BA 323 Finance - SDSU Exam 1 Latest Update
2025-2026 75 Questions and 100% Verified
Correct Answers Guaranteed A+
**Know what premiums that different types of bonds have** - CORRECT ANSWER:
Treasury Short-Term Bonds: Inflation Premium
Treasury Long-Term Bonds: Inflation Premium & Maturity Risk Premium
Corporate Short-Term Bonds: Inflation Premium, Default-Risk Premium, & Liquidity
Premium.
Corporate Long-Term Bonds: Inflation Premium Liquidity Premium, Maturity Risk
Premium & Default Risk Premium.
*What are the three types of term structures? - CORRECT ANSWER: Upward slopping
(investors are confident about the economy); downward slopping (investors are
pessimistic about the economy, i.e. expect recession)
• What is the nominal vs real interest rate? - CORRECT ANSWER: The nominal interest
rate is just that...the rate of interest. The real interest rate is the nominal rate minus the
expected rate of inflation. Nominal is generally larger. If the risk-free rate increases
generally speaking the interest rate will go up*.
•What are the four parts of an annual report? - CORRECT ANSWER: Balance sheet
• Provides a snapshot of a firm's financial position
at one point in time.
Income statement
• Summarizes a firm's revenues and expenses over
a given period of time.
Statement of cash flows
, • Reports the impact of a firm's activities on cash
flows over a given period of time.
Statement of stockholders' equity
• Shows how much of the firm's earnings were
retained, rather than paid out as dividends.
Change in CEO Compensation starting in the 1980s? - CORRECT ANSWER:
Movement away from salaries to stock options to foster growth, innovation and risk-
taking.
Current Assets include? - CORRECT ANSWER: cash, marketable securities, accounts
receivable, and inventories
Current Liabilities include? - CORRECT ANSWER: liabilities due within a short time,
usually within a year
Describe the capital allocation process and what role the suppliers of capital plays and
the role that the users of capital play. Why is the financial system often described as the
circulatory system of the economy? - CORRECT ANSWER: - In a well-functioning
economy, capital flows
efficiently from those who supply capital to
those who demand it.
- Suppliers of capital: individuals and institutions
with "excess funds." These groups are saving
money and looking for a rate of return on their
investment.
- Demanders or users of capital: individuals and
institutions who need to raise funds to finance
2025-2026 75 Questions and 100% Verified
Correct Answers Guaranteed A+
**Know what premiums that different types of bonds have** - CORRECT ANSWER:
Treasury Short-Term Bonds: Inflation Premium
Treasury Long-Term Bonds: Inflation Premium & Maturity Risk Premium
Corporate Short-Term Bonds: Inflation Premium, Default-Risk Premium, & Liquidity
Premium.
Corporate Long-Term Bonds: Inflation Premium Liquidity Premium, Maturity Risk
Premium & Default Risk Premium.
*What are the three types of term structures? - CORRECT ANSWER: Upward slopping
(investors are confident about the economy); downward slopping (investors are
pessimistic about the economy, i.e. expect recession)
• What is the nominal vs real interest rate? - CORRECT ANSWER: The nominal interest
rate is just that...the rate of interest. The real interest rate is the nominal rate minus the
expected rate of inflation. Nominal is generally larger. If the risk-free rate increases
generally speaking the interest rate will go up*.
•What are the four parts of an annual report? - CORRECT ANSWER: Balance sheet
• Provides a snapshot of a firm's financial position
at one point in time.
Income statement
• Summarizes a firm's revenues and expenses over
a given period of time.
Statement of cash flows
, • Reports the impact of a firm's activities on cash
flows over a given period of time.
Statement of stockholders' equity
• Shows how much of the firm's earnings were
retained, rather than paid out as dividends.
Change in CEO Compensation starting in the 1980s? - CORRECT ANSWER:
Movement away from salaries to stock options to foster growth, innovation and risk-
taking.
Current Assets include? - CORRECT ANSWER: cash, marketable securities, accounts
receivable, and inventories
Current Liabilities include? - CORRECT ANSWER: liabilities due within a short time,
usually within a year
Describe the capital allocation process and what role the suppliers of capital plays and
the role that the users of capital play. Why is the financial system often described as the
circulatory system of the economy? - CORRECT ANSWER: - In a well-functioning
economy, capital flows
efficiently from those who supply capital to
those who demand it.
- Suppliers of capital: individuals and institutions
with "excess funds." These groups are saving
money and looking for a rate of return on their
investment.
- Demanders or users of capital: individuals and
institutions who need to raise funds to finance
