FIN 221 Exam 1 Questions with Correct Answers Bundled Package

Which of the following statements is NOT correct? Correct Answer An investment that compounds interest semiannually, and has a nominal rate of 10%, will have an effective rate less than 10% Which of the following investments provides the highest effective rate of return? Correct Answer An investm...

Discounting Correct Answer the process of calculating the present value of a cash flow to be received or paid in the future. Compounding, which is the process of determining the future, or terminal, value of a current cash flow, is the opposite of discounting. Time value of money Correct Answer T...

Insurance Correct Answer Protection against possible financial loss Insurer Correct Answer a risk-sharing firm that agrees to assume financial responsibility for losses that may result from an insured risk Types of Risks Correct Answer 1. Risk 2. Peril 3. Hazard Risk Correct Answer uncert...

Which of the following is true if a company misses a dividend payment on cumulative preferred stock? Correct Answer the current and past missed preferred stock dividend payments must be made before a common stock dividend payment can be made Which of the following would be a reasonable estimate f...

What is a firm's intrinsic value? Correct Answer an estimate of a stock's "true" value based on accurate risk and return data; it can be estimated but not measured precisely What is a firm's current stock price? Correct Answer it's market price-the value based on perceived but possibly inc...

Steps for a personal financial plan Correct Answer 1. Determine current financial situations 2. Develop financial goals 3. Identify alternative courses of action 4. Evaluate alternatives 5. Create and implement your financial action plan 6. Review and revise your financial plan Future value ...

Income Statement Correct Answer Gives details about the firm's sales, costs, and profits for the past accounting period. Annual Report Correct Answer Is required by the SEC and includes the audited document that shows the company's financial results for the past year and management's discussio...

Sarbanes-Oxley Act Correct Answer A law passed by Congress that requires the CEO and CFO to certify that their firm's financial statements are accurate Proprietorship Correct Answer An unincorporated business owned by one individual Partnership Correct Answer An unincorporated business owned ...