Fin 301 Multiple Choice Questions Quiz 1 with Latest Update
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Course
FIN 301
Institution
FIN 301
Which of the following concerning the relationship between risk and return is correct?
A. A risk taker investor would prefer a stock with an expected 10% return and a standard deviation of 10% to a stock with an expected return of 10% with a standard deviation of 20%
B. Investors generally demand...
Fin 301 Multiple Choice Questions Quiz
1 with Latest Update
Which of the following concerning the relationship between risk and return is correct?
A. A risk taker investor would prefer a stock with an expected 10% return and a
standard deviation of 10% to a stock with an expected return of 10% with a standard
deviation of 20%
B. Investors generally demand higher return for less risky investments
C. Riskier investments tend to have lower returns
D. Safer investments historically provide the highest returns
E. A risk averse investor would prefer a stock with an expected 10% return and a
standard deviation of 10% to a stock with an expected return of 10% with a standard
deviation of 20% - Answer-E
Calculate the stock return from the following information:
Beginning Price: $40.00
Price 1 Year Later: $48.50
Annual dividend: $3.50
A. 21.25%
B. 24.74%
C. 17.53%
D. 8.75%
E. 30.00% - Answer-E
If Nissan invests in a new plant to manufacture the new F-150, it is an example of which
corporate financial decision?
A. Risk Management
B. Capital Structure
C. Capital Budgeting
D. Growth and Acquisition Strategy
E. Working Capital Management - Answer-C
Which of the following is one of the three primary areas of finance?
A. Tax
B. Institutions & Markets
C. Audit & Assurance
D. Financial Accounting
E. International Finance - Answer-B
According to the Theory of Efficient Capital Markets:
A. Stock prices are not affected by new information
B. Current stock prices reflect all publicly available information
C. Stock prices adjust to new information slowly over time
D. Stock prices only react instantly to positive financial information
, E. Investors can easily beat the market - Answer-B
Given the following information, a rational investor would most likely invest in which
stock?>
Stock A: Mean Return - 5%; Standard Deviation - 9%
Stock B: Mean Return - 5%; Standard Deviation - 12%>
A. Stock A because it is riskier than Stock B
B. Stock A because it is not as risky as Stock B
C. Stock B because it is riskier than Stock A
D. Stock B because it is not as risky as Stock A
E. No difference because they have the same rate of return - Answer-B
Which of the following is an advantage of a Corporation?
A. Ease of formation
B. Minimized taxes
C. Limited liability to owners
D. Higher market share
E. Greater Shareholder Value - Answer-C
What is a reason that a start-up may organize as a Corporation?
A. Minimized Taxes
B. Ability to raise capital
C. Ease of formation
D. Minimize labor negotiations
E. Limit transfer of ownership - Answer-B
The time value of money implies that:
A. A dollar today is worth MORE than a dollar tomorrow
B. A dollar today is worth LESS than a dollar tomorrow
C. The value of money does not change over time
D. Investors are indifferent to receiving a dollar today vs. a dollar in the future
E. The value of a dollar tomorrow depends on many things, but time is not one of them -
Answer-A
Which of the following is a tenet of good management according to Gordon Gekko?
A. Managerial efficiency is not important
B. Management is not accountable to shareholders
C. Management should have ownership in the company
D. Shareholder activism hurts a company's stock price
E. Managers that have a stake in the company create a greater potential for the agency
problem - Answer-C
Which of the following companies has the highest market capitalization?
A. Share Price: $110, Shares Outstanding: 30 million, P/E Ratio: 7x
B. Share Price: $60, Shares Outstanding: 100 million, P/E Ratio: 9x
C. Share Price: $70, Shares Outstanding: 50 million, P/E Ratio: 16x
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