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FINC 409: Chapter 1 Practice Exam Questions With 100% Correct Answers
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FINC 409: Chapter 1 Practice Exam Questions With 100% Correct Answers
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FINC 409: Chapter 1 Practice ExamQuestions With 100% Correct Answers
Finance is the study of how individuals, institutions, and businesses
acquire, spend and manage money and other financial resources. - -
correct answer ✅T
Financial markets provide the mechanism for allocating financial
resources or funds from savers to borrowers. - - correct answer ✅T
The goal of the financial manager in a profit-seeking organization
should be to maximize the owners' wealth. - - correct answer ✅T
The secondary securities markets are involved in creating and
issuing new securities, mortgages, and other claims to wealth. - -
correct answer ✅F
Money markets are the markets where debt securities with
maturities of one year or less are issued and traded. - - correct
answer ✅T
One of the most significant functions of the monetary system
within the financial system is the creation of money, which serves
as a medium of exchange. - - correct answer ✅T
,FINC 409: Chapter 1 Practice Exam
Questions With 100% Correct Answers
Personal finance is the study of how growth-driven performance-
focused, early-stage firms raise financial capital and manage
operations and assets. - - correct answer ✅F
Personal finance is the study of how individuals prepare for
financial emergencies, protect against premature death and
property losses, and accumulate wealth. - - correct answer ✅T
An effective financial system is a complex mix of government and
policy makers, a monetary system, financial institutions, and
financial markets that interact to expedite the flow of financial
capital from savings into investment. - - correct answer ✅T
Capital markets are markets where debt securities with maturities
of greater than one year and equity are issued and traded. - -
correct answer ✅T
Money markets are markets where equity securities and debt
securities with maturities of greater than one are traded. - - correct
answer ✅F
12. The six principles of finance include (1) Money has a time value,
(2) Higher returns are expected for taking on more risk, (3)
, FINC 409: Chapter 1 Practice Exam
Questions With 100% Correct Answers
Diversification of investments can reduce risk, (4) Financial markets
are efficient in pricing securities, (5) Manager and stockholder
objectives may differ, and (6) Reputation matters. - - correct answer
✅T
The principle of finance that "money has a time value" implies
money in hand today is worth less than the
promise of receiving the same amount in the future because a sum
of money today can be invested and grow over time. - - correct
answer ✅F
The principle of finance that "lower returns are expected for taking
on less risk" implies that rational investors would choose a risky
investment only if they feel the expected return is high enough to
justify the greater risk. - - correct answer ✅T
The principle of finance that "financial markets are efficient in
pricing securities" implies that the prices of securities reflect some
information available to the public and that when new information
becomes available, prices change over time to reflect that
information. - - correct answer ✅F
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