ETS MFT Business Exam 2025 (2 Different Versions)
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ETS MFT Business Exam (First Exam)
Under which of the following conditions will a future value calculated with simple
interest exceed a future value calculated with compound interest at the same
rate?
a) this is not possible with positive interest rates
b) the investment period is very long
c) the compounding is annually
d) the interest rate is very high ---------CORRECT ANSWER-----------------a) this is not
possible with positive interest rates
Which of the following statements regarding present and future values of streams
of cash payments are incorrect?
a) a level stream of cash payments that continues indefinitely is known as a
perpetuity; one that continues for a limited number of years is called an annuity
b) the present value of a stream of cash flows is simply the sum of the present
value of each individual cash flow
c) shortcut formulas make the calculations for perpetuities and annuities easy
d) the future value of an annuity is the sum of the future value of each individual
cash flow ---------CORRECT ANSWER-----------------a) a level stream of cash
,payments that continues indefinitely is known as a perpetuity; one that continues
for a limited number of years is called an annuity
The decision rule for the net present value is to
a) accept all projects with positive net present values
b) accept all projects with cash inflows exceeding initial cost
c) reject all projects lasting longer than ten years
d) reject all projects with rates of return exceeding the opportunity cost of capital
---------CORRECT ANSWER-----------------a) accept all projects with positive net
present values
One common reason for issuing two distinct classes of common stock is to
a) conserve cash by offering dividends to only one class of stockholders
b) sell different classes to increase profits
c) restrict voting privileges from some shareholders
d) allow one stock to increase in price while the other class declines ---------
CORRECT ANSWER-----------------c) restrict voting privileges from some
shareholders
Treasury bills have a beta of zero
True or False ---------CORRECT ANSWER-----------------True
,Which of the following presents the correct relationship? As the coupon rate of a
bond increases, the bond's
a) face value increases
b) maturity date is extended
c) current price decreases
d) interest payments increase ---------CORRECT ANSWER-----------------d) interest
payments increase
If a stock's P/E ratio is 13.5 at a time when earnings are $3 per year, what is the
stock's current price?
a) $22.22
b) $4.50
c) $18.00
d) $40.50 ---------CORRECT ANSWER-----------------$40.50
Price = 13.5*$3 = $40.50
Which of the following is NOT a service/product provided to corporations by
financial markets and institutions?
a) financing
b) real assets
c) contracts to manage risk
d) valuation of the company ---------CORRECT ANSWER-----------------b) real assets
, Cost of Capital is the return investors could expect.
True or False ---------CORRECT ANSWER-----------------True
A firm's mixture of long term financing and equity financing is called ______.
a) financing activities
b) capital structure
c) capital financing
d) cost of capital ---------CORRECT ANSWER-----------------b) capital structure
The Weighted Average Cost of Capital is adjusted for tax savings.
True or False ---------CORRECT ANSWER-----------------True
If there is a total of $800 on the balance sheet and long term bonds account for
$200, what is the weighted percentage that the long term bonds hold?
a) 40%
b) 20%
c) 15%
d) 25% ---------CORRECT ANSWER-----------------d) 25%
$200/$800 = .25
| Actual Exam Questions and Correct Answers |
Already Graded A+ | Verified Answers | Latest
Versions | Just Released
ETS MFT Business Exam (First Exam)
Under which of the following conditions will a future value calculated with simple
interest exceed a future value calculated with compound interest at the same
rate?
a) this is not possible with positive interest rates
b) the investment period is very long
c) the compounding is annually
d) the interest rate is very high ---------CORRECT ANSWER-----------------a) this is not
possible with positive interest rates
Which of the following statements regarding present and future values of streams
of cash payments are incorrect?
a) a level stream of cash payments that continues indefinitely is known as a
perpetuity; one that continues for a limited number of years is called an annuity
b) the present value of a stream of cash flows is simply the sum of the present
value of each individual cash flow
c) shortcut formulas make the calculations for perpetuities and annuities easy
d) the future value of an annuity is the sum of the future value of each individual
cash flow ---------CORRECT ANSWER-----------------a) a level stream of cash
,payments that continues indefinitely is known as a perpetuity; one that continues
for a limited number of years is called an annuity
The decision rule for the net present value is to
a) accept all projects with positive net present values
b) accept all projects with cash inflows exceeding initial cost
c) reject all projects lasting longer than ten years
d) reject all projects with rates of return exceeding the opportunity cost of capital
---------CORRECT ANSWER-----------------a) accept all projects with positive net
present values
One common reason for issuing two distinct classes of common stock is to
a) conserve cash by offering dividends to only one class of stockholders
b) sell different classes to increase profits
c) restrict voting privileges from some shareholders
d) allow one stock to increase in price while the other class declines ---------
CORRECT ANSWER-----------------c) restrict voting privileges from some
shareholders
Treasury bills have a beta of zero
True or False ---------CORRECT ANSWER-----------------True
,Which of the following presents the correct relationship? As the coupon rate of a
bond increases, the bond's
a) face value increases
b) maturity date is extended
c) current price decreases
d) interest payments increase ---------CORRECT ANSWER-----------------d) interest
payments increase
If a stock's P/E ratio is 13.5 at a time when earnings are $3 per year, what is the
stock's current price?
a) $22.22
b) $4.50
c) $18.00
d) $40.50 ---------CORRECT ANSWER-----------------$40.50
Price = 13.5*$3 = $40.50
Which of the following is NOT a service/product provided to corporations by
financial markets and institutions?
a) financing
b) real assets
c) contracts to manage risk
d) valuation of the company ---------CORRECT ANSWER-----------------b) real assets
, Cost of Capital is the return investors could expect.
True or False ---------CORRECT ANSWER-----------------True
A firm's mixture of long term financing and equity financing is called ______.
a) financing activities
b) capital structure
c) capital financing
d) cost of capital ---------CORRECT ANSWER-----------------b) capital structure
The Weighted Average Cost of Capital is adjusted for tax savings.
True or False ---------CORRECT ANSWER-----------------True
If there is a total of $800 on the balance sheet and long term bonds account for
$200, what is the weighted percentage that the long term bonds hold?
a) 40%
b) 20%
c) 15%
d) 25% ---------CORRECT ANSWER-----------------d) 25%
$200/$800 = .25
