FIN 320 TEST PAPER EXAM 2025/2026 QUESTIONS AND
SOLUTIONS GRADED A+ TIP
✔✔If you receive $100,000 in retirement and are in a 26% tax bracket, how much will
you receive after tax? - ✔✔$74,000
✔✔A ________ is a trust that distributes income according to need, as determined by
the discretion of the trustee rather than according to some preset formula. -
✔✔sprinkling trust
✔✔Pat and John want to reduce the size of their by gifting their four grandchildren and
two children the maximum tax free amount per year for the next five years. How much
can they gift, tax free, each year? - ✔✔$168,000
✔✔Ingrid is single with no dependents. She has been in the hospital with a coma for the
last 2 weeks. Her bills are piling up and her rent on her apartment is due. Who is legally
empowered to take care of her banking and bill paying while she is incapacitated? -
✔✔Whoever is named in her durable power of attorney
✔✔Herbert Dix picked up a booklet at his attorney's office that described estate
planning. All of the following were included as primary objectives of estate planning
except - ✔✔estate planning involves all of the above objectives.
✔✔You and your spouse wish to give each of your three grandchildren a yearly
tax-free gift from your estate. If you give each of your three grandchildren the maximum
amount allowed by law, what is the total amount that you as a couple would pay out in
gifts in 2017? - ✔✔$84,000 per year
✔✔At the end of each year for 25 years you deposit $365 in an account that earns 12%
interest. If instead you had begun saving earlier, and had deposited $365 in the account
each year for 50 years, how much more money would you have on deposit? - ✔✔
$827,339.80
✔✔According to your textbook, which is a typical financial event that recent graduates
may face during their first decade out of college? - ✔✔all of the above
✔✔According to your text, which of the following is true regarding employment in
today's world? - ✔✔Reinventing and upgrading your skills is a necessity in today's
business world.
✔✔The debt limit ratio is - ✔✔total monthly nonmortgage payments divided by total
monthly take-home
pay.
, ✔✔At the beginning of 2016, according to CreditCards.com and Cardweb.com, the
average credit card debt per household with at least one credit card was $16,048, up
from $2,985 in 1990. - ✔✔True
✔✔Any bond that has a bond rating that is below investment grade is known as a
speculative bond or: - ✔✔junk bond
✔✔What is the value of a $1,000 par value 6% coupon bond with 7 years remaining to
maturity assuming annual coupon payments and a market rate of 9% on similar risk
bonds? - ✔✔$849.01
✔✔A legal document administered by a trustee that provides specific details on a bond
issue and the firm's responsibilities to bondholders is called a(n): - ✔✔indenture.
✔✔What is the market price of a $1,000 face value bond quoted at 97 ½%? -
✔✔$975.00
✔✔For most Americans the single largest investment they make is in: - ✔✔home
ownership.
✔✔Which of the following is NOT considered an investment? - ✔✔Which of the
following is NOT considered an investment?
✔✔What is the yield to maturity on a zero coupon bond currently selling for $527.32 that
has a $1,000 par value and will mature in 8 years? - ✔✔8.33%.
✔✔A zero coupon bond has a $1,000 par value and matures in 5 years. What is the
value of this bond if the market rate of interest on similar risk bonds is 10%? -
✔✔$620.92
✔✔All other things equal, a corporation will pay a __________ coupon rate on
__________ bonds. - ✔✔higher, higher risk
✔✔The present value of a bond's __________ determines the value of the bond. -
✔✔coupon payment and maturity value
✔✔If the inflation rate increases by 2%, the __________ of a Treasury Inflation-
Protected Security will increase by 2%. - ✔✔par value
✔✔As market interest rates increase, the value of a bond will __________ all other
things equal. - ✔✔decrease
SOLUTIONS GRADED A+ TIP
✔✔If you receive $100,000 in retirement and are in a 26% tax bracket, how much will
you receive after tax? - ✔✔$74,000
✔✔A ________ is a trust that distributes income according to need, as determined by
the discretion of the trustee rather than according to some preset formula. -
✔✔sprinkling trust
✔✔Pat and John want to reduce the size of their by gifting their four grandchildren and
two children the maximum tax free amount per year for the next five years. How much
can they gift, tax free, each year? - ✔✔$168,000
✔✔Ingrid is single with no dependents. She has been in the hospital with a coma for the
last 2 weeks. Her bills are piling up and her rent on her apartment is due. Who is legally
empowered to take care of her banking and bill paying while she is incapacitated? -
✔✔Whoever is named in her durable power of attorney
✔✔Herbert Dix picked up a booklet at his attorney's office that described estate
planning. All of the following were included as primary objectives of estate planning
except - ✔✔estate planning involves all of the above objectives.
✔✔You and your spouse wish to give each of your three grandchildren a yearly
tax-free gift from your estate. If you give each of your three grandchildren the maximum
amount allowed by law, what is the total amount that you as a couple would pay out in
gifts in 2017? - ✔✔$84,000 per year
✔✔At the end of each year for 25 years you deposit $365 in an account that earns 12%
interest. If instead you had begun saving earlier, and had deposited $365 in the account
each year for 50 years, how much more money would you have on deposit? - ✔✔
$827,339.80
✔✔According to your textbook, which is a typical financial event that recent graduates
may face during their first decade out of college? - ✔✔all of the above
✔✔According to your text, which of the following is true regarding employment in
today's world? - ✔✔Reinventing and upgrading your skills is a necessity in today's
business world.
✔✔The debt limit ratio is - ✔✔total monthly nonmortgage payments divided by total
monthly take-home
pay.
, ✔✔At the beginning of 2016, according to CreditCards.com and Cardweb.com, the
average credit card debt per household with at least one credit card was $16,048, up
from $2,985 in 1990. - ✔✔True
✔✔Any bond that has a bond rating that is below investment grade is known as a
speculative bond or: - ✔✔junk bond
✔✔What is the value of a $1,000 par value 6% coupon bond with 7 years remaining to
maturity assuming annual coupon payments and a market rate of 9% on similar risk
bonds? - ✔✔$849.01
✔✔A legal document administered by a trustee that provides specific details on a bond
issue and the firm's responsibilities to bondholders is called a(n): - ✔✔indenture.
✔✔What is the market price of a $1,000 face value bond quoted at 97 ½%? -
✔✔$975.00
✔✔For most Americans the single largest investment they make is in: - ✔✔home
ownership.
✔✔Which of the following is NOT considered an investment? - ✔✔Which of the
following is NOT considered an investment?
✔✔What is the yield to maturity on a zero coupon bond currently selling for $527.32 that
has a $1,000 par value and will mature in 8 years? - ✔✔8.33%.
✔✔A zero coupon bond has a $1,000 par value and matures in 5 years. What is the
value of this bond if the market rate of interest on similar risk bonds is 10%? -
✔✔$620.92
✔✔All other things equal, a corporation will pay a __________ coupon rate on
__________ bonds. - ✔✔higher, higher risk
✔✔The present value of a bond's __________ determines the value of the bond. -
✔✔coupon payment and maturity value
✔✔If the inflation rate increases by 2%, the __________ of a Treasury Inflation-
Protected Security will increase by 2%. - ✔✔par value
✔✔As market interest rates increase, the value of a bond will __________ all other
things equal. - ✔✔decrease
