FIN 3005 Final Exam Questions And Correct Answer Verified Solutions.
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Course
FIN.
Institution
FIN.
A 2 for 1 stock split gives the stockholder __________.
A. twice as many shares at double the previous price
B. twice as many shares at half the previous price
C. half as many shares at twice the previous price
D. half as many shares at double the previous price - correct answer ...
A 2 for 1 stock split gives the stockholder __________.
A. twice as many shares at double the previous price
B. twice as many shares at half the previous price
C. half as many shares at twice the previous price
D. half as many shares at double the previous price - correct answer B
What concept involves earning earning interest on interest in addition to interest on the principal or
initial investment?
A. discounting
B. the principal value
C. inflation
D. compounding - correct answer D
__________ is a nation's output of goods and services achieved over a specified period of time, such as
one year.
A. net exports of goods and services
B. GDP
C. government expenditures including gross investment
D. PCE - correct answer B
What is the present value of the following stream of cash flows using a discount rate of 10%:
-100, 100, 200, 300, 300, 200
, A. $1000
B. $1,200
C. 711
D. 811 - correct answer C
Assume a stock has a dividend of $2.75, a growth rate of 6% and a required return of 12%. What is the
value of this stock using the DDM model discussed in class?
A. 45.83
B. 40
C. 22.92
D. unable to determine with information provided - correct answer A
An important and carefully regulated piece of information that details the issuer's finances and must be
provided to each buyer is __________.
A. the IPO
B. the due diligence
C. the prospectus
D. the index - correct answer C
A one year U.S. Treasury security has a nominal interest rate of 5%. If the expected real rate of interest
is 3%, and is expected to rise in the future, what is the expected annual inflation rate now?
A. 3%
B. 2%
C. 5%
D. 8% - correct answer B
__________ is the term for the principal amount that the issuer is obligated to repay at maturity.
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