HFT 4464 Final Exam With
Complete Solution
A bond is: - ANSWER A form of debt capital issued by a corporation.
The advantages of a corporation are: - ANSWER It has unlimited life and
limited liability, and it is relatively easy to raise capital.
Statement 1:
A bank account is an example of a current asset.
Statement 2:
Inventory is an example of a fixed asset. - ANSWER Statement 1 is correct;
statement 2 is incorrect
The goal of financial management is: - ANSWER To maximize the wealth of
the owners.
Which of the following is correct? - ANSWER Financial management is the
process of making decisions about assets, the financing of those assets, and
the distribution of any potential cash flow generated by the assets.
A company's liabilities increased by $2,000,000. This means that - ANSWER
This company's total assets will increase by $2,000,000
A company has a cash inflow of $300,000 and a cash outflow of $400,000.
Therefore, its cash flow has... - ANSWER decreased by $100,000
,Keeping records for a business separate from the owner's personal affairs is
in keeping with the _______ principle - ANSWER business entity
A balance sheet has a total debit side of $ 2,000,000. The total liabilities are
$500,000. Therefore, the total Onwers' equity is: - ANSWER $1,500,000
The upward valuation of land subsequent to its purchase violates the _______
principle. - ANSWER cost
An investor bought a share in company X in 2015 and sells this share again in
2017 for $60. In the two years that she held the share, she received $2.75 in
dividends. The Holding Period of Return for this company is 12.75%. Based
on the available information, the purchasing price of this share would then
be (rounded to two digits): - ANSWER $55.65
An investor bought a share in company X in 2015 for $60 and sells this share
again in 2017. In the two years that she held the share, she received $4.50 in
dividends. The Holding Period of Return for this company is 14.25%. Based
on the available information, the selling price of this share would then be
(rounded to two digits): - ANSWER $64.05
Statement 1:
Bonds are prices in the market through an index.
, Statement 2:
An index of 102 means that the par value of a bond of $1000 is valued at
$1020 in the market. - ANSWER Both statements are correct
A bond has a par value of $1,000. Currently, the index of this bond is 99.75.
The market value of this bond is then: - ANSWER $997.50
A bond pays $91.00 in interest each year. The market value is $1,035.00,
which is equal to an index of 103.5. Based on this information, the yield of
this bond would then be: - ANSWER 8.8%
When calculating a holding period of return, dividends are excluded. -
ANSWER False
The annual returns of the Dow Jones Industrial Average and the S&P 500
index are highly positively correlated. - ANSWER True
Financial markets only involve buyers and sellers of financial instruments. -
ANSWER False
The bid price is the price a broker will give you for the stock you want to sell.
- ANSWER False
Complete Solution
A bond is: - ANSWER A form of debt capital issued by a corporation.
The advantages of a corporation are: - ANSWER It has unlimited life and
limited liability, and it is relatively easy to raise capital.
Statement 1:
A bank account is an example of a current asset.
Statement 2:
Inventory is an example of a fixed asset. - ANSWER Statement 1 is correct;
statement 2 is incorrect
The goal of financial management is: - ANSWER To maximize the wealth of
the owners.
Which of the following is correct? - ANSWER Financial management is the
process of making decisions about assets, the financing of those assets, and
the distribution of any potential cash flow generated by the assets.
A company's liabilities increased by $2,000,000. This means that - ANSWER
This company's total assets will increase by $2,000,000
A company has a cash inflow of $300,000 and a cash outflow of $400,000.
Therefore, its cash flow has... - ANSWER decreased by $100,000
,Keeping records for a business separate from the owner's personal affairs is
in keeping with the _______ principle - ANSWER business entity
A balance sheet has a total debit side of $ 2,000,000. The total liabilities are
$500,000. Therefore, the total Onwers' equity is: - ANSWER $1,500,000
The upward valuation of land subsequent to its purchase violates the _______
principle. - ANSWER cost
An investor bought a share in company X in 2015 and sells this share again in
2017 for $60. In the two years that she held the share, she received $2.75 in
dividends. The Holding Period of Return for this company is 12.75%. Based
on the available information, the purchasing price of this share would then
be (rounded to two digits): - ANSWER $55.65
An investor bought a share in company X in 2015 for $60 and sells this share
again in 2017. In the two years that she held the share, she received $4.50 in
dividends. The Holding Period of Return for this company is 14.25%. Based
on the available information, the selling price of this share would then be
(rounded to two digits): - ANSWER $64.05
Statement 1:
Bonds are prices in the market through an index.
, Statement 2:
An index of 102 means that the par value of a bond of $1000 is valued at
$1020 in the market. - ANSWER Both statements are correct
A bond has a par value of $1,000. Currently, the index of this bond is 99.75.
The market value of this bond is then: - ANSWER $997.50
A bond pays $91.00 in interest each year. The market value is $1,035.00,
which is equal to an index of 103.5. Based on this information, the yield of
this bond would then be: - ANSWER 8.8%
When calculating a holding period of return, dividends are excluded. -
ANSWER False
The annual returns of the Dow Jones Industrial Average and the S&P 500
index are highly positively correlated. - ANSWER True
Financial markets only involve buyers and sellers of financial instruments. -
ANSWER False
The bid price is the price a broker will give you for the stock you want to sell.
- ANSWER False
