Exam Questions and Verified Correct Answers
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Which statement correctly describes contextualizes what a return is?
An interest can be a good tool because it summarizes the required return, but it is a
detriment because it requires a larger cost of capital.
A return is the gain or loss on an investment over some period of time.
A compounding interest can be a good tool to understand opportunity cost, but it is a
detriment because it does not take risk into account.
A return can be a good tool to understand the time value of money, but it is a detriment
because it does not take inflation into account. - answer>>>A return is the gain or loss on
an investment over some period of time.
A person who loans a corporation money by buying debt securities
Stock Holders
Banks
Pension Holders
Bond Holders - answer>>>Bond Holders
An area of finance that deals with sources of funding. the capital structure of
corporations, the actions that managers take to increase the value of the firm to its
owners and the tools and analysis used to allocate financial resources.
Service Finance
Employee Finance
Business Finance
Stock Finance - answer>>>Business Finance
The reduction in sales a company's own product due to introduction of another similar
product.
Cannibalization
Common stock
Secured bonds
,Zero-coupon bonds - answer>>>Cannibalization
A model used to determine the risk reurn relationship for an asset
Capital Market Pricing Model (CMPM)
Capital Asset Pricing Model (CAPM)
Capital Arveta Pricing Model (CAPM)
Capital Asset Printing Model (CAPM) - answer>>>Capital Asset Pricing Model (CAPM)
Metrics and calculations used to determine whether a project or asset will add value and
be a worthwhile investment?
Capital budgeting criteria
Performance evaluation criteria
Corrective action criteria
Standardization criteria - answer>>>Capital Budgeting criteria
The process of evaluation and planning for purchases of long term assets
Capital Markets
Capital Structure
Capital Budgeting.
Capital Investment - answer>>>Capital Budgeting
A type of financial market used for long term assets that are held for greater than one
year
Capital Investment
Capital Market
Capital Budgeting
Capital Structure - answer>>>Capital Markets
The sum of money invested in a business to purchase long term assets to further its
objective of maximizing owner wealth.
Capital Investment
Capital Market
Capital Budgeting
Capital Structure - answer>>>Capital Investment
, The mixture of debt and equity used to finance a firm
Capital Investment
Capital Market
Capital Budgeting
Capital Structure - answer>>>Capital Structure
A financial asset that can be used by a firm or individual. Examples of capital may be
machinery or cash held by a firm.
Investment
Market
Budgeting
Capital - answer>>>Capital
When a limited amount of funds are available
Capital Investment Environment
Capital market Environment.
Capital constrained Environment.
Capital Structure Environment - answer>>>Capital constrained Environment.
A plan for controlling cash inflow and outflows business to balance income with
expenditures.
Cash Budgets
Cash Managment
Central Bank
Comon Stock - answer>>>Cash Budgets
Managing the day-to-day finance operations of a firm.
Cash Budgets
Cash Managment
Central Bank
Comon Stock - answer>>>Cash Managment