FINA 5170 Final Exam 1 Questions And
100% Correct Answers (2025) Updated.
Mr. Bird has $100 income this year and zero income next year. The market interest rate is 10%
per year. Mr. Bird also has an investment opportunity in which he can invest $50 today and
receive $80 next year. Suppose Mr. Bird consumes $30 this year and invests in the project. What
will be his consumption next year? - Answer Consumption next year = (100 - 30 - 50) × 1.1 + 80
= 102.
"Companies usually buy xxxx assets. These include both tangible assets such as xxxx and
intangible assets such as xxxx . To pay for these assets, they sell xxxx assets such as xxxx . The
decision about which assets to buy is usually termed the xxxx or xxxx decision. The decision
about how to raise the money is usually termed the xxxx decision." - Answer a. real
b. executive airplanes
c. brand names
d. financial
e. bonds
f. investment
g. capital budgeting
h. financing
Which of the following are real assets, and which are financial?
a. A share of stock.
b. A personal IOU.
c. A trademark.
d. A factory.
e. Undeveloped land.
f. The balance in the firm's checking account.
g. An experienced and hardworking sales force.
h. A corporate bond. - Answer a. Financial
b. financial
c. real
d. real
, A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all real assets.
Real assets are identifiable items with intrinsic value. The others in the list are financial assets,
that is, these assets derive value because of a contractual claim.
The firm's purchase of real assets is also referred to as the: - Answer investment decision
Mr. Free has $100 dollars income this year and zero income next year. The market interest rate
is 10% per year. If Mr. Free consumes $30 this year and invests the rest in the market, what will
be his consumption next year? - Answer Consumption next year = (100 − 30) × (1.1) = 77.
In the principal-agent framework: - Answer A and C
The shareholders are the principals.
managers are the agents.
The financial goal of a corporation is to: - Answer maximize the value of the firm for the
shareholders.
The sale of financial assets by a corporation is also referred to as the: - Answer financing
decision.
Ms. Venus has $100 income this year and $110 next year. The market interest rate is 10% per
year. Suppose Ms. Venus consumes $60 this year. What will be her consumption next year? -
Answer Consumption next year = (100 - 60) × 1.1 + 110 = 154.
A firm's investment decision is also called its: - Answer capital budgeting decision.
Which of the following statements always apply to corporations? (Select all that apply.) - Answer
Ownership can be transferred without affecting operations. AND
Managers can be fired with no effect on ownership.
Because corporations have perpetual life, ownership can be transferred without affecting
operations, and managers can be fired with no effect on ownership. Other forms of business
may have unlimited liability and limited life.
Which of the following types of assets are intangible? - Answer trademarks
100% Correct Answers (2025) Updated.
Mr. Bird has $100 income this year and zero income next year. The market interest rate is 10%
per year. Mr. Bird also has an investment opportunity in which he can invest $50 today and
receive $80 next year. Suppose Mr. Bird consumes $30 this year and invests in the project. What
will be his consumption next year? - Answer Consumption next year = (100 - 30 - 50) × 1.1 + 80
= 102.
"Companies usually buy xxxx assets. These include both tangible assets such as xxxx and
intangible assets such as xxxx . To pay for these assets, they sell xxxx assets such as xxxx . The
decision about which assets to buy is usually termed the xxxx or xxxx decision. The decision
about how to raise the money is usually termed the xxxx decision." - Answer a. real
b. executive airplanes
c. brand names
d. financial
e. bonds
f. investment
g. capital budgeting
h. financing
Which of the following are real assets, and which are financial?
a. A share of stock.
b. A personal IOU.
c. A trademark.
d. A factory.
e. Undeveloped land.
f. The balance in the firm's checking account.
g. An experienced and hardworking sales force.
h. A corporate bond. - Answer a. Financial
b. financial
c. real
d. real
, A trademark, a factory, undeveloped land, and your work force (c, d, e, and g) are all real assets.
Real assets are identifiable items with intrinsic value. The others in the list are financial assets,
that is, these assets derive value because of a contractual claim.
The firm's purchase of real assets is also referred to as the: - Answer investment decision
Mr. Free has $100 dollars income this year and zero income next year. The market interest rate
is 10% per year. If Mr. Free consumes $30 this year and invests the rest in the market, what will
be his consumption next year? - Answer Consumption next year = (100 − 30) × (1.1) = 77.
In the principal-agent framework: - Answer A and C
The shareholders are the principals.
managers are the agents.
The financial goal of a corporation is to: - Answer maximize the value of the firm for the
shareholders.
The sale of financial assets by a corporation is also referred to as the: - Answer financing
decision.
Ms. Venus has $100 income this year and $110 next year. The market interest rate is 10% per
year. Suppose Ms. Venus consumes $60 this year. What will be her consumption next year? -
Answer Consumption next year = (100 - 60) × 1.1 + 110 = 154.
A firm's investment decision is also called its: - Answer capital budgeting decision.
Which of the following statements always apply to corporations? (Select all that apply.) - Answer
Ownership can be transferred without affecting operations. AND
Managers can be fired with no effect on ownership.
Because corporations have perpetual life, ownership can be transferred without affecting
operations, and managers can be fired with no effect on ownership. Other forms of business
may have unlimited liability and limited life.
Which of the following types of assets are intangible? - Answer trademarks
