MBA 620 MIDTERM EXAM 2026 QUESTIONS AND
SOLUTIONS RATED A+
✔✔pure discount loan - ✔✔the borrower receives money today and repays a single
lump sum at some time in the future
✔✔Rule of 72 - ✔✔The number of years it takes for a certain amount to double in value
is equal to 72 divided by its annual rate of interest.
✔✔simple interest - ✔✔Interest earned each period only on the original principal
✔✔compound interest - ✔✔interest earned on both the principal amount and any
interest already earned
✔✔cumulative voting - ✔✔a procedure in which a shareholder may cast all votes for
one member of the board of directors
✔✔straight voting - ✔✔a procedure in which a shareholder may cast all votes for each
member of the board of directors
✔✔proxy - ✔✔a grant of authority by a shareholder allowing another individual to vote
his or her shares
✔✔dealer - ✔✔maintains an inventory and stands ready to buy and sell at any time
✔✔broker - ✔✔brings buyers and sellers together but does not maintain an inventory
✔✔auction market - ✔✔a market in which those who wish to sell are matched with
those who wish to buy.
✔✔Sole Proprietorship - ✔✔a business owned by one person.
-the simplest type of business and least regulated.
-they keep all of the profits, but they also have unlimited liability for business debts.
-all income is taxed as personal income.
✔✔Partnership - ✔✔a business owned by two or more people
✔✔Corporation - ✔✔a company or group of people authorized to act as a single entity
(legally a person) and recognized as such in law.
✔✔ Agency Problem - ✔✔the possibility of conflict of interest between the owners and
management of a firm
✔✔annuity - ✔✔A level stream of cash flows for a fixed period of time
SOLUTIONS RATED A+
✔✔pure discount loan - ✔✔the borrower receives money today and repays a single
lump sum at some time in the future
✔✔Rule of 72 - ✔✔The number of years it takes for a certain amount to double in value
is equal to 72 divided by its annual rate of interest.
✔✔simple interest - ✔✔Interest earned each period only on the original principal
✔✔compound interest - ✔✔interest earned on both the principal amount and any
interest already earned
✔✔cumulative voting - ✔✔a procedure in which a shareholder may cast all votes for
one member of the board of directors
✔✔straight voting - ✔✔a procedure in which a shareholder may cast all votes for each
member of the board of directors
✔✔proxy - ✔✔a grant of authority by a shareholder allowing another individual to vote
his or her shares
✔✔dealer - ✔✔maintains an inventory and stands ready to buy and sell at any time
✔✔broker - ✔✔brings buyers and sellers together but does not maintain an inventory
✔✔auction market - ✔✔a market in which those who wish to sell are matched with
those who wish to buy.
✔✔Sole Proprietorship - ✔✔a business owned by one person.
-the simplest type of business and least regulated.
-they keep all of the profits, but they also have unlimited liability for business debts.
-all income is taxed as personal income.
✔✔Partnership - ✔✔a business owned by two or more people
✔✔Corporation - ✔✔a company or group of people authorized to act as a single entity
(legally a person) and recognized as such in law.
✔✔ Agency Problem - ✔✔the possibility of conflict of interest between the owners and
management of a firm
✔✔annuity - ✔✔A level stream of cash flows for a fixed period of time
