FIN 302 ASU EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
Double Taxation of C Corporations - Answers C Corporation pays corporate tax on profits and
shareholders pay personal tax on dividends
Percentage of Stock Trades Done Electronically - Answers Over 90% are done electronically by
computers/algorithms
Goal Of C Corp Managers - Answers Maximize shareholder wealth by maximizing stock price
Executive Stock Options - Answers Compensation giving managers the right to buy stock at a fixed
price to align incentives with shareholders
Primary Market - Answers Market where new securities are issued and the firm receives the money
Secondary Market - Answers Market where investors trade existing securities and the firm does not
receive money
Money Market - Answers Market for short-term debt securities (less than 1 year)
Capital Market - Answers Market for long term securities (stock and bonds over 1 year)
Federal Corporate Tax Rate - Answers 21%
Sources of Cash - Answers Decrease in assets or increase in liabilities/equity
Uses of Cash - Answers Increase in assets or decrease in liabilities/equity
Cash Flow from Operations (CFO) - Answers Net Income + Depreciation - Change in Net Working
Capital
Dupont Roe Formula - Answers (Net Income/Revenue) x (Revenue/Assets) x (Assets/SE)
Current Ratio - Answers Current Assets/Current Liabilities
Quick Ratio - Answers (Current Assets - Inventory) / Current Liabilities
Debt Ratio - Answers Total Debt/Total Assets
Debt to Equity Ratio - Answers Debt/Equity
Return on Assets (ROA) - Answers Net Income/Total Assets
Return on Equity (ROE) - Answers Net Income/Equity
Profit Margin - Answers Net Income/Sales
Asset Turnover - Answers Sales/Assets
Inventory Turnover - Answers COGS/Inventory
Future Value (1 Payment) - Answers FV = PV(1+r)^t
Present Value (1 Payment) - Answers PV = FV / (1+r)^t
Future Value of an Annuity - Answers FV = PMT[(1+r)^t - 1] / r
Present Value of an Annuity - Answers PV = PMT[1 - (1+r)^-t] / r
Loan Payment Formula - Answers PMT = PV[r / (1 - (1+r)^-t)]
Interest Portion of Payment - Answers Beginning Balance x r
Principal Portion of Payment - Answers Payment - Interest
Unpaid Loan Balance - Answers Present Value of Remaining Payments
Effective Annual Rate (EAR) - Answers (1 + APR/m)^m - 1
Percent Return - Answers (Ending Value - Beginning Value + Dividends) / Beginning Value
Rule of 72 - Answers Years to double = 72 / interest rate
Normal Distribution 68-95-99.7 Rule - Answers 68% within 1 STD DEV; 95% within 2 STD DEV; 99.7%
within 3 STD DEV
What is the relationship between Geometric ROR and Arithmetic ROR - Answers Arithmetic ROR is
always greater than Geometric ROR
Portfolio Standard Deviation Formula - Answers √[w1²σ1² + w2²σ2² + 2w1w2σ1σ2ρ]
p = correlation (will be 0 or 1 on quiz)
W = weight (ex. 1/2 in notes)
Correlation - Answers Measures how two assets move together (ranges from -1 to 1)
CAPM Formula - Answers Required Return = rf + BETA(rm - rf)
BETA - Answers Measures systematic risk relative to the market (BETA > 1 means the stock is more
volatile than the market; BETA < 1 means the stock is less volatile than the market)
Bond Rating - Answers Measure of default risk; lower rating means higher yield to maturity required
Bond Pricing - Answers Price = PV of coupons + PV of face value
Premium Bond - Answers Coupon rate > YTM, price above par
Discount Bond - Answers Coupon rate < YTM, price below par
Yield to Maturity (YTM) - Answers Return if bond is held to maturity
Holding Period Yield - Answers (Income + Price Change) / Purchase Price
Double Taxation of C Corporations - Answers C Corporation pays corporate tax on profits and
shareholders pay personal tax on dividends
Percentage of Stock Trades Done Electronically - Answers Over 90% are done electronically by
computers/algorithms
Goal Of C Corp Managers - Answers Maximize shareholder wealth by maximizing stock price
Executive Stock Options - Answers Compensation giving managers the right to buy stock at a fixed
price to align incentives with shareholders
Primary Market - Answers Market where new securities are issued and the firm receives the money
Secondary Market - Answers Market where investors trade existing securities and the firm does not
receive money
Money Market - Answers Market for short-term debt securities (less than 1 year)
Capital Market - Answers Market for long term securities (stock and bonds over 1 year)
Federal Corporate Tax Rate - Answers 21%
Sources of Cash - Answers Decrease in assets or increase in liabilities/equity
Uses of Cash - Answers Increase in assets or decrease in liabilities/equity
Cash Flow from Operations (CFO) - Answers Net Income + Depreciation - Change in Net Working
Capital
Dupont Roe Formula - Answers (Net Income/Revenue) x (Revenue/Assets) x (Assets/SE)
Current Ratio - Answers Current Assets/Current Liabilities
Quick Ratio - Answers (Current Assets - Inventory) / Current Liabilities
Debt Ratio - Answers Total Debt/Total Assets
Debt to Equity Ratio - Answers Debt/Equity
Return on Assets (ROA) - Answers Net Income/Total Assets
Return on Equity (ROE) - Answers Net Income/Equity
Profit Margin - Answers Net Income/Sales
Asset Turnover - Answers Sales/Assets
Inventory Turnover - Answers COGS/Inventory
Future Value (1 Payment) - Answers FV = PV(1+r)^t
Present Value (1 Payment) - Answers PV = FV / (1+r)^t
Future Value of an Annuity - Answers FV = PMT[(1+r)^t - 1] / r
Present Value of an Annuity - Answers PV = PMT[1 - (1+r)^-t] / r
Loan Payment Formula - Answers PMT = PV[r / (1 - (1+r)^-t)]
Interest Portion of Payment - Answers Beginning Balance x r
Principal Portion of Payment - Answers Payment - Interest
Unpaid Loan Balance - Answers Present Value of Remaining Payments
Effective Annual Rate (EAR) - Answers (1 + APR/m)^m - 1
Percent Return - Answers (Ending Value - Beginning Value + Dividends) / Beginning Value
Rule of 72 - Answers Years to double = 72 / interest rate
Normal Distribution 68-95-99.7 Rule - Answers 68% within 1 STD DEV; 95% within 2 STD DEV; 99.7%
within 3 STD DEV
What is the relationship between Geometric ROR and Arithmetic ROR - Answers Arithmetic ROR is
always greater than Geometric ROR
Portfolio Standard Deviation Formula - Answers √[w1²σ1² + w2²σ2² + 2w1w2σ1σ2ρ]
p = correlation (will be 0 or 1 on quiz)
W = weight (ex. 1/2 in notes)
Correlation - Answers Measures how two assets move together (ranges from -1 to 1)
CAPM Formula - Answers Required Return = rf + BETA(rm - rf)
BETA - Answers Measures systematic risk relative to the market (BETA > 1 means the stock is more
volatile than the market; BETA < 1 means the stock is less volatile than the market)
Bond Rating - Answers Measure of default risk; lower rating means higher yield to maturity required
Bond Pricing - Answers Price = PV of coupons + PV of face value
Premium Bond - Answers Coupon rate > YTM, price above par
Discount Bond - Answers Coupon rate < YTM, price below par
Yield to Maturity (YTM) - Answers Return if bond is held to maturity
Holding Period Yield - Answers (Income + Price Change) / Purchase Price
