FIN-350 Final Exam Questions and Verified
Answers
Question 1
Section 529 Plans include prepaid tuition and savings plans; only savings plans grow
tax free.
True
False
Correct Answer
False
Question 2
Precious metals
are a hedge against deflation.
are as good an investment as stocks and bonds over time.
can be purchased via mutual funds dealing in bullion.
fall into the area of commodity trading.
Correct Answer
fall into the area of commodity trading.
Page 1 of 160
,Question 3
Sarah's Computer City sells 5,000 boxes of CD-RW compact discs per year. She
determined that she pays $50 to process an order for discs. Her purchase price is $6
for each box of discs and she has determined that storage costs for one year are 25
percent of the purchase price. Sarah's vendor said that if she purchased 1,000 boxes
at a time, she would receive a 10 percent discount. The total cost formula is What is
Sarah's annual ordering cost if she does NOT take advantage of the discount?
$250
$578
$433
$675
Correct Answer
$433
Question 4
Future moneys or benefits should be measured in after-tax dollars.
True
False
Correct Answer
True
Question 5
Which of the following is a variable expense?
a security deposit
a phone bill
sales commission
a utility bill
Correct Answer
sales commission
Page 2 of 160
,Question 6
Daniel Goldstein utilized virtual reality to test whether assisting people's imagination
of future self will change their investment behaviors.
True
False
Correct Answer
True
Question 1
ABC Inc. has $100 in cash on its balance sheet at the end of 2009. During 2010,
the firm issued $450 in common stock, reduced its notes payable by $40,
purchased fixed assets in the amount of $750, and had cash flows from
operating activities of $315. How much cash did ABC Inc. have on its balance
sheet at the end of 2010?
Correct Answer
$75
100 + 315 - 40 - 750 + 450
Question 2
What is an ordinary annuity?
Correct Answer
It is a regular stream of payments - the same amount every period for a
period of time
Question 3
What is a bond par value?
Correct Answer
The amount of the loan to be repaid
In this class: $1000
Page 3 of 160
, Question 4
Suppose Netflix, Inc., has a beta of 3.69. If the market return is expected to be
13.50 percent and the risk-free rate is 7.20 percent, what is Netflix's risk
premium? (Round your answer to 2 decimal places.)
Correct Answer
23.25%
Risk Premium = B(Rm - Rf)
3.69 (13.5 - 7.20)
Question 5
What is beta?
Correct Answer
A measure of market risk relative to the overall market
Question 6
What is capital?
Correct Answer
Assets for a company
Question 7
What is equity?
Correct Answer
This is the difference between values of assets and liabilities
Page 4 of 160
Answers
Question 1
Section 529 Plans include prepaid tuition and savings plans; only savings plans grow
tax free.
True
False
Correct Answer
False
Question 2
Precious metals
are a hedge against deflation.
are as good an investment as stocks and bonds over time.
can be purchased via mutual funds dealing in bullion.
fall into the area of commodity trading.
Correct Answer
fall into the area of commodity trading.
Page 1 of 160
,Question 3
Sarah's Computer City sells 5,000 boxes of CD-RW compact discs per year. She
determined that she pays $50 to process an order for discs. Her purchase price is $6
for each box of discs and she has determined that storage costs for one year are 25
percent of the purchase price. Sarah's vendor said that if she purchased 1,000 boxes
at a time, she would receive a 10 percent discount. The total cost formula is What is
Sarah's annual ordering cost if she does NOT take advantage of the discount?
$250
$578
$433
$675
Correct Answer
$433
Question 4
Future moneys or benefits should be measured in after-tax dollars.
True
False
Correct Answer
True
Question 5
Which of the following is a variable expense?
a security deposit
a phone bill
sales commission
a utility bill
Correct Answer
sales commission
Page 2 of 160
,Question 6
Daniel Goldstein utilized virtual reality to test whether assisting people's imagination
of future self will change their investment behaviors.
True
False
Correct Answer
True
Question 1
ABC Inc. has $100 in cash on its balance sheet at the end of 2009. During 2010,
the firm issued $450 in common stock, reduced its notes payable by $40,
purchased fixed assets in the amount of $750, and had cash flows from
operating activities of $315. How much cash did ABC Inc. have on its balance
sheet at the end of 2010?
Correct Answer
$75
100 + 315 - 40 - 750 + 450
Question 2
What is an ordinary annuity?
Correct Answer
It is a regular stream of payments - the same amount every period for a
period of time
Question 3
What is a bond par value?
Correct Answer
The amount of the loan to be repaid
In this class: $1000
Page 3 of 160
, Question 4
Suppose Netflix, Inc., has a beta of 3.69. If the market return is expected to be
13.50 percent and the risk-free rate is 7.20 percent, what is Netflix's risk
premium? (Round your answer to 2 decimal places.)
Correct Answer
23.25%
Risk Premium = B(Rm - Rf)
3.69 (13.5 - 7.20)
Question 5
What is beta?
Correct Answer
A measure of market risk relative to the overall market
Question 6
What is capital?
Correct Answer
Assets for a company
Question 7
What is equity?
Correct Answer
This is the difference between values of assets and liabilities
Page 4 of 160
