FIN 300 EXAM 1 - CSU Stein || with Certified Answers.
4 basic areas of finance correct answers -corporate finance=business finance
-investments
-financial institutions
-international finance (exchange rates, country customs)
liquidity correct answers speed and ease of conversion to cash without significant loss in value
depreciation correct answers method to recognize the expense over a period of time instead of
just recognizing it in one period (matching principle)
book value correct answers Value of business based on books
market value correct answers true value, the price at which assets, liabilities, or stockholders
equity can be bought or sold
the income statement correct answers measures the performance over a specified period of time
(quarter, year, etc.)
-report revenues first and then deduct expenses
internal growth rate correct answers -how much a firm can grow assets using RE as the only
source of financing
-losing debt over time because growth is completely internal
sustainable growth rate correct answers -how much the firm can grow by using internally
generate funds and issuing debt to maintain a constant debt ratio
, present value correct answers the current value of future cash flows discounted at the appropriate
discount ratio
future value correct answers the amount an investment is worth after one or more periods
simple interest correct answers interest earned only one the principle amount
compound interest correct answers interest earned on the principle and on interest received
Surplus Economic Units correct answers have funds left over after spending all they wish to
spend
Deficit Economic Units correct answers need to acquire additional funds to sustain their
operations
What is the primary market? correct answers Where deficit economic units sell new securities
Where securities are created
What is the secondary market? correct answers Where securities are traded by investors
What are intermediaries within the financial market? correct answers Commercial banks and
insurance companies help to facilitate the flow of funds.
Money Market vs Capital Market correct answers Money Market: Short Term securities with
bills
- Trade short term (1 year or less) debt instruments
- Treasury Bill (federal government)
- Certificates of Deposit (financial institutions)
- Commercial Paper (corporations with good credit)
4 basic areas of finance correct answers -corporate finance=business finance
-investments
-financial institutions
-international finance (exchange rates, country customs)
liquidity correct answers speed and ease of conversion to cash without significant loss in value
depreciation correct answers method to recognize the expense over a period of time instead of
just recognizing it in one period (matching principle)
book value correct answers Value of business based on books
market value correct answers true value, the price at which assets, liabilities, or stockholders
equity can be bought or sold
the income statement correct answers measures the performance over a specified period of time
(quarter, year, etc.)
-report revenues first and then deduct expenses
internal growth rate correct answers -how much a firm can grow assets using RE as the only
source of financing
-losing debt over time because growth is completely internal
sustainable growth rate correct answers -how much the firm can grow by using internally
generate funds and issuing debt to maintain a constant debt ratio
, present value correct answers the current value of future cash flows discounted at the appropriate
discount ratio
future value correct answers the amount an investment is worth after one or more periods
simple interest correct answers interest earned only one the principle amount
compound interest correct answers interest earned on the principle and on interest received
Surplus Economic Units correct answers have funds left over after spending all they wish to
spend
Deficit Economic Units correct answers need to acquire additional funds to sustain their
operations
What is the primary market? correct answers Where deficit economic units sell new securities
Where securities are created
What is the secondary market? correct answers Where securities are traded by investors
What are intermediaries within the financial market? correct answers Commercial banks and
insurance companies help to facilitate the flow of funds.
Money Market vs Capital Market correct answers Money Market: Short Term securities with
bills
- Trade short term (1 year or less) debt instruments
- Treasury Bill (federal government)
- Certificates of Deposit (financial institutions)
- Commercial Paper (corporations with good credit)
