FIN 306 MULTIPLE CHOICE EXAM | QUESTIONS AND ANSWERS | 2026 UPDATED | 100%
CORRECT.
Moving from a future value to a present value is called compounding. - (answer)False
When addressing agency problems in the firm, a high salary is better than stock ownership. -
(answer)False
On a balance sheet, Assets = Liabilities + Equity. - (answer)True
Managers can use net income to make interest payments to bondholders. - (answer)False
The NASDAQ is an example of a secondary market. - (answer)True
If the payment and discount rate are both positive, an ordinary annuity has a lower present value than
an otherwise equivalent annuity due. - (answer)True
You computer shareholder wealth as stock price x shares outstanding. - (answer)True
In its IPO in 2019, Zoom received cash from investors in exchange for new shares of stock. -
(answer)True
The bondholders are the owners of a firm. - (answer)False
The goal of a financial manager is:
a. Maximize cash flow
b. Maximize shareholder wealth
c. Maximize earnings
d. Maximize revenue - (answer)Maximize shareholder wealth
, FIN 306 MULTIPLE CHOICE EXAM | QUESTIONS AND ANSWERS | 2026 UPDATED | 100%
CORRECT.
Where do a company's bonds appear on its balance sheet?
a. Short term assets
b. Liabilities
c. Equity
d. Operations - (answer)Liabilities
Consider a perpetuity with a positive payment and discount rate. All else equal, what happens to PV if all
payments are shifted forward one year such that the first payment happens today?
a. PV does not change
b. PV increases
c. PV can either increase or decrease
d. PV decreases - (answer)PV increases
If you submit an order through an online broker to purchase 10 shares of Zoom, who would receive the
money you pay for the shares?
a. The previous owner of the shares
b. Zoom
c. Your broker
d. The government - (answer)The previous owner of the shares
Holding the annual cash flow and interest rate constant across all these options, which has the highest
present value? Assume the cash flow and interest rate are both positive numbers.
a. A perpetuity whose first payment is two years from today
b. An ordinary T-period annuity
CORRECT.
Moving from a future value to a present value is called compounding. - (answer)False
When addressing agency problems in the firm, a high salary is better than stock ownership. -
(answer)False
On a balance sheet, Assets = Liabilities + Equity. - (answer)True
Managers can use net income to make interest payments to bondholders. - (answer)False
The NASDAQ is an example of a secondary market. - (answer)True
If the payment and discount rate are both positive, an ordinary annuity has a lower present value than
an otherwise equivalent annuity due. - (answer)True
You computer shareholder wealth as stock price x shares outstanding. - (answer)True
In its IPO in 2019, Zoom received cash from investors in exchange for new shares of stock. -
(answer)True
The bondholders are the owners of a firm. - (answer)False
The goal of a financial manager is:
a. Maximize cash flow
b. Maximize shareholder wealth
c. Maximize earnings
d. Maximize revenue - (answer)Maximize shareholder wealth
, FIN 306 MULTIPLE CHOICE EXAM | QUESTIONS AND ANSWERS | 2026 UPDATED | 100%
CORRECT.
Where do a company's bonds appear on its balance sheet?
a. Short term assets
b. Liabilities
c. Equity
d. Operations - (answer)Liabilities
Consider a perpetuity with a positive payment and discount rate. All else equal, what happens to PV if all
payments are shifted forward one year such that the first payment happens today?
a. PV does not change
b. PV increases
c. PV can either increase or decrease
d. PV decreases - (answer)PV increases
If you submit an order through an online broker to purchase 10 shares of Zoom, who would receive the
money you pay for the shares?
a. The previous owner of the shares
b. Zoom
c. Your broker
d. The government - (answer)The previous owner of the shares
Holding the annual cash flow and interest rate constant across all these options, which has the highest
present value? Assume the cash flow and interest rate are both positive numbers.
a. A perpetuity whose first payment is two years from today
b. An ordinary T-period annuity
