FINA FINAL EXAM QUESTIONS AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) ALREADY GRADED A+
The primary role of a financial system is to:
a. enable financial managers to evaluate investment projects with a
system that always selects the correct opportunity for their firm
b. make savvy investors rich
c. channel funds from savers to borrowers who need funds for
investment projects
d. provide employees in financial institutions with a code of ethics
e. regulate the banking system Ans✓✓✓c. channel funds from savers to
borrows who need funds for investment projects
The largest providers of funds in the financial system are:
a. individuals
b. businesses
c. Bill and Melinda Gates
d. government agencies Ans✓✓✓a. individuals
The _____________ is the financial market in which securities are
initially issued
a. secondary market
b. private placement
c. OTC
d. NASDAQ
,e. primary market Ans✓✓✓e. primary market
Money markets are markets for:
a. long-term bonds
b. short-term debt securities
c. preferred securities
d. foreign currency exchanges
e. corporate stocks Ans✓✓✓b. short-term debt securities
What word do we use for the ease with which assets can be converted
into cash?
a. solvency
b. liquidity
c. agency
d. efficiency
e. accuracy Ans✓✓✓b. liquidity
What do we call a market in which the price of a security is an accurate
estimate by the market of its try value?
a. law of one price
b. effective market
c. secondary
d. efficient market
, e. primary market Ans✓✓✓d. efficient market
$100 today is worth:
a. the same as $100 to be received in one year, since the inflation rate
has been how low recently and funds received in the near future should
have the same purchasing power that they have today
b. less than $100 received by someone ten years ago, since many
products have been improved over this time period
c. the same as a future received in one year, since the physical
characteristics of U.S. currency are unchanged for long periods of time
d. less than $100 to be received in one year, since many peoplewill
spend money foolishly today and will become more careful in their
spending habits as they mature
e. more than $100 to be received in one year, since you can invest the
money received today for this period, leaving you with more than $100
in the future Ans✓✓✓e. more than $100 to be received in one year,
since you can invest the money received today for this period, leaving
you with more than $100 in the future
The relationship between risk and return in finance can best be described
by which of the following statements?
a. high risk always brings it high returns
b. the riskier the security, the lower the return expected from it
c. high risk securities always beat low risk securities
d. risk and return are inversely related
ANSWERS (VERIFIED ANSWERS) ALREADY GRADED A+
The primary role of a financial system is to:
a. enable financial managers to evaluate investment projects with a
system that always selects the correct opportunity for their firm
b. make savvy investors rich
c. channel funds from savers to borrowers who need funds for
investment projects
d. provide employees in financial institutions with a code of ethics
e. regulate the banking system Ans✓✓✓c. channel funds from savers to
borrows who need funds for investment projects
The largest providers of funds in the financial system are:
a. individuals
b. businesses
c. Bill and Melinda Gates
d. government agencies Ans✓✓✓a. individuals
The _____________ is the financial market in which securities are
initially issued
a. secondary market
b. private placement
c. OTC
d. NASDAQ
,e. primary market Ans✓✓✓e. primary market
Money markets are markets for:
a. long-term bonds
b. short-term debt securities
c. preferred securities
d. foreign currency exchanges
e. corporate stocks Ans✓✓✓b. short-term debt securities
What word do we use for the ease with which assets can be converted
into cash?
a. solvency
b. liquidity
c. agency
d. efficiency
e. accuracy Ans✓✓✓b. liquidity
What do we call a market in which the price of a security is an accurate
estimate by the market of its try value?
a. law of one price
b. effective market
c. secondary
d. efficient market
, e. primary market Ans✓✓✓d. efficient market
$100 today is worth:
a. the same as $100 to be received in one year, since the inflation rate
has been how low recently and funds received in the near future should
have the same purchasing power that they have today
b. less than $100 received by someone ten years ago, since many
products have been improved over this time period
c. the same as a future received in one year, since the physical
characteristics of U.S. currency are unchanged for long periods of time
d. less than $100 to be received in one year, since many peoplewill
spend money foolishly today and will become more careful in their
spending habits as they mature
e. more than $100 to be received in one year, since you can invest the
money received today for this period, leaving you with more than $100
in the future Ans✓✓✓e. more than $100 to be received in one year,
since you can invest the money received today for this period, leaving
you with more than $100 in the future
The relationship between risk and return in finance can best be described
by which of the following statements?
a. high risk always brings it high returns
b. the riskier the security, the lower the return expected from it
c. high risk securities always beat low risk securities
d. risk and return are inversely related
