Essay on Finance Test with Answers

1060 Words Feb 2nd, 2014 5 Pages
Test 1

Question 1
0 out of 1 points

Which of the following securities will likely have the highest liquidity premium?
Answer

Selected Answer: a.
U.S. Treasury Bond maturing in 2027
Correct Answer: c.
Aaa-rated corporate bond maturing in 2015 not actively traded

Question 2
0 out of 2 points

The curse of competitive markets
Answer

Selected Answer: a.
Means that companies cannot earn exceptional profits.
Correct Answer: c.
May be lessened by obtaining patents for new ideas that protect companies from competitors.

Question 3
2 out of 2 points

Two assets, A and B, have the same expected return (10%) and the same level of risk (average). Which of the following
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facilitating indirect transfers from savers (investing public) to borrowers (corporations needing capital).
Correct Answer: a. facilitating indirect transfers from savers (investing public) to borrowers (corporations needing capital).

Question 15
2 out of 2 points

The true owners of the corporation are the:
Answer

Selected Answer: d. common stockholders.
Correct Answer: d. common stockholders.

Question 16
0 out of 1 points

Which of the following forms of business organizations provide limited liability to all its owners?
Answer

Selected Answer: a. general partnership
Correct Answer: c. corporation Question 17
1 out of 1 points

In finance, we assume that investors are generally
Answer

Selected Answer: b. averse to risk.
Correct Answer: b. averse to risk.

Question 18
3 out of 3 points

You invest $1,000 at a variable rate of interest. Initially the rate is 4% compounded annually for the first year, and the rate increases one-half of one percent annually for five years (year two's rate is 4.5%, year three's rate is 5.0%, etc.). How much will you have in the account after five years?
Answer

Selected Answer: a.
$1,276
Correct Answer: a.
$1,276

Question

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