PEREGRINE FINANCE EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE
2026/2027
The firm's are primarily interested in ratios that measure the short-term liquidity of the company
and its ability to make principal and interest payments. - Answers Creditors
A company's balance sheet shows the value of assets, liabilities, and stockholders' equity -
Answers At a specific point in time
A firm that employs an aggressive strategy to finance assets - Answers Will finance a portion of
long-term (permanent) growth in assets with short-term financing
Which of the following is NOT an example of a financial asset? - Answers Property, plant, and
equipment
Which of the following statements is correct? - Answers The incremental operating cash flow
for capital budgeting includes return on invested capital, which is net income, and return of part
of invested capital, which is depreciation
The bottom-up method for forecasting sales - Answers Relies on the ability of sales personnel
to assess future demand, usually without the aid of statistical models
A(n) ________ is generally obtained from a bank or insurance company and the borrower agrees
to make a series of payments consisting of interest and principal - Answers term loan
Which of the following statements is most correct? - Answers If the maturity risk premium were
zero and the rate of inflation were expected to increase in the future, then the yield curve for U.S.
Treasury securities would, other things held constant, have an upward slope
The premium is compensation for the possibility that the borrower will not be able to pay the
debt's interest and principal on time - Answers default risk
Your uncle would like to restrict his interest rate risk and his default risk, but he still would like to
invest in corporate bonds. Which of the possible bonds listed below satisfies your uncle's
criteria? - Answers AAA bond with 5 years to maturity
An American Depository Receipt (ADR) represents - Answers Certificates representing
ownership in stocks of foreign companies that are held in trust by a bank located in the country
the stock is traded
Which of the following is not an example of a financial asset? - Answers Inventory
A cash budget is - Answers A statement of a firm's planned inflows and outflows of cash used
to ensure that a firm has available cash to meet short-term financial obligations
The preemptive right is important to shareholders because it - Answers Protects the current
shareholders against dilution of ownership interests
2026/2027
The firm's are primarily interested in ratios that measure the short-term liquidity of the company
and its ability to make principal and interest payments. - Answers Creditors
A company's balance sheet shows the value of assets, liabilities, and stockholders' equity -
Answers At a specific point in time
A firm that employs an aggressive strategy to finance assets - Answers Will finance a portion of
long-term (permanent) growth in assets with short-term financing
Which of the following is NOT an example of a financial asset? - Answers Property, plant, and
equipment
Which of the following statements is correct? - Answers The incremental operating cash flow
for capital budgeting includes return on invested capital, which is net income, and return of part
of invested capital, which is depreciation
The bottom-up method for forecasting sales - Answers Relies on the ability of sales personnel
to assess future demand, usually without the aid of statistical models
A(n) ________ is generally obtained from a bank or insurance company and the borrower agrees
to make a series of payments consisting of interest and principal - Answers term loan
Which of the following statements is most correct? - Answers If the maturity risk premium were
zero and the rate of inflation were expected to increase in the future, then the yield curve for U.S.
Treasury securities would, other things held constant, have an upward slope
The premium is compensation for the possibility that the borrower will not be able to pay the
debt's interest and principal on time - Answers default risk
Your uncle would like to restrict his interest rate risk and his default risk, but he still would like to
invest in corporate bonds. Which of the possible bonds listed below satisfies your uncle's
criteria? - Answers AAA bond with 5 years to maturity
An American Depository Receipt (ADR) represents - Answers Certificates representing
ownership in stocks of foreign companies that are held in trust by a bank located in the country
the stock is traded
Which of the following is not an example of a financial asset? - Answers Inventory
A cash budget is - Answers A statement of a firm's planned inflows and outflows of cash used
to ensure that a firm has available cash to meet short-term financial obligations
The preemptive right is important to shareholders because it - Answers Protects the current
shareholders against dilution of ownership interests
