FINA 363 FINAL EXAM QUESTIONS AND
ANSWERS 100% PASS 2026/2027
The primary role of a financial system is to:
a. enable financial managers to evaluate investment projects with a system that always selects
the correct opportunity for their firm
b. make savvy investors rich
c. channel funds from savers to borrowers who need funds for investment projects
d. provide employees in financial institutions with a code of ethics
e. regulate the banking system - ANS c. channel funds from savers to borrows who need
funds for investment projects
The largest providers of funds in the financial system are:
a. individuals
b. businesses
c. Bill and Melinda Gates
d. government agencies - ANS a. individuals
The _____________ is the financial market in which securities are initially issued
a. secondary market
b. private placement
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,c. OTC
d. NASDAQ
e. primary market - ANS e. primary market
Money markets are markets for:
a. long-term bonds
b. short-term debt securities
c. preferred securities
d. foreign currency exchanges
e. corporate stocks - ANS b. short-term debt securities
What word do we use for the ease with which assets can be converted into cash?
a. solvency
b. liquidity
c. agency
d. efficiency
e. accuracy - ANS b. liquidity
What do we call a market in which the price of a security is an accurate estimate by the market
of its try value?
a. law of one price
b. effective market
c. secondary
d. efficient market
e. primary market - ANS d. efficient market
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, $100 today is worth:
a. the same as $100 to be received in one year, since the inflation rate has been how low
recently and funds received in the near future should have the same purchasing power that
they have today
b. less than $100 received by someone ten years ago, since many products have been improved
over this time period
c. the same as a future received in one year, since the physical characteristics of U.S. currency
are unchanged for long periods of time
d. less than $100 to be received in one year, since many peoplewill spend money foolishly today
and will become more careful in their spending habits as they mature
e. more than $100 to be received in one year, since you can invest the money received today for
this period, leaving you with more than $100 in the future - ANS e. more than $100 to be
received in one year, since you can invest the money received today for this period, leaving you
with more than $100 in the future
The relationship between risk and return in finance can best be described by which of the
following statements?
a. high risk always brings it high returns
b. the riskier the security, the lower the return expected from it
c. high risk securities always beat low risk securities
d. risk and return are inversely related
e. the riskier the security, the greater the return the investors expect from it - ANS e. the
riskier the security, the greater the return the investors expect from it
Information Asymmetry is:
a. false information spread by competitors
b. when information is not reflected properly in the market
c. incomplete information
d. when some know more than others
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ANSWERS 100% PASS 2026/2027
The primary role of a financial system is to:
a. enable financial managers to evaluate investment projects with a system that always selects
the correct opportunity for their firm
b. make savvy investors rich
c. channel funds from savers to borrowers who need funds for investment projects
d. provide employees in financial institutions with a code of ethics
e. regulate the banking system - ANS c. channel funds from savers to borrows who need
funds for investment projects
The largest providers of funds in the financial system are:
a. individuals
b. businesses
c. Bill and Melinda Gates
d. government agencies - ANS a. individuals
The _____________ is the financial market in which securities are initially issued
a. secondary market
b. private placement
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,c. OTC
d. NASDAQ
e. primary market - ANS e. primary market
Money markets are markets for:
a. long-term bonds
b. short-term debt securities
c. preferred securities
d. foreign currency exchanges
e. corporate stocks - ANS b. short-term debt securities
What word do we use for the ease with which assets can be converted into cash?
a. solvency
b. liquidity
c. agency
d. efficiency
e. accuracy - ANS b. liquidity
What do we call a market in which the price of a security is an accurate estimate by the market
of its try value?
a. law of one price
b. effective market
c. secondary
d. efficient market
e. primary market - ANS d. efficient market
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, $100 today is worth:
a. the same as $100 to be received in one year, since the inflation rate has been how low
recently and funds received in the near future should have the same purchasing power that
they have today
b. less than $100 received by someone ten years ago, since many products have been improved
over this time period
c. the same as a future received in one year, since the physical characteristics of U.S. currency
are unchanged for long periods of time
d. less than $100 to be received in one year, since many peoplewill spend money foolishly today
and will become more careful in their spending habits as they mature
e. more than $100 to be received in one year, since you can invest the money received today for
this period, leaving you with more than $100 in the future - ANS e. more than $100 to be
received in one year, since you can invest the money received today for this period, leaving you
with more than $100 in the future
The relationship between risk and return in finance can best be described by which of the
following statements?
a. high risk always brings it high returns
b. the riskier the security, the lower the return expected from it
c. high risk securities always beat low risk securities
d. risk and return are inversely related
e. the riskier the security, the greater the return the investors expect from it - ANS e. the
riskier the security, the greater the return the investors expect from it
Information Asymmetry is:
a. false information spread by competitors
b. when information is not reflected properly in the market
c. incomplete information
d. when some know more than others
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