D076- ALL UNIT TESTS UPDATED Actual Exam Questions and CORRECT Answers
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Course
D076
Institution
D076
D076- ALL UNIT TESTS UPDATED
Actual Exam Questions and CORRECT
Answers
What are the main services offered by financial institutions? - CORRECT ANSWER-
Accepting a wide variety of deposits, offering investment products, providing loans, and
brokering financial transactions
What is the main ...
D076- ALL UNIT TESTS UPDATED
Actual Exam Questions and CORRECT
Answers
What are the main services offered by financial institutions? - CORRECT ANSWER-
✔✔Accepting a wide variety of deposits, offering investment products, providing loans, and
brokering financial transactions
What is the main objective of personal financial goals? - CORRECT ANSWER- ✔✔To
maximize individual utility
Which task does the financial manager of a firm perform that involves the issuance of new
stocks and bonds? - CORRECT ANSWER- ✔✔Making financing decisions
Why is understanding the definition of finance important in managing personal finances? -
CORRECT ANSWER- ✔✔It helps individuals compare the costs and benefits of an action to
determine whether to take that action.
In which type of market would a company issue bonds or stocks for the first time? -
CORRECT ANSWER- ✔✔Primary market
Which type of financial institution is a mutual fund? - CORRECT ANSWER- ✔✔Investment
institution
Which financial institution specializes in managing and administering retirement funds? -
CORRECT ANSWER- ✔✔Pension funds
Which type of economic indicator is the consumer price index? - CORRECT ANSWER-
✔✔Lagging indicator
What does the term ethical refer to? - CORRECT ANSWER- ✔✔The accepted standards of
conduct that guide a person's behavior
,A company's officers and board of directors are selling their stocks in the firm at higher prices
due to false accounting reports that made the stock seem more valuable than it truly was.
Which ethical issue is occurring in this situation? - CORRECT ANSWER- ✔✔Agency
problem due to conflicting interests
Which area of finance involves deciding which assets to invest in to create wealth in the
future? - CORRECT ANSWER- ✔✔Investments
What is the main goal of a firm? - CORRECT ANSWER- ✔✔To maximize owner wealth
What are financial managers doing if they evaluate whether it is worth spending money on
research and development for a new product? - CORRECT ANSWER- ✔✔Making an
investment decision
Which type of financial market is where securities such as stocks and bonds are traded after
their initial issuance? - CORRECT ANSWER- ✔✔The secondary financial market
What type of financial institution is an insurance company? - CORRECT ANSWER-
✔✔Contractual
Which financial institution invests funds contributed by a company to provide retirement
funds for the company's employees? - CORRECT ANSWER- ✔✔Pension fund
Personal income is which type of economic indicator? - CORRECT ANSWER-
✔✔Coincident
Which term refers to something that conforms with accepted standards of conduct that guide
a person's behavior? - CORRECT ANSWER- ✔✔Ethical
What is the second step in finding a solution to an ethical dilemma? - CORRECT ANSWER-
✔✔Consider alternative courses of action
Which type of interest rate includes interest on interest in addition to interest on the
principal? - CORRECT ANSWER- ✔✔Compound interest
, How can agency problems be reduced through corporate control? - CORRECT ANSWER-
✔✔Executive compensation
What is the rate at which the average price level of particular goods and services in an
economy increases over a period of time? - CORRECT ANSWER- ✔✔Inflation rate
You signed an apartment contract today. You are going to pay $1,500 at the beginning of each
month for the next 12 months, starting today. What type of cash flows is this contract? -
CORRECT ANSWER- ✔✔An annuity due
What is the term for the return over the entire period that an investor owns a financial
security? - CORRECT ANSWER- ✔✔Holding period return
What is used to measure total risk? - CORRECT ANSWER- ✔✔Standard deviation
What is the term for the risk that changes in interest rates will impact the value of a bond? -
CORRECT ANSWER- ✔✔Interest rate risk
What is another name for the cost of capital? - CORRECT ANSWER- ✔✔Discount rate
What is the name for the minimum rate of return that an investor or lender will accept for
investments? - CORRECT ANSWER- ✔✔Required rate of return
The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real
interest rate? - CORRECT ANSWER- ✔✔5%
Which action reduces the future value of cash flows? - CORRECT ANSWER- ✔✔Receive
all cash flows later than expected.
How is risk defined in finance? - CORRECT ANSWER- ✔✔The possibility that the realized
or actual return will differ from what we expect
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