FINANCE 380 EXAM 1 | QUESTIONS AND ANSWERS | 2026 UPDATE | WITH COMPLETE
SOLUTION
One of the underlying principles of finance is that cash is - (answer)King
Newly-created securities are issued to their initial investors in the - (answer)Primary market
Limited liability exists for - (answer)limited partners and shareholders
You purchase securities directly from an entity. That entity is a securities - (answer)dealer
Double taxation may exist in - (answer)Corporations
Ultimate control of a corporation is held by the - (answer)Stockholders
A market is which security prices quickly reflect new information is said to be - (answer)Efficient
In order for a particular security to be traded on a particular exchange, the security must be __________
on the exchange - (answer)listed
The day-to-day decisions in a firm are typically made by the - (answer)Management team
Which of the following files its own tax return (is a separate tax-paying entity) - (answer)Corporation
The present value and the discount rate are __________ related, everything else equal -
(answer)inversely
What is the present value of $1,800 to be received ten years from now discounted at 5% APR
compounded quarterly? - (answer)$1,095.14
, FINANCE 380 EXAM 1 | QUESTIONS AND ANSWERS | 2026 UPDATE | WITH COMPLETE
SOLUTION
What is the present value of $10,000 to be received seven years from now discounted at 5% APR
compounded annually? - (answer)$7,106.81
According to the rule of 72, an investment that earns 10% annual interest will double in approximately
7.2 years. - (answer)True
What is the future value ten years from now of $2,500 invested at 6% APR compounded monthly? -
(answer)$4,548.49
How many years does it take for $10,000 to grow into $48,010.21 if the investment earns 8% APR
compounded semi-annually? - (answer)20
A $20,000 investment compounds monthly for 120 months and grows into $28,000. What is the APR
earned by this investment? - (answer)3.37%
An investment of $20,000 grows into $35,000 over a period of 6 years. What is the APR? Remember,
when the compounding period is not given, we assume annual compounding. - (answer)9.78%
"Earning interest on interest" pertains to - (answer)compound interest
What is the future value six years from now of $1,000 invested at 5% interest compounded annually: -
(answer)$1,340.10
Financial markets exist to transfer savings from - (answer)households to businesses
Securities trading takes place at a physical location is the case of an - (answer)Organized securities
exchange
Brokers charge a fee or commission for bringing buyers and sellers together - (answer)True
SOLUTION
One of the underlying principles of finance is that cash is - (answer)King
Newly-created securities are issued to their initial investors in the - (answer)Primary market
Limited liability exists for - (answer)limited partners and shareholders
You purchase securities directly from an entity. That entity is a securities - (answer)dealer
Double taxation may exist in - (answer)Corporations
Ultimate control of a corporation is held by the - (answer)Stockholders
A market is which security prices quickly reflect new information is said to be - (answer)Efficient
In order for a particular security to be traded on a particular exchange, the security must be __________
on the exchange - (answer)listed
The day-to-day decisions in a firm are typically made by the - (answer)Management team
Which of the following files its own tax return (is a separate tax-paying entity) - (answer)Corporation
The present value and the discount rate are __________ related, everything else equal -
(answer)inversely
What is the present value of $1,800 to be received ten years from now discounted at 5% APR
compounded quarterly? - (answer)$1,095.14
, FINANCE 380 EXAM 1 | QUESTIONS AND ANSWERS | 2026 UPDATE | WITH COMPLETE
SOLUTION
What is the present value of $10,000 to be received seven years from now discounted at 5% APR
compounded annually? - (answer)$7,106.81
According to the rule of 72, an investment that earns 10% annual interest will double in approximately
7.2 years. - (answer)True
What is the future value ten years from now of $2,500 invested at 6% APR compounded monthly? -
(answer)$4,548.49
How many years does it take for $10,000 to grow into $48,010.21 if the investment earns 8% APR
compounded semi-annually? - (answer)20
A $20,000 investment compounds monthly for 120 months and grows into $28,000. What is the APR
earned by this investment? - (answer)3.37%
An investment of $20,000 grows into $35,000 over a period of 6 years. What is the APR? Remember,
when the compounding period is not given, we assume annual compounding. - (answer)9.78%
"Earning interest on interest" pertains to - (answer)compound interest
What is the future value six years from now of $1,000 invested at 5% interest compounded annually: -
(answer)$1,340.10
Financial markets exist to transfer savings from - (answer)households to businesses
Securities trading takes place at a physical location is the case of an - (answer)Organized securities
exchange
Brokers charge a fee or commission for bringing buyers and sellers together - (answer)True
