2025/2026 D076 OA EXAM QUESTIONS & ANSWERS GRADED A +

2025/2026 D076 OA EXAM QUESTIONS & ANSWERS GRADED A + What are the main services offered by financial institutions? A. Soliciting charitable donations and then managing the distribution of these funds B. Accepting a wide variety of deposits, offering investment products, providing loans, and brokering financial transactions C. Deciding which assets to invest in to create wealth in the future D. Evaluating sources of funding for a business project, the capital structure of a firm, or actions managers could take to increase the value of the firm - CORRECT ANSWER-B. Accepting a wide variety of deposits, offering investment products, providing loans, and brokering financial transactions What is the main objective of personal financial goals? A. To maximize stock investments B. To maximize individual utility C. To maximize charity donations D. To maximize owner wealth - CORRECT ANSWER-B. To maximize individual utility Which task does the financial manager of a firm perform that involves the issuance of new stocks and bonds? A. Making financing decisions B. Managing working capital C. Deciding on accounting standards D. Making investing decisions - CORRECT ANSWER-A. Making financing decisions Why is understanding the definition of finance important in managing personal finances? A. It helps individuals compare the costs and benefits of an action to determine whether to take that action. B. It helps individuals act ethically about finances. C. It helps individuals understand legal issues related to finance. D. It allows individuals to find an investment with the highest return possible. - CORRECT ANSWER. It helps individuals compare the costs and benefits of an action to determine whether to take that action. In which type of market would a company issue bonds or stocks for the first time? Dealer market Primary market Secondary market Money market - CORRECT ANSWER-Primary market Which type of financial institution is a mutual fund? Contractual institution Depository institution Investment institution Federal institution - CORRECT ANSWER-Investment institution Which financial institution specializes in managing and administering retirement funds? Investment banks Mutual funds Pension funds Private equity - CORRECT ANSWER-Pension funds Which type of economic indicator is the consumer price index? Leading indicator Coincident indicator Forecasting indicator Lagging indicator - CORRECT ANSWER-Lagging indicator What does the term ethical refer to? The accepted standards of conduct that guide a person's behavior An idea or thing used as a measure, norm, or model in comparative evaluations One's beliefs about right and wrong, good and bad, or just and unjust Following the laws and rules set by an authority - CORRECT ANSWER-The accepted standards of conduct that guide a person's behavior A company's officers and board of directors are selling their stocks in the firm at higher prices due to false accounting reports that made the stock seem more valuable than it truly was. Which ethical issue is occurring in this situation? Conflict between work and personal affairs Maximizing shareholder value Pursuing individual interest over client interests Agency problem due to conflicting interests - CORRECT ANSWER-Agency problem due to conflicting interests Which type of interest rate includes interest on interest in addition to interest on the principal? Simple interest Compound interest Yield to maturity Nominal interest rate - CORRECT ANSWER-Compound interest What is the rate at which the average price level of particular goods and services in an economy increases over a period of time? Opportunity cost Inflation rate Real rate Nominal rate - CORRECT ANSWER-Inflation rate 1 / 1 You signed an apartment contract today. You are going to pay $1,500 at the beginning of each month for the next 12 months, starting today. What type of cash flows is this contract? A perpetuity Uneven cash flows An ordinary annuity An annuity due - CORRECT ANSWER-An annuity due