FINANCE 380 EXAM 1 QUESTIONS
COMPLETE WITH 100% VERIFIED ANSWERS
\.One of the underlying principles of finance is that cash is -
ANSWERS✔-King
\.Newly-created securities are issued to their initial investors in the -
ANSWERS✔-Primary market
\.Limited liability exists for - ANSWERS✔-limited partners and
shareholders
\.You purchase securities directly from an entity. That entity is a
securities - ANSWERS✔-dealer
\.Double taxation may exist in - ANSWERS✔-Corporations
\.Ultimate control of a corporation is held by the - ANSWERS✔-
Stockholders
,\.A market is which security prices quickly reflect new information is
said to be - ANSWERS✔-Efficient
\.In order for a particular security to be traded on a particular exchange,
the security must be __________ on the exchange - ANSWERS✔-listed
\.The day-to-day decisions in a firm are typically made by the -
ANSWERS✔-Management team
\.Which of the following files its own tax return (is a separate tax-paying
entity) - ANSWERS✔-Corporation
\.The present value and the discount rate are __________ related,
everything else equal - ANSWERS✔-inversely
\.What is the present value of $1,800 to be received ten years from now
discounted at 5% APR compounded quarterly? - ANSWERS✔-$1,095.14
\.What is the present value of $10,000 to be received seven years from
now discounted at 5% APR compounded annually? - ANSWERS✔-
$7,106.81
, \.According to the rule of 72, an investment that earns 10% annual
interest will double in approximately 7.2 years. - ANSWERS✔-True
\.What is the future value ten years from now of $2,500 invested at 6%
APR compounded monthly? - ANSWERS✔-$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? -
ANSWERS✔-20
\.A $20,000 investment compounds monthly for 120 months and grows
into $28,000. What is the APR earned by this investment? -
ANSWERS✔-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. - ANSWERS✔-9.78%
\."Earning interest on interest" pertains to - ANSWERS✔-compound
interest
\.What is the future value six years from now of $1,000 invested at 5%
interest compounded annually: - ANSWERS✔-$1,340.10
COMPLETE WITH 100% VERIFIED ANSWERS
\.One of the underlying principles of finance is that cash is -
ANSWERS✔-King
\.Newly-created securities are issued to their initial investors in the -
ANSWERS✔-Primary market
\.Limited liability exists for - ANSWERS✔-limited partners and
shareholders
\.You purchase securities directly from an entity. That entity is a
securities - ANSWERS✔-dealer
\.Double taxation may exist in - ANSWERS✔-Corporations
\.Ultimate control of a corporation is held by the - ANSWERS✔-
Stockholders
,\.A market is which security prices quickly reflect new information is
said to be - ANSWERS✔-Efficient
\.In order for a particular security to be traded on a particular exchange,
the security must be __________ on the exchange - ANSWERS✔-listed
\.The day-to-day decisions in a firm are typically made by the -
ANSWERS✔-Management team
\.Which of the following files its own tax return (is a separate tax-paying
entity) - ANSWERS✔-Corporation
\.The present value and the discount rate are __________ related,
everything else equal - ANSWERS✔-inversely
\.What is the present value of $1,800 to be received ten years from now
discounted at 5% APR compounded quarterly? - ANSWERS✔-$1,095.14
\.What is the present value of $10,000 to be received seven years from
now discounted at 5% APR compounded annually? - ANSWERS✔-
$7,106.81
, \.According to the rule of 72, an investment that earns 10% annual
interest will double in approximately 7.2 years. - ANSWERS✔-True
\.What is the future value ten years from now of $2,500 invested at 6%
APR compounded monthly? - ANSWERS✔-$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? -
ANSWERS✔-20
\.A $20,000 investment compounds monthly for 120 months and grows
into $28,000. What is the APR earned by this investment? -
ANSWERS✔-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. - ANSWERS✔-9.78%
\."Earning interest on interest" pertains to - ANSWERS✔-compound
interest
\.What is the future value six years from now of $1,000 invested at 5%
interest compounded annually: - ANSWERS✔-$1,340.10
