Finance 301 Exam Practice Questions and
Answers
Which of the following is a stakeholder? - Ans:-anyone who has claim to the company; an
employee, a lender, the IRS
The cash remaining with the firm after paying its operating expenses, making payments to
creditors, and taxes is called - Ans:-res...
Secondary financial markets are similar to: - Ans:✔✔-used-car markets
The ease with which a security can be sold and converted into cash is called - Ans:✔✔-
marketability
Which of the following theories states that security prices reflect all public information, but not
all private information? - Ans:✔✔-Semistrong-form efficiency
The idea that all information about a security is reflected in its price is known as - Ans:✔✔-
strong-form efficiency
This hypothesis holds that all information contained in past prices of a security is reflected in
current prices but that there is both public and private information that is not - Ans:✔✔-Weak-
form efficiency
The process of converting financial securities with one set of characteristics into securities with
another set of characteristics is called - Ans:✔✔-financial intermediation
If you are a borrower, which would you prefer to occur during the life of your loan? - Ans:✔✔-A
level of inflation that is higher than that anticipated at the outset of the loan
If inflation is anticipated to be 5 percent during the next year, while the real rate of interest for a
one-year loan is 5 percent, then what should the nominal rate of interest be for a risk-free one-
year loan? - Ans:✔✔-10 percent
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