FINA 3311 test 1 Exam 2026 Questions
and Answers Graded A+
5%
(Rate of Interest + Inflation + maturity risk premium) - Correct answer-You are
considering an investment in a U.S. Treasury bond but you are not sure what rate
of interest it should pay. Assume that the real
risk−free
rate of interest is 1.0%; inflation is expected to be 1.5%; the maturity risk premium
is 2.5%; and, the default risk premium for AAA rated corporate bonds is 3.5%.
What rate of interest should the U.S. Treasury bond pay?
yield curve - Correct answer-What is the term for a graphical representation of the
relationship between interest rates and the maturities of debt securities?
underwriting, distributing, and advising - Correct answer-The investment banker
performs what three basic functions?
a hybrid market, allowing for
face−to−face
,trading on the floor of the stock exchange in addition to automated, electronic
trading. - Correct answer-The New York Stock Exchange (NYSE) is
secondary market. - Correct answer-John calls his stockbroker and instructs him to
purchase 100 shares of Microsoft Corporation common stock. This transaction
occurs in the
allowing investors to submit bids saying how many shares they'd like to buy and at
what price. - Correct answer-A "Dutch auction" was used by Google to raise
money in 2004. A Dutch auction involves
indirect transfer using the venture capital firm. - Correct answer-Three ways that
savings can be transferred through the financial markets include all of the
following EXCEPT
Aaa−rated
corporate bond maturing in 2019 not actively traded - Correct answer-Which of the
following securities will likely have the highest liquidity premium?
Ford Motor Company sells a new issue of common stock to raise funds through a
public offering. - Correct answer-Which of the following is an example of both a
capital market and a primary market transaction?
default−risk
, premium - Correct answer-Which of the following premiums is NOT factored into
the price of a
long−term
Treasury bond?
maximize shareholder wealth. - Correct answer-The long-run goal of the firm is to
Project B may be preferred to Project A if the opportunity cost of money is high
enough. - Correct answer-Project A is expected to generate positive cash flow of $1
million in 10 years while Project B is expected to generate $500,000 in 5 years.
Therefore
The stock price is likely to be unaffected because the stock market is efficient. -
Correct answer-Profits are down so the controller decides to change the
corporation's accounting policy relating to inventory costing. The change will
allow the corporation to report higher income and higher assets, although the
physical inventory has not changed. Which of the following statements is MOST
correct?
is concerned with ethics because unethical behavior destroys trust, and businesses
cannot function without a certain degree of trust. - Correct answer-A corporate
financial manager trying to maximize shareholder value
and Answers Graded A+
5%
(Rate of Interest + Inflation + maturity risk premium) - Correct answer-You are
considering an investment in a U.S. Treasury bond but you are not sure what rate
of interest it should pay. Assume that the real
risk−free
rate of interest is 1.0%; inflation is expected to be 1.5%; the maturity risk premium
is 2.5%; and, the default risk premium for AAA rated corporate bonds is 3.5%.
What rate of interest should the U.S. Treasury bond pay?
yield curve - Correct answer-What is the term for a graphical representation of the
relationship between interest rates and the maturities of debt securities?
underwriting, distributing, and advising - Correct answer-The investment banker
performs what three basic functions?
a hybrid market, allowing for
face−to−face
,trading on the floor of the stock exchange in addition to automated, electronic
trading. - Correct answer-The New York Stock Exchange (NYSE) is
secondary market. - Correct answer-John calls his stockbroker and instructs him to
purchase 100 shares of Microsoft Corporation common stock. This transaction
occurs in the
allowing investors to submit bids saying how many shares they'd like to buy and at
what price. - Correct answer-A "Dutch auction" was used by Google to raise
money in 2004. A Dutch auction involves
indirect transfer using the venture capital firm. - Correct answer-Three ways that
savings can be transferred through the financial markets include all of the
following EXCEPT
Aaa−rated
corporate bond maturing in 2019 not actively traded - Correct answer-Which of the
following securities will likely have the highest liquidity premium?
Ford Motor Company sells a new issue of common stock to raise funds through a
public offering. - Correct answer-Which of the following is an example of both a
capital market and a primary market transaction?
default−risk
, premium - Correct answer-Which of the following premiums is NOT factored into
the price of a
long−term
Treasury bond?
maximize shareholder wealth. - Correct answer-The long-run goal of the firm is to
Project B may be preferred to Project A if the opportunity cost of money is high
enough. - Correct answer-Project A is expected to generate positive cash flow of $1
million in 10 years while Project B is expected to generate $500,000 in 5 years.
Therefore
The stock price is likely to be unaffected because the stock market is efficient. -
Correct answer-Profits are down so the controller decides to change the
corporation's accounting policy relating to inventory costing. The change will
allow the corporation to report higher income and higher assets, although the
physical inventory has not changed. Which of the following statements is MOST
correct?
is concerned with ethics because unethical behavior destroys trust, and businesses
cannot function without a certain degree of trust. - Correct answer-A corporate
financial manager trying to maximize shareholder value
