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Sophia Finance 100 Milestone- FINAL Exam Review.
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This document is a comprehensive exam review for Sofia Finance 100. Questions and accurate answers provived. Graded A+
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Sophia Finance Milestone- FINALWhich of the following is an example of an operational risk for a
company that manufactures automobiles?
A national car rental agency backing out of a contract to buy a certain
volume of new cars
Damage to completed cars held on a storage lot
A state tax increase that makes buying and registering a car more
expensive
Rising interest rates that affect the terms of car loans, thereby
decreasing demand
CONCEPT
Risk and Capital Budgeting
2
Which of the following describes equity securities, rather than debt
securities or derivatives?
They typically generate the highest returns of the three types of
marketable securities.
They carry more risk than debt securities, but less than derivatives.
They offer a fixed rate of return.
They are best for hedging against changes in currency exchange rates.
CONCEPT
Securities Management
3
Select the pairing that is correctly matched.
, Common stock: the value of the stock is dependant upon the overall
value of the company
Preferred stock: stockholder receives interest from the issuer
Common stock: the issuer must honor any missed dividend payments
Preferred stock: cannot be converted for common stock shares
CONCEPT
Rules and Rights of Common and Preferred Stock
4
Which of the following is an example of an agency conflict?
Board oversight
Shareholder voting rights
Managerial self-dealing
Manager's salary
CONCEPT
Agency and Conflicts of Interest
5
The capital asset pricing model is useful for __________.
assessing the ratio between risk and return on an investment
valuing the net present value of a project
determining the discount rate on a company's long-term debt
projecting a company's future performance
CONCEPT
Approaches to Calculating the Cost of Capital
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