Finance Test with Answers
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 statements is true?
Answer
Selected Answer: d.
A combination of assets A and B will have the same expected return (10%) as either asset A or asset B, but may have less than average risk depending on how the cash flows from each asset move together.
Correct Answer: d.
A combination of assets A and B will have the same expected return (10%) as either asset A or asset B, but may have less than average risk depending on how the cash flows from each asset move together.
Question 4
2 out of 2 points
When a company repurchases its own common stock, it is likely that
Answer
Selected Answer: a. the stock price will increase because the company views the stock as undervalued.
Correct Answer: a. the stock price will increase because the company views the stock as undervalued.
Question 5
3 out of 3 points
To compound $100 quarterly for 20 years at 8%, we must use:
Answer
Selected Answer: d.
80 periods at 2%.
Correct Answer: d.
80 periods at 2%.
Question 6
2 out of 2 points
The stock market with the most stringent listing requirements is the
Answer
Selected Answer: a.
New York Stock Exchange (NYSE).
Correct Answer: a.
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 statements is true?
Answer
Selected Answer: d.
A combination of assets A and B will have the same expected return (10%) as either asset A or asset B, but may have less than average risk depending on how the cash flows from each asset move together.
Correct Answer: d.
A combination of assets A and B will have the same expected return (10%) as either asset A or asset B, but may have less than average risk depending on how the cash flows from each asset move together.
Question 4
2 out of 2 points
When a company repurchases its own common stock, it is likely that
Answer
Selected Answer: a. the stock price will increase because the company views the stock as undervalued.
Correct Answer: a. the stock price will increase because the company views the stock as undervalued.
Question 5
3 out of 3 points
To compound $100 quarterly for 20 years at 8%, we must use:
Answer
Selected Answer: d.
80 periods at 2%.
Correct Answer: d.
80 periods at 2%.
Question 6
2 out of 2 points
The stock market with the most stringent listing requirements is the
Answer
Selected Answer: a.
New York Stock Exchange (NYSE).
Correct Answer: a.