FINANCE 301 Exam Latest Questions all with
100% Correct Answers
Financial Decision - ANSWER The investment decision: allocating scare resources
The financing decision: raising funds to finance projects
The dividend decision: returning funds to investors
The Corporate Financial Toolbox - ANSWER 1. Accounting Statements and Ratios
2. Present Value
3. Risk and Return Models
4. Spreadsheet Modeling
Primary Areas of Finance - ANSWER Corporate Finance: How business use and invest
their money
Institutions and Markets: Dominate Financial Environment, retirement funds, banks,
stocks, etc
Investments- How we make investment decisions and how we determine value of a
company's stock
Importance of Financial Markets - ANSWER Corn is a commodity and therefore it is
elastic to price changes
Gold identifies the market's behavior- people buy gold when they are scared the market
is going to crash
The Role of Capital Markets - ANSWER 1. Capitalism- Market Allocation Capital
2. Role of Government-Regulator, Investor, Market Control
3. Stock Price Reflect Stock Value-Operating Efficiency, Information/Price Efficiency
4. Shareholder Value- Manage for Value- Attract Capital
, 5. Current Market Issues- Financial Crisis, Insider Trading, High Frequency Trading
Four Common Elements of Financial Crises - ANSWER 1. Excessive investment in an asset
'class'
2. Easy Financing usually involved
3. government bailout needed
4. It will happen again in 5-10 years people don't learn from their mistakes
Warren Buffett and Why is he famous? - ANSWER 1. CEO of Berkshire Hathaway (BRK.A)
2. Very successful investor, very credible, politically active
3. Started in Insurance Business
What does Berkshire Hathaway do? - ANSWER BRK.A is primarily an insurance company;
it is currently traded at $220,000/share
Key Information of Warren Buffett - ANSWER 1. Never had a stock spilt
2. Prefer to own companies rather than stocks- provides the benefit of full control
3. Believes management should act like owners
4. Like companies with moats- Barriers to entry because it protects from large amounts
of competition
5. Does not own any part of technology companies
6. Like companies with good cash flows
Financial Metrics does Buffet use to analyze companies? - ANSWER 1. % Profit Margin-
Average US profit Margin is 5%
2. % Return of Equity
100% Correct Answers
Financial Decision - ANSWER The investment decision: allocating scare resources
The financing decision: raising funds to finance projects
The dividend decision: returning funds to investors
The Corporate Financial Toolbox - ANSWER 1. Accounting Statements and Ratios
2. Present Value
3. Risk and Return Models
4. Spreadsheet Modeling
Primary Areas of Finance - ANSWER Corporate Finance: How business use and invest
their money
Institutions and Markets: Dominate Financial Environment, retirement funds, banks,
stocks, etc
Investments- How we make investment decisions and how we determine value of a
company's stock
Importance of Financial Markets - ANSWER Corn is a commodity and therefore it is
elastic to price changes
Gold identifies the market's behavior- people buy gold when they are scared the market
is going to crash
The Role of Capital Markets - ANSWER 1. Capitalism- Market Allocation Capital
2. Role of Government-Regulator, Investor, Market Control
3. Stock Price Reflect Stock Value-Operating Efficiency, Information/Price Efficiency
4. Shareholder Value- Manage for Value- Attract Capital
, 5. Current Market Issues- Financial Crisis, Insider Trading, High Frequency Trading
Four Common Elements of Financial Crises - ANSWER 1. Excessive investment in an asset
'class'
2. Easy Financing usually involved
3. government bailout needed
4. It will happen again in 5-10 years people don't learn from their mistakes
Warren Buffett and Why is he famous? - ANSWER 1. CEO of Berkshire Hathaway (BRK.A)
2. Very successful investor, very credible, politically active
3. Started in Insurance Business
What does Berkshire Hathaway do? - ANSWER BRK.A is primarily an insurance company;
it is currently traded at $220,000/share
Key Information of Warren Buffett - ANSWER 1. Never had a stock spilt
2. Prefer to own companies rather than stocks- provides the benefit of full control
3. Believes management should act like owners
4. Like companies with moats- Barriers to entry because it protects from large amounts
of competition
5. Does not own any part of technology companies
6. Like companies with good cash flows
Financial Metrics does Buffet use to analyze companies? - ANSWER 1. % Profit Margin-
Average US profit Margin is 5%
2. % Return of Equity
