resources
Finance - ANSWER applied economics i.e. the economics of time and risk
Valuation - ANSWER the process of placing a value/worth on resources such as
buildings, resources, and ideas; the central process of finance
corporation - ANSWER a distinct legal entity defined by a collection of contracts set up
by one or more persons for the purpose of engaging in economic activity
Sole Proprietorship - ANSWER a type of business organization in which an individual,
acting alone, conducts business. Legal rights + responsibilities of the business = legal
rights + responsibilities of the owner
