BFIN 300 Exam Questions With Solutions
When a company introduces a product that competes with one of its own existing products, this
is called: B) cannibalism.
4. The primary function of a business is to: C) enhance shareholder wealth over the long
term.
5. An investor wishing to decrease volatility should purchase securities with B) lower risk
premiums.
8. A disadvantage of the internal rate of return method of valuing capital budgets is it: C)
assumes all cash flows are reinvested at the IRR.
12. The rate of return required by investors in the market for owning a bond is called the:
C) yield to maturity.
15. The terms of a bond issue are spelled out in the bond: B) indenture.
, BFIN 300 Exam Questions With Solutions
16. A cost that has already been paid, or the liability to pay has already been incurred is a(n):
B) sunk cost.
19. The ratio that measures how much an investor is willing to pay for a dollar of earnings is
known as a _____________ ratio. A) market value
21. Which of the following is not a disadvantage of the discounted payback period method?
It ignores the time value of money.
22. Management may be hesitant to initiate regular dividends because: A) dividends are
sticky.
27. A security's beta is described as: C) a measure of how the returns of that security co-
vary with the returns of the market.
28. To determine cash flows for a capital budget, we must consider: B) changes in net
working capital.
When a company introduces a product that competes with one of its own existing products, this
is called: B) cannibalism.
4. The primary function of a business is to: C) enhance shareholder wealth over the long
term.
5. An investor wishing to decrease volatility should purchase securities with B) lower risk
premiums.
8. A disadvantage of the internal rate of return method of valuing capital budgets is it: C)
assumes all cash flows are reinvested at the IRR.
12. The rate of return required by investors in the market for owning a bond is called the:
C) yield to maturity.
15. The terms of a bond issue are spelled out in the bond: B) indenture.
, BFIN 300 Exam Questions With Solutions
16. A cost that has already been paid, or the liability to pay has already been incurred is a(n):
B) sunk cost.
19. The ratio that measures how much an investor is willing to pay for a dollar of earnings is
known as a _____________ ratio. A) market value
21. Which of the following is not a disadvantage of the discounted payback period method?
It ignores the time value of money.
22. Management may be hesitant to initiate regular dividends because: A) dividends are
sticky.
27. A security's beta is described as: C) a measure of how the returns of that security co-
vary with the returns of the market.
28. To determine cash flows for a capital budget, we must consider: B) changes in net
working capital.
