FNAN 522 MIDTERM EXAM QUESTIONS
AND ANSWERS. VERIFIED 2025/2026.
A. Public, unsecured debt. - ANS A company issued debt that did not grant the bondholders
the ability to seize the company's assets to settle the obligation. This debt can be traded on a
public exchange. Which of the following best describes this debt?
a. Public, unsecured debt.
b. Private, unsecured debt.
c. Private, secured debt.
d. Public, secured debt.
c. A government bond that matures in four months - ANS Which of the following is NOT a
cash equivalent?
a. A banknote
b. Preferred stock that will be redeemed in a month
c. A government bond that matures in four months.
d. A treasury bill that matures in two months
d. All of these answers - ANS Which of the following occurred during the financial crisis of
2007-08?
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,a. Several major institutions failed or were subject to government takeover.
b. Significant declines in consumer wealth and prolonged unemployment.
c. A currency crisis, with investors transferring their wealth to countries with stronger
currencies.
d. All of these answers
d. The idea of maximizing market value is related to the idea of maximizing shareholder value. -
ANS Which of the following statements regarding shareholder and market value is correct?
a. Market value is the price at which a shareholder is willing to sell.
b. Short-term focus on shareholder value is never detrimental to long-term shareholder value.
c. All of these answers.
d. The idea of maximizing market value is related to the idea of maximizing shareholder value.
b. All of these answers. - ANS How is finance used in organizations?
a. To maximize shareholder value.
b. All of these answers.
c. To ensure that money is at the right place at the right time.
d. To choose between different potential investments.
b. limited liability - ANS Which of the following terms describes the protection of personal
assets stemming from the corporate structure?
a. simple transference
b. limited liability
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, c. articles of incorporation
d. double taxation
c. All of these answers - ANS Which of the following is a factor that contributes to the conflict
of interest between a company's bondholders and its shareholders?
a. Shareholders are only paid if the company makes a profit, bondholders are paid regardless.
b. Shareholders generally want the company to pursue riskier projects; bondholders do not.
c. All of these answers
d. Shareholders have a vote in how the company conducts its business; bondholders generally
do not.
b. There must be at least two business owners. - ANS Which of the following is a legal
characteristic of a general partnership?
a. Partners are not personally liable for the business's debts and obligations.
b. There must be at least two business owners.
c. The partnership is taxed as a separate entity from its partners.
d. All of these answers.
a. All of these answers - ANS Which of the following is a type of financial market?
a. All of these answers
b. Derivative markets
c. Capital markets
d. Money markets
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
AND ANSWERS. VERIFIED 2025/2026.
A. Public, unsecured debt. - ANS A company issued debt that did not grant the bondholders
the ability to seize the company's assets to settle the obligation. This debt can be traded on a
public exchange. Which of the following best describes this debt?
a. Public, unsecured debt.
b. Private, unsecured debt.
c. Private, secured debt.
d. Public, secured debt.
c. A government bond that matures in four months - ANS Which of the following is NOT a
cash equivalent?
a. A banknote
b. Preferred stock that will be redeemed in a month
c. A government bond that matures in four months.
d. A treasury bill that matures in two months
d. All of these answers - ANS Which of the following occurred during the financial crisis of
2007-08?
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,a. Several major institutions failed or were subject to government takeover.
b. Significant declines in consumer wealth and prolonged unemployment.
c. A currency crisis, with investors transferring their wealth to countries with stronger
currencies.
d. All of these answers
d. The idea of maximizing market value is related to the idea of maximizing shareholder value. -
ANS Which of the following statements regarding shareholder and market value is correct?
a. Market value is the price at which a shareholder is willing to sell.
b. Short-term focus on shareholder value is never detrimental to long-term shareholder value.
c. All of these answers.
d. The idea of maximizing market value is related to the idea of maximizing shareholder value.
b. All of these answers. - ANS How is finance used in organizations?
a. To maximize shareholder value.
b. All of these answers.
c. To ensure that money is at the right place at the right time.
d. To choose between different potential investments.
b. limited liability - ANS Which of the following terms describes the protection of personal
assets stemming from the corporate structure?
a. simple transference
b. limited liability
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, c. articles of incorporation
d. double taxation
c. All of these answers - ANS Which of the following is a factor that contributes to the conflict
of interest between a company's bondholders and its shareholders?
a. Shareholders are only paid if the company makes a profit, bondholders are paid regardless.
b. Shareholders generally want the company to pursue riskier projects; bondholders do not.
c. All of these answers
d. Shareholders have a vote in how the company conducts its business; bondholders generally
do not.
b. There must be at least two business owners. - ANS Which of the following is a legal
characteristic of a general partnership?
a. Partners are not personally liable for the business's debts and obligations.
b. There must be at least two business owners.
c. The partnership is taxed as a separate entity from its partners.
d. All of these answers.
a. All of these answers - ANS Which of the following is a type of financial market?
a. All of these answers
b. Derivative markets
c. Capital markets
d. Money markets
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
