fIN 419 fINAL EXAM
fIN 419 fINAL EXAM
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Date Created: 11/06/15
1 Michael T Ryan FIN 419 Dana WIlliams FIN 419 Final Exam PLEASE HIGHLIGHT THE CORRECT ANSWER Finance is concerned with the process institutions markets and instruments involved in the transfer of money among and between individuals businesses and government True False The president or chief executive officer is elected by the firm s stockholders and has ultimate authority to guide corporate affairs and make general policy True False 3 Finance can be defined as a the system of debits and credits b the science of the production distribution and consumption of wealth c the art and science of managing money d the art of merchandising products and services 4 Under which of the following legal forms of organization is ownership readily transferable a Sole proprietorships b Partnerships c Limited partnership d Corporation 5 is the chance of loss or the variability of returns associated with a given asset a Return b Value 0 M d Probability 6 Primea grade commercial paper will most likely have a higher annual return than a a Treasurv bill b a preferred stock c a common stock d an investmenta grade bond 7 Timea value of money is based on the belief that a dollar that will be received at some future date is worth more than a dollar today True False 8 In general with an amortized loan the payment amount grows over the life of the loan the principal portion of each payment grows over the life of the loan and the interest portion declines over the life of the loan True False Michael T Ryan FIN 419 Dana WIlliams 9 An annuity With an infinite life is called an a perpetuity b primia c indefinite d deep discount 10 The isare a graphic depiction of the term structure of interest rates a yield curve b supply and demand functions c riska return profile d aggregate demand curve 11 Generally longterm loans have higher interest rates than shortterm loans because of a the general expectation of higher future rates of in ation b lender preferences for shorterterm more liquid loans c greater demand for longterm rather than shortterm loans relative to the supply of such loans 1 all of the above 12 Preferred stock is often considered a quasia debt since it yields a fixed periodic payment True False 13 Unlike creditors lenders equity holders both preferred and common stockholders are owners of the firm True False 14 The claims of the equity holders on income have priority over a the claims of the preferred stockholders b the claims of the creditors c the claims of the unsecured creditors 1 no one 15 The opportunity for management to purchase a certain number of shares of their firm s common stock at a specified price over a certain period of time is a a stock option b warrant c prea emptive right d stock right Michael T Ryan FIN 419 Dana WIlliams
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