FNAN522-020_ Midterm Exam Correct Answers

FNAN522-020_ Midterm Exam Correct Answers Started on Friday, 29 November 2019, 1:05 PM State Finished Completed on Friday, 29 November 2019, 2:04 PM Time taken 59 mins 19 secs Marks 24.00/30.00 Grade 168.00 out of 210.00 (80%) Question 1 Correct Mark 1.00 out of 1.00 Question 2 Correct Mark 1.00 out of 1.00 A company needs to raise cash to cover its operating expenses. The company will only need the funds for a short period of time. Which financial market is the most appropriate for the company use to raise money (that is, likely the lowest cost and best-matched maturity)? Select one: a. Money market b. Capital market c. Derivative market d. All of these answers The correct answer is: Money market What is the primary goal of the Sarbanes-Oxley act according to the Module 1 video "The Goal of Financial Management"? Select one: a. To protect investors from corporate abuse. b. To help maintain a primary bull market. c. To protect corporate executives from frivolous shareholder lawsuits. d. To prevent a secular bear market. The correct answer is: To protect investors from corporate abuse. Question 3 Correct Mark 1.00 out of 1.00 Which of the following is an accurate characteristic of a sole proprietorship? Select one: a. The owner is personally liable for the business's debt and obligations. b. There is more than one owner. c. A sole proprietorship typically elects board members for staggered terms. d. The owner must file a separate tax return for the business. The correct answer is: The owner is personally liable for the business's debt and obligations. Question 4 Correct Mark 1.00 out of 1.00 Question 5 Correct Mark 1.00 out of 1.00 Which of the following is a source of agency costs in an organization? Select one: a. Parties associated with the organization have different risk preferences. b. The people who make the day-to-day decisions are not the owners. c. All of these answers. d. The managers of the organization have different objectives than the other shareholders. The correct answer is: All of these answers. Which of the following occurred during the financial crisis of ? Select one: a. All of these answers b. Several major institutions failed or were subject to government takeover. c. A currency crisis, with investors transferring their wealth to countries with stronger currencies. d. Significant declines in consumer wealth and prolonged unemployment. The correct answer is: All of these answers Question 6 Correct Mark 1.00 out of 1.00 Which of the following terms describes the protection of personal assets stemming from the corporate structure? Select one: a. simple transference b. double taxation c. articles of incorporation d. limited liability The correct answer is: limited liability Question 7 Correct Mark 1.00 out of 1.00 Question 8 Correct Mark 1.00 out of 1.00 What will $250,000 grow to be in 11 years if it is invested today in an account with an annual interest rate of 6%? Select one: a. $96,558.42 b. $637,365.32 c. $474,574.64 d. $351,268.46 The correct answer is: $474,574.64 Approximately how many years will it take for $36,000 to grow to be $68,000 if it is invested in an account with an annual interest rate of 8%? Choose the closest answer. Select one: a. 10 years. b. 6 years. c. 8 years. d. 12 years. The correct answer is: 8 years. Question 9 Incorrect Mark 0.00 out of 1.00 Question 10 Correct Mark 1.00 out of 1.00 You are offered a loan with a quoted annual interest rate of 13% with monthly compounding of interest. What is your effective annual interest rate? Select one: a. 11.01% b. 13.80% c. 12.48% d. 15.23% The correct answer is: 13.80% John and Peggy would like to buy a house. They have looked at their budget and determined that they can afford a maximum monthly mortgage payment of $1,100. Interest rates on 30-year, fixed-rate mortgages currently have a nominal annual interest rate of 7 percent with monthly compounding (payments due at the end of each month). Given these loan terms, what is the maximum amount John and Peggy borrow today to purchase a house and not exceed a monthly payment of $1,100 on the loan? Round to the nearest dollar. Select one: a. $127,128 b. $15,714 c. $157,143 d. $165,338 The correct answer is: $165,338