QUANTITATIVE FINANCE EXAMINATION QUESTIONS AND CORRECT ANSWER WITH EXPLANATION GRADED A+ STUDY GUIDE

QUANTITATIVE FINANCE EXAMINATION QUESTIONS
AND CORRECT ANSWER WITH EXPLANATION GRADED
A+ STUDY GUIDE SOUTHERN NEW HAMPSHIRE
UNIVERSITY
1. Quantitative finance applies:
A. Mathematical and statistical methods to finance
B. Only marketing techniques
C. Only accounting rules
D. Only banking laws
Answer: A
Rationale: It uses math models in finance.

2. Time value of money means:
A. Money today is worth more than in future
B. Money has no value over time
C. Inflation is zero
D. Interest is constant
Answer: A
Rationale: Present money is more valuable.

3. Present value is:
A. Current worth of future cash flows
B. Future income only
C. Profit only
D. Tax value
Answer: A
Rationale: Discounted future value.

4. Future value is:
A. Value of money at a future date
B. Current money value
C. Tax value
D. Loss value
Answer: A
Rationale: Growth of money over time.

,5. Discount rate is:
A. Rate used to discount future cash flows
B. Tax rate
C. Inflation rate
D. Profit rate
Answer: A
Rationale: Converts future to present value.

6. Compounding means:
A. Earning interest on interest
B. Losing money
C. Fixed value
D. No interest
Answer: A
Rationale: Growth accumulation.

7. Simple interest is calculated on:
A. Principal only
B. Principal + interest
C. Profit only
D. Tax only
Answer: A
Rationale: No compounding.

8. Continuous compounding assumes:
A. Interest is compounded infinitely
B. No interest
C. Annual compounding only
D. Fixed returns
Answer: A
Rationale: Continuous growth model.

9. Risk in finance refers to:
A. Uncertainty of returns
B. Guaranteed profit
C. Fixed income
D. Taxes
Answer: A
Rationale: Variability in outcomes.

, 10. Return is:
A. Gain or loss on investment
B. Tax
C. Cost
D. Debt
Answer: A
Rationale: Investment outcome.

11. Expected return is:
A. Weighted average of possible returns
B. Guaranteed return
C. Tax rate
D. Inflation
Answer: A
Rationale: Probability-weighted outcome.

12. Variance measures:
A. Dispersion of returns
B. Profit only
C. Taxes
D. Revenue
Answer: A
Rationale: Risk measure.

13. Standard deviation measures:
A. Volatility of returns
B. Income
C. Tax
D. Debt
Answer: A
Rationale: Risk indicator.

14. Covariance measures:
A. Joint variability of two assets
B. Profit only
C. Inflation
D. Tax rate
Answer: A
Rationale: Relationship between variables.