D076 EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
What are the main services offered by financial institutions? - CORRECT
| | | | | | | | | | |
ANSWER✔✔-Accepting a wide variety of deposits, offering investment | | | | | | | |
products, providing loans, and brokering financial transactions
| | | | | |
What is the main objective of personal financial goals? - CORRECT
| | | | | | | | | | |
ANSWER✔✔-To maximize individual utility | | |
Which task does the financial manager of a firm perform that involves
| | | | | | | | | | | |
the issuance of new stocks and bonds? - CORRECT ANSWER✔✔-Making
| | | | | | | | | |
financing decisions |
Why is understanding the definition of finance important in managing
| | | | | | | | | |
personal finances? - CORRECT ANSWER✔✔-It helps individuals compare
| | | | | | |
the costs and benefits of an action to determine whether to take that
| | | | | | | | | | | | | |
action.
In which type of market would a company issue bonds or stocks for the
| | | | | | | | | | | | | |
first time? - CORRECT ANSWER✔✔-Primary market
| | | | |
,Which type of financial institution is a mutual fund? - CORRECT
| | | | | | | | | | |
ANSWER✔✔-Investment institution |
Which financial institution specializes in managing and administering
| | | | | | | |
retirement funds? - CORRECT ANSWER✔✔-Pension funds
| | | | |
Which type of economic indicator is the consumer price index? -
| | | | | | | | | | |
CORRECT ANSWER✔✔-Lagging indicator
| |
What does the term ethical refer to? - CORRECT ANSWER✔✔-The
| | | | | | | | | |
accepted standards of conduct that guide a person's behavior
| | | | | | | |
A company's officers and board of directors are selling their stocks in the
| | | | | | | | | | | |
firm at higher prices due to false accounting reports that made the
| | | | | | | | | | | | |
stock seem more valuable than it truly was. Which ethical issue is
| | | | | | | | | | | |
occurring in this situation? - CORRECT ANSWER✔✔-Agency problem
| | | | | | | |
due to conflicting interests
| | |
Which area of finance involves deciding which assets to invest in to
| | | | | | | | | | | |
create wealth in the future? - CORRECT ANSWER✔✔-Investments
| | | | | | |
What is the main goal of a firm? - CORRECT ANSWER✔✔-To maximize
| | | | | | | | | | | |
owner wealth |
,What are financial managers doing if they evaluate whether it is worth
| | | | | | | | | | | |
spending money on research and development for a new product? -
| | | | | | | | | | |
CORRECT ANSWER✔✔-Making an investment decision
| | | |
Which type of financial market is where securities such as stocks and
| | | | | | | | | | | |
bonds are traded after their initial issuance? - CORRECT ANSWER✔✔-
| | | | | | | | |
The secondary financial market
| | |
What type of financial institution is an insurance company? - CORRECT
| | | | | | | | | | |
ANSWER✔✔-Contractual
Which financial institution invests funds contributed by a company to
| | | | | | | | | |
provide retirement funds for the company's employees? - CORRECT
| | | | | | | | |
ANSWER✔✔-Pension fund |
Personal income is which type of economic indicator? - CORRECT
| | | | | | | | | |
ANSWER✔✔-Coincident
Which term refers to something that conforms with accepted standards
| | | | | | | | | |
of conduct that guide a person's behavior? - CORRECT ANSWER✔✔-
| | | | | | | | |
Ethical
What is the second step in finding a solution to an ethical dilemma? -
| | | | | | | | | | | | | |
CORRECT ANSWER✔✔-Consider alternative courses of action
| | | | |
, Which type of interest rate includes interest on interest in addition to
| | | | | | | | | | | |
interest on the principal? - CORRECT ANSWER✔✔-Compound interest
| | | | | | |
How can agency problems be reduced through corporate control? -
| | | | | | | | | |
CORRECT ANSWER✔✔-Executive compensation
| |
What is the rate at which the average price level of particular goods and
| | | | | | | | | | | | | |
services in an economy increases over a period of time? - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-Inflation rate |
You signed an apartment contract today. You are going to pay $1,500 at
| | | | | | | | | | | | |
the beginning of each month for the next 12 months, starting today.
| | | | | | | | | | | |
What type of cash flows is this contract? - CORRECT ANSWER✔✔-An
| | | | | | | | | | |
annuity due |
What is the term for the return over the entire period that an investor
| | | | | | | | | | | | | |
owns a financial security? - CORRECT ANSWER✔✔-Holding period
| | | | | | | |
return
What is used to measure total risk? - CORRECT ANSWER✔✔-Standard
| | | | | | | | | |
deviation
COMPLETE SOLUTIONS
What are the main services offered by financial institutions? - CORRECT
| | | | | | | | | | |
ANSWER✔✔-Accepting a wide variety of deposits, offering investment | | | | | | | |
products, providing loans, and brokering financial transactions
| | | | | |
What is the main objective of personal financial goals? - CORRECT
| | | | | | | | | | |
ANSWER✔✔-To maximize individual utility | | |
Which task does the financial manager of a firm perform that involves
| | | | | | | | | | | |
the issuance of new stocks and bonds? - CORRECT ANSWER✔✔-Making
| | | | | | | | | |
financing decisions |
Why is understanding the definition of finance important in managing
| | | | | | | | | |
personal finances? - CORRECT ANSWER✔✔-It helps individuals compare
| | | | | | |
the costs and benefits of an action to determine whether to take that
| | | | | | | | | | | | | |
action.
In which type of market would a company issue bonds or stocks for the
| | | | | | | | | | | | | |
first time? - CORRECT ANSWER✔✔-Primary market
| | | | |
,Which type of financial institution is a mutual fund? - CORRECT
| | | | | | | | | | |
ANSWER✔✔-Investment institution |
Which financial institution specializes in managing and administering
| | | | | | | |
retirement funds? - CORRECT ANSWER✔✔-Pension funds
| | | | |
Which type of economic indicator is the consumer price index? -
| | | | | | | | | | |
CORRECT ANSWER✔✔-Lagging indicator
| |
What does the term ethical refer to? - CORRECT ANSWER✔✔-The
| | | | | | | | | |
accepted standards of conduct that guide a person's behavior
| | | | | | | |
A company's officers and board of directors are selling their stocks in the
| | | | | | | | | | | |
firm at higher prices due to false accounting reports that made the
| | | | | | | | | | | | |
stock seem more valuable than it truly was. Which ethical issue is
| | | | | | | | | | | |
occurring in this situation? - CORRECT ANSWER✔✔-Agency problem
| | | | | | | |
due to conflicting interests
| | |
Which area of finance involves deciding which assets to invest in to
| | | | | | | | | | | |
create wealth in the future? - CORRECT ANSWER✔✔-Investments
| | | | | | |
What is the main goal of a firm? - CORRECT ANSWER✔✔-To maximize
| | | | | | | | | | | |
owner wealth |
,What are financial managers doing if they evaluate whether it is worth
| | | | | | | | | | | |
spending money on research and development for a new product? -
| | | | | | | | | | |
CORRECT ANSWER✔✔-Making an investment decision
| | | |
Which type of financial market is where securities such as stocks and
| | | | | | | | | | | |
bonds are traded after their initial issuance? - CORRECT ANSWER✔✔-
| | | | | | | | |
The secondary financial market
| | |
What type of financial institution is an insurance company? - CORRECT
| | | | | | | | | | |
ANSWER✔✔-Contractual
Which financial institution invests funds contributed by a company to
| | | | | | | | | |
provide retirement funds for the company's employees? - CORRECT
| | | | | | | | |
ANSWER✔✔-Pension fund |
Personal income is which type of economic indicator? - CORRECT
| | | | | | | | | |
ANSWER✔✔-Coincident
Which term refers to something that conforms with accepted standards
| | | | | | | | | |
of conduct that guide a person's behavior? - CORRECT ANSWER✔✔-
| | | | | | | | |
Ethical
What is the second step in finding a solution to an ethical dilemma? -
| | | | | | | | | | | | | |
CORRECT ANSWER✔✔-Consider alternative courses of action
| | | | |
, Which type of interest rate includes interest on interest in addition to
| | | | | | | | | | | |
interest on the principal? - CORRECT ANSWER✔✔-Compound interest
| | | | | | |
How can agency problems be reduced through corporate control? -
| | | | | | | | | |
CORRECT ANSWER✔✔-Executive compensation
| |
What is the rate at which the average price level of particular goods and
| | | | | | | | | | | | | |
services in an economy increases over a period of time? - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-Inflation rate |
You signed an apartment contract today. You are going to pay $1,500 at
| | | | | | | | | | | | |
the beginning of each month for the next 12 months, starting today.
| | | | | | | | | | | |
What type of cash flows is this contract? - CORRECT ANSWER✔✔-An
| | | | | | | | | | |
annuity due |
What is the term for the return over the entire period that an investor
| | | | | | | | | | | | | |
owns a financial security? - CORRECT ANSWER✔✔-Holding period
| | | | | | | |
return
What is used to measure total risk? - CORRECT ANSWER✔✔-Standard
| | | | | | | | | |
deviation
