FIN 306 MULTIPLE CHOICE CERTIFICATION
SCRIPT 2026 QUESTIONS WITH SOLUTIONS
GRADED A+
◍ Recently, you discovered a convertible, callable bond with a semiannual
coupon of 5 percent. If you purchase this bond you will have the right
to:Multiple Choice
A. )force the issuer to repurchase the bond prior to maturity.
B. )convert the bond into equity shares.
C. )defer all taxable income until the bond matures.
D. )convert the bond into a perpetuity paying 5 percent.
E. )have the principal amount adjusted for inflation..
Answer: B.)convert the bond into equity shares.
◍ Future Value (FV).
Answer: The amount an investment is worth after one or more periods
◍ Which one of the following will decrease the net present value of a
project?Multiple Choice
A. )Increasing the value of each of the project's discounted cash inflows
B. )Moving each cash inflow forward one time period, such as from Year 3
to Year 2
C. )Decreasing the required discount rate
D. )Increasing the project's initial cost at time zero
E. )Increasing the amount of the final cash inflow.
Answer: D.)Increasing the project's initial cost at time zero
◍ Generally Accepted Accounting Principles.
Answer: The common set of standards and procedures by which audited
financial statements are prepared
, ◍ Noncash Items.
Answer: Expenses charged against revenues that do not directly affect cash
flow, such as depreciation
◍ The final decision on which one of two mutually exclusive projects to
accept ultimately depends upon which one of the following?Multiple Choice
A. )Initial cost of each project
B. )Timing of the cash inflows
C. )Total cash inflows of each project
D. )Net present value
E. )Length of each project's life.
Answer: D.)Net present value
◍ An agent who arranges a transaction between a buyer and a seller of equity
securities is called a:Multiple Choice
A. )broker.
B. )floor trader.
C. )capitalist.
D. )principal.
E. )dealer..
Answer: A.) broker
◍ Average Tax Rate.
Answer: Total taxes paid divided by total taxable income
◍ Which of the following are advantages of the payback method of project
analysis?Multiple Choice
A. )Considers time value of money, liquidity bias
B. )Liquidity bias, arbitrary cutoff point
C. )Liquidity bias, ease of use
D. )Ignores time value of money, ease of use
E. )Ease of use, arbitrary cutoff point.
Answer: C.)Liquidity bias, ease of use
◍ Operating Cash Flow.
Answer: Cash generated from a firm's normal business activities
SCRIPT 2026 QUESTIONS WITH SOLUTIONS
GRADED A+
◍ Recently, you discovered a convertible, callable bond with a semiannual
coupon of 5 percent. If you purchase this bond you will have the right
to:Multiple Choice
A. )force the issuer to repurchase the bond prior to maturity.
B. )convert the bond into equity shares.
C. )defer all taxable income until the bond matures.
D. )convert the bond into a perpetuity paying 5 percent.
E. )have the principal amount adjusted for inflation..
Answer: B.)convert the bond into equity shares.
◍ Future Value (FV).
Answer: The amount an investment is worth after one or more periods
◍ Which one of the following will decrease the net present value of a
project?Multiple Choice
A. )Increasing the value of each of the project's discounted cash inflows
B. )Moving each cash inflow forward one time period, such as from Year 3
to Year 2
C. )Decreasing the required discount rate
D. )Increasing the project's initial cost at time zero
E. )Increasing the amount of the final cash inflow.
Answer: D.)Increasing the project's initial cost at time zero
◍ Generally Accepted Accounting Principles.
Answer: The common set of standards and procedures by which audited
financial statements are prepared
, ◍ Noncash Items.
Answer: Expenses charged against revenues that do not directly affect cash
flow, such as depreciation
◍ The final decision on which one of two mutually exclusive projects to
accept ultimately depends upon which one of the following?Multiple Choice
A. )Initial cost of each project
B. )Timing of the cash inflows
C. )Total cash inflows of each project
D. )Net present value
E. )Length of each project's life.
Answer: D.)Net present value
◍ An agent who arranges a transaction between a buyer and a seller of equity
securities is called a:Multiple Choice
A. )broker.
B. )floor trader.
C. )capitalist.
D. )principal.
E. )dealer..
Answer: A.) broker
◍ Average Tax Rate.
Answer: Total taxes paid divided by total taxable income
◍ Which of the following are advantages of the payback method of project
analysis?Multiple Choice
A. )Considers time value of money, liquidity bias
B. )Liquidity bias, arbitrary cutoff point
C. )Liquidity bias, ease of use
D. )Ignores time value of money, ease of use
E. )Ease of use, arbitrary cutoff point.
Answer: C.)Liquidity bias, ease of use
◍ Operating Cash Flow.
Answer: Cash generated from a firm's normal business activities
