FIN 306 MULTIPLE CHOICE ACTUAL EXAM
PAPER 2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ Primary Markets.
Answer: markets in which corporations raise funds through new issues of
securities
◍ Cash flows may differ compared to revenue from sales when:a. The
customer pays cash for the item purchased.b. The customer receives sixty
days credit for goods purchased.c. The restaurant pays for its produce with
cash.d. The cash accounting method is used..
Answer: b. the customer receives sixty days credit for goods purchased
◍ What are the Fed's objectives?.
Answer: 1. Conducting monetary policy2. Supervising and regulating
depository institutions3. Maintaining the stability of the financial system4.
Providing payment and other financial services to the U.S. gov, the public,
financial institutions, and foreign official institutions
◍ Stocks that are offered for sale in a secondary market that consists of a
network of dealers trading over computers are:a. illegalb. green sheet
stocksc. traded on the "over-the-counter market"d. more expensive than
exchange listed stocks.
Answer: c. traded on the "over-the-counter market"
◍ The periodic payment by businesses and consumers insured by insurance
companies to keep their policy in force is called a:a. actuaryb. reservec.
premiumd. annuity.
Answer: c. premium
◍ A Subchapter S corporation:a. is a large corporationb. has limited liability
, for its ownersc. is double taxedd. has unlimited liability for its owners.
Answer: b. has limited liability for for its owners
◍ In calculating earnings per share, EPS, net income, and earnings available to
common stockholders will be the same unless the corporation:a. has
long-term debt outstanding.b. has preferred stock outstanding paying a
preferred stock dividend.c. has sufficient retained earnings.d. pays a
common dividend..
Answer: b. has preferred stock outstanding paying a preferred stock
dividend
◍ Which of the following equations best describes net working capital?a. total
assets - total liabilitiesb. total assets - fixed assets - current liabilitiesc. cash
+ inventory-accounts payables.d fixed assets - long-term liabilities.
Answer: b. total assets- fixed assets- current liabilities
◍ A zero-coupon bond:a. usually pays interest semi-annuallyb. is issued with a
maturity of less than five yearsc. makes no periodic interest paymentsd. is
illegal to sell.
Answer: c. makes no periodic interest payments
◍ Money Market Instruments.
Answer: Treasury BillsFed Fund rateRepurchase AgreementsCommercial
PaperNegotiable Certificates of DepositsBanker Acceptances
◍ Money Markets.
Answer: markets that trade debt securities or instruments with maturities of
less than one year
◍ Savings and loans, credit unions, and many large life insurance companies
are "mutuals," which means:a. they are owned by their borrowing
customers.b. they are owned by their "saving" customers.c. the employees
of these institutions own the business.d. that the Federal government, as a
regulator, owns partial interest in the business..
Answer: b. they are owned by their "saving" customers
◍ Great Depression.
, Answer: (HH) , starting with collapse of the US stock market in 1929,
period of worldwide economic stagnation and depression. Heavy borrowing
by European nations from USA during WW1 contributed to instability in
European economies. Sharp declines in income and production as buying
and selling slowed down. Widespread unemployment, countries raised
tariffs to protect their industries. America stopped investing in Europe. Lead
to loss of confidence that economies were self adjusting, HH was blamed for
it
◍ Primary Reserves:a. include marketable securitiesb. include vault cash and
deposits held at the Federal Reservec. provide all the liquidity commercial
banks needd. include only Treasury securities.
Answer: b. include vault cash and deposits held at the Federal Reserve
◍ monetary policy.
Answer: Government policy that attempts to manage the economy by
controlling the money supply and thus interest rates.
◍ discount rate.
Answer: rate the Federal Reserve charges for loans to commercial banks
◍ "The primary financial goal of the business firm is to maximize the wealth
of the firm's owners." For a corporation, this statement means that managers
should focus on maximizing the wealth of its shareholders or its:a. market
valueb. sales revenuec. net incomed. minimize the risk.
Answer: a. market value
◍ Profit maximization as a goal of the firm:a. is an economic principle and not
an accounting oneb. is superior to other goals that could be pursuedc.
maximizes the wealth of the ownersd. does not consider cash flow or risk.
Answer: d. does not consider cash flow or risk
◍ U.
S. Treasury securities in order of increasing maturity are:a. Treasury bonds,
bills, and notes.b. Treasury bills, bonds, and notes.c. Treasury bills, notes,
and bonds.d. Treasury bills, stocks, and bonds..
PAPER 2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ Primary Markets.
Answer: markets in which corporations raise funds through new issues of
securities
◍ Cash flows may differ compared to revenue from sales when:a. The
customer pays cash for the item purchased.b. The customer receives sixty
days credit for goods purchased.c. The restaurant pays for its produce with
cash.d. The cash accounting method is used..
Answer: b. the customer receives sixty days credit for goods purchased
◍ What are the Fed's objectives?.
Answer: 1. Conducting monetary policy2. Supervising and regulating
depository institutions3. Maintaining the stability of the financial system4.
Providing payment and other financial services to the U.S. gov, the public,
financial institutions, and foreign official institutions
◍ Stocks that are offered for sale in a secondary market that consists of a
network of dealers trading over computers are:a. illegalb. green sheet
stocksc. traded on the "over-the-counter market"d. more expensive than
exchange listed stocks.
Answer: c. traded on the "over-the-counter market"
◍ The periodic payment by businesses and consumers insured by insurance
companies to keep their policy in force is called a:a. actuaryb. reservec.
premiumd. annuity.
Answer: c. premium
◍ A Subchapter S corporation:a. is a large corporationb. has limited liability
, for its ownersc. is double taxedd. has unlimited liability for its owners.
Answer: b. has limited liability for for its owners
◍ In calculating earnings per share, EPS, net income, and earnings available to
common stockholders will be the same unless the corporation:a. has
long-term debt outstanding.b. has preferred stock outstanding paying a
preferred stock dividend.c. has sufficient retained earnings.d. pays a
common dividend..
Answer: b. has preferred stock outstanding paying a preferred stock
dividend
◍ Which of the following equations best describes net working capital?a. total
assets - total liabilitiesb. total assets - fixed assets - current liabilitiesc. cash
+ inventory-accounts payables.d fixed assets - long-term liabilities.
Answer: b. total assets- fixed assets- current liabilities
◍ A zero-coupon bond:a. usually pays interest semi-annuallyb. is issued with a
maturity of less than five yearsc. makes no periodic interest paymentsd. is
illegal to sell.
Answer: c. makes no periodic interest payments
◍ Money Market Instruments.
Answer: Treasury BillsFed Fund rateRepurchase AgreementsCommercial
PaperNegotiable Certificates of DepositsBanker Acceptances
◍ Money Markets.
Answer: markets that trade debt securities or instruments with maturities of
less than one year
◍ Savings and loans, credit unions, and many large life insurance companies
are "mutuals," which means:a. they are owned by their borrowing
customers.b. they are owned by their "saving" customers.c. the employees
of these institutions own the business.d. that the Federal government, as a
regulator, owns partial interest in the business..
Answer: b. they are owned by their "saving" customers
◍ Great Depression.
, Answer: (HH) , starting with collapse of the US stock market in 1929,
period of worldwide economic stagnation and depression. Heavy borrowing
by European nations from USA during WW1 contributed to instability in
European economies. Sharp declines in income and production as buying
and selling slowed down. Widespread unemployment, countries raised
tariffs to protect their industries. America stopped investing in Europe. Lead
to loss of confidence that economies were self adjusting, HH was blamed for
it
◍ Primary Reserves:a. include marketable securitiesb. include vault cash and
deposits held at the Federal Reservec. provide all the liquidity commercial
banks needd. include only Treasury securities.
Answer: b. include vault cash and deposits held at the Federal Reserve
◍ monetary policy.
Answer: Government policy that attempts to manage the economy by
controlling the money supply and thus interest rates.
◍ discount rate.
Answer: rate the Federal Reserve charges for loans to commercial banks
◍ "The primary financial goal of the business firm is to maximize the wealth
of the firm's owners." For a corporation, this statement means that managers
should focus on maximizing the wealth of its shareholders or its:a. market
valueb. sales revenuec. net incomed. minimize the risk.
Answer: a. market value
◍ Profit maximization as a goal of the firm:a. is an economic principle and not
an accounting oneb. is superior to other goals that could be pursuedc.
maximizes the wealth of the ownersd. does not consider cash flow or risk.
Answer: d. does not consider cash flow or risk
◍ U.
S. Treasury securities in order of increasing maturity are:a. Treasury bonds,
bills, and notes.b. Treasury bills, bonds, and notes.c. Treasury bills, notes,
and bonds.d. Treasury bills, stocks, and bonds..
