D775 Business Finance Quizlet Q&A Overview
Questions with 100% Correct Answers
What is the main goal of financial management?
Correct Answer: To maximize shareholder wealth.
If a bond pays $60 annually on a $1,000 face value,
what is the coupon rate? Correct Answer: 6%.
What happens to bond prices when interest rates rise?
Correct Answer: Bond prices fall.
Which market involves the resale of securities? Correct
Answer: Secondary market.
What is the formula for Future Value? Correct Answer: FV
= PV × (1 + r)^n.
What does a positive NPV indicate? Correct Answer: The
investment is expected to add value and should be
accepted.
When is a project acceptable using IRR? Correct
Answer: If IRR > required rate of return.
, What does the payback period ignore? Correct Answer:
Time value of money and cash flows after payback.
What is the formula for the current ratio? Correct
Answer: Current Assets / Current Liabilities.
Why is WACC used in capital budgeting? Correct
Answer: It is the discount rate used to evaluate
investment opportunities.
Future Value Correct Answer: FV = PV × (1 + r)^n
Positive NPV Correct Answer: The investment is expected
to add value and should be accepted.
Acceptable project using IRR Correct Answer: If IRR >
required rate of return.
Payback period ignores Correct Answer: Time value of
money and cash flows after payback.
Current ratio formula Correct Answer: Current Assets /
Current Liabilities.
WACC in capital budgeting Correct Answer: It is the
discount rate used to evaluate investment opportunities.
Questions with 100% Correct Answers
What is the main goal of financial management?
Correct Answer: To maximize shareholder wealth.
If a bond pays $60 annually on a $1,000 face value,
what is the coupon rate? Correct Answer: 6%.
What happens to bond prices when interest rates rise?
Correct Answer: Bond prices fall.
Which market involves the resale of securities? Correct
Answer: Secondary market.
What is the formula for Future Value? Correct Answer: FV
= PV × (1 + r)^n.
What does a positive NPV indicate? Correct Answer: The
investment is expected to add value and should be
accepted.
When is a project acceptable using IRR? Correct
Answer: If IRR > required rate of return.
, What does the payback period ignore? Correct Answer:
Time value of money and cash flows after payback.
What is the formula for the current ratio? Correct
Answer: Current Assets / Current Liabilities.
Why is WACC used in capital budgeting? Correct
Answer: It is the discount rate used to evaluate
investment opportunities.
Future Value Correct Answer: FV = PV × (1 + r)^n
Positive NPV Correct Answer: The investment is expected
to add value and should be accepted.
Acceptable project using IRR Correct Answer: If IRR >
required rate of return.
Payback period ignores Correct Answer: Time value of
money and cash flows after payback.
Current ratio formula Correct Answer: Current Assets /
Current Liabilities.
WACC in capital budgeting Correct Answer: It is the
discount rate used to evaluate investment opportunities.
