FIN305
Foundations of Finance
Finals Exam (Qns & Ans)
2025
General Instructions
1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
©2024/2025
,1. Which of the following is NOT a component of the Capital
Asset Pricing Model (CAPM)?
- A) Risk-free rate
- B) Market return
- C) Equity beta
- D) Dividend yield
ANS: D) Dividend yield
Rationale: The CAPM does not include dividend yield as a
component; it focuses on the risk-free rate, market return, and
equity beta.
2. Which of the following financial instruments is primarily used
for hedging against interest rate risks?
- A) Stocks
- B) Options
- C) Interest Rate Swaps
- D) Mutual Funds
ANS: C) Interest Rate Swaps
Rationale: Interest Rate Swaps are specifically designed to
manage exposure to fluctuations in interest rates.
©2024/2025
, 3. In the context of financial markets, the term “liquidity” refers
to:
- A) The volatility of security prices
- B) The availability of cash in the market
- C) The ease with which an asset can be converted into cash
- D) The level of investor participation in the market
ANS: C) The ease with which an asset can be converted into
cash
Rationale: Liquidity measures how quickly and easily an
asset can be sold without affecting its price.
Fill-in-the-Blank Questions
4. The __________ is used to calculate the present value of
future cash flows and reflects the value of money over time.
ANS: Discount Rate
Rationale: The discount rate plays a crucial role in
determining present value in finance by accounting for the time
value of money.
©2024/2025
Foundations of Finance
Finals Exam (Qns & Ans)
2025
General Instructions
1. Read All Questions Carefully: Make sure you understand each question.
2. Time Management: You have a specific amount of time to complete the exam.
Keep an eye on the clock and pace yourself.
3. Allowed Materials: Only use materials that are explicitly allowed. Unauthorized
materials can lead to disqualification.
4. ANS Format: Follow the required format for your ANS. For example, multiple-
choice questions might need you to select the best ANS, while essay questions
require detailed responses.
5. Academic Integrity: Adhere to the university's honor code. Any form of cheating or
plagiarism is strictly prohibited.
6. Technical Requirements: Ensure your computer and internet connection are
stable. For online exams, you might need a webcam and microphone for proctoring
purposes.
7. Submission: Submit your ANS before the time expires. Late submissions might
not be accepted.
©2024/2025
,1. Which of the following is NOT a component of the Capital
Asset Pricing Model (CAPM)?
- A) Risk-free rate
- B) Market return
- C) Equity beta
- D) Dividend yield
ANS: D) Dividend yield
Rationale: The CAPM does not include dividend yield as a
component; it focuses on the risk-free rate, market return, and
equity beta.
2. Which of the following financial instruments is primarily used
for hedging against interest rate risks?
- A) Stocks
- B) Options
- C) Interest Rate Swaps
- D) Mutual Funds
ANS: C) Interest Rate Swaps
Rationale: Interest Rate Swaps are specifically designed to
manage exposure to fluctuations in interest rates.
©2024/2025
, 3. In the context of financial markets, the term “liquidity” refers
to:
- A) The volatility of security prices
- B) The availability of cash in the market
- C) The ease with which an asset can be converted into cash
- D) The level of investor participation in the market
ANS: C) The ease with which an asset can be converted into
cash
Rationale: Liquidity measures how quickly and easily an
asset can be sold without affecting its price.
Fill-in-the-Blank Questions
4. The __________ is used to calculate the present value of
future cash flows and reflects the value of money over time.
ANS: Discount Rate
Rationale: The discount rate plays a crucial role in
determining present value in finance by accounting for the time
value of money.
©2024/2025
