BFIN 300 TEST QUESTIONS WITH CORRECT ANSWERS
Which one of the following is a source of cash for a non-tax paying firm?
a.) Increased in accounts receivable b.) Increase in depreciation
c.) Decrease in accounts receivable d.) Increase in common stock
e.) Increase in inventory - Answer-d.) Inc...
Which one of the following is a source of cash for a non-tax paying firm?
a.) Increased in accounts receivable
b.) Increase in depreciation
c.) Decrease in accounts receivable
d.) Increase in common stock
e.) Increase in inventory - Answer-d.) Increase in common stock
According to the cash flow statement, an increase in inventory will
the cash flow from activities.
1. increase/decrease
2. operating, financing, investment - Answer-According to the cash flow statement, an
increase in inventory will decrease the cash flow from operating activities.
Which is a measure of a company's liquidity?
a.) Price to earnings ratio
b.) Inventory days
c.) Quick ratio
d.) Times interest earned
e.) Return on assets - Answer-c.) Quick ratio
What are bond yields the combined effect of?
a.) Inflation
b.) Rate risk
c.) Default risk
d.) Taxability
e.) All of the above - Answer-e.) All of the above
What does the phrase inversely proportional mean when it comes to bonds?
a.) Inverted yield curve
b.) Normal yield curve
c.) Interest rates increasing, bond values increasing
d.) Term structure of interest rates
, e.) Interest rates declining, bond values increasing - Answer-e.) Interest rates declining,
bond values increasing
Interest earned on both the initial principal and interest reinvested from the prior periods
is called:
a.) Free interest
b.) Dual interest
c.) Simple interest
d.) Interest on interest
e.) Compound interest - Answer-e.) Compound interest
Aaron Judge invested $2,000 six years ago at 4.5%. He spends his earnings as soon as
he earns any interest so he only receives interest on his initial investment. Which type of
interest is Mr. Judge earning?
a.) Free interest
b.) Complex interest
c.) Simple Interest
d.) Interest on interest
e.) Compound interest - Answer-c.) Simple Interest
What is a secondary market?
a.) Alibaba IPO
b.) Primary market
c.) Citigroup USD bond
d.) Existing shares trades amongst investors
e.) London Stock Exchange - Answer-e.) London Stock Exchange
What is a market dealer do?
a.) Broker
b.) Acts on behalf of customers
c.) Manages NASDAQ
d.) Buys and sells for its own account
e.) Only provides bid pricing - Answer-d.) Buys and sells for its own account
What is a junk bond?
a.) Russian debt
b.) Rated below BBB
c.) Below investment grade
d.) Puerto Rico Municipal debt
e.) All of the above - Answer-e.) All of the above
What is an example of an interest only (I/O) security?
a.) Corporate bond
b.) Mortgage
c.) Treasury bill
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