Filters
Question type

Study Flashcards

Most financial decisions involve two related elements:


A) advice and consent.
B) investment and taxes.
C) time and risk.
D) saving and consumption.

E) B) and D)
F) A) and D)

Correct Answer

verifed

verified

Felix deposited $500 into an account two years ago.The first year he earned 3 percent interest and the second year he earned 5 percent interest.How much money does Felix have in his account now?


A) $540.75
B) $540.80
C) $540.85
D) None of the above are correct to the nearest cent.

E) B) and D)
F) B) and C)

Correct Answer

verifed

verified

Which of the following defines an annuity?


A) For a fee,an insurance company provides you with regular income until you die.
B) A surcharge is added to life-insurance premiums paid by persons in dangerous occupations.
C) Annuity is another name for stock funds managed by mutual fund managers.
D) Annuity is another name for any diversified portfolio.

E) A) and D)
F) A) and C)

Correct Answer

verifed

verified

What is the present value of a payment of $100 one year from today if the interest rate is 5 percent?


A) $95.50
B) $95.24
C) $95.00
D) None of the above are correct to the nearest cent.

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

A company that can build a project that will cost $50,000,but returns $52,000 in one year would make a good decision by turning this project down if the interest rate were 3 percent.

A) True
B) False

Correct Answer

verifed

verified

If the efficient markets hypothesis is correct,then


A) the number of shares of stock offered for sale exceeds the number of shares of stock that people want to buy.
B) the stock market is informationally efficient.
C) stock prices never follow a random walk.
D) All of the above are correct.

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

Toni put $500 into an account and one year later she had $534.What interest rate was paid on Toni's deposit?


A) 7.1 percent
B) 5.9 percent
C) 6.8 percent
D) None of the above is correct.

E) A) and C)
F) None of the above

Correct Answer

verifed

verified

The present value of a payment of $500 to be made two years from today is greater if the interest rate is 7% than if it is 6%.

A) True
B) False

Correct Answer

verifed

verified

Braden says that $400 saved for one year at 4 percent interest has a smaller future value than $400 saved for two years at 2 percent interest.Lefty says that the present value of $400 to be received one year from today if the interest rate is 4 percent exceeds the present value of $400 to be received two years from today if the interest rate is 2 percent.


A) Braden and Lefty are both correct.
B) Braden and Lefty are both incorrect.
C) Only Braden is correct.
D) Only Lefty is correct.

E) All of the above
F) B) and D)

Correct Answer

verifed

verified

Other things the same,when the interest rate rises,the present value of future revenues from investment projects


A) rises,so investment spending rises.
B) falls,so investment spending rises.
C) rises,so investment spending falls.
D) falls,so investment spending falls.

E) B) and C)
F) A) and D)

Correct Answer

verifed

verified

Ben decided to increase the number of stocks in his portfolio.In doing so,Ben reduced


A) both the firm-specific risk and the market risk of his portfolio.
B) the firm-specific risk,but not the market risk of his portfolio.
C) the market risk,but not the firm-specific risk of his portfolio.
D) neither the market risk nor the firm-specific risk of his portfolio.

E) None of the above
F) B) and D)

Correct Answer

verifed

verified

An increase in the number of corporations in a portfolio from 110 to 120 reduces


A) market risk by more than an increase from 1 to 10.
B) market risk by less than an increase from 1 to 10.
C) firm-specific risk by more than an increase from 1 to 10.
D) firm-specific risk by less than an increase from 1 to 10.

E) None of the above
F) A) and B)

Correct Answer

verifed

verified

Which of the following has the highest future value?


A) $100 saved for 2 years at 10 percent interest
B) $110 saved for 2 years at 9 percent interest
C) $120 saved for 2 years at 8 percent interest
D) $130 saved for 2 years at 7 percent interest

E) None of the above
F) A) and D)

Correct Answer

verifed

verified

The available evidence indicates that


A) about one-half of all managers of active mutual funds consistently outperform index funds.
B) outperforming the market on a consistent basis is extremely difficult to do.
C) there is little truth to the notion that there is a trade-off between risk and return.
D) there is little truth to the efficient markets hypothesis.

E) None of the above
F) All of the above

Correct Answer

verifed

verified

What is the future value of $800 one year from today if the interest rate is 7 percent?


A) $747.66
B) $756.00
C) $856.00
D) None of the above are correct to the nearest cent.

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

If stock prices follow a random walk,it means


A) long periods of declining prices are followed by long periods of rising prices.
B) the greater the number of consecutive days of price declines,the greater the probability prices will increase the following day.
C) stock prices are unrelated to random events that shock the economy.
D) stock prices are just as likely to rise as to fall at any given time.

E) A) and B)
F) None of the above

Correct Answer

verifed

verified

Dakota rearranges her portfolio so that it has a higher average return.In doing this rearranging,she


A) raised both firm-specific risk and market risk.
B) raised firm-specific risk,but not market risk.
C) raised market risk,but not firm-specific risk.
D) None of the above is correct.

E) B) and C)
F) B) and D)

Correct Answer

verifed

verified

If stock prices follow a random walk,then stock investors can make large profits by


A) buying stocks whose prices have been falling for several days.
B) buying stocks whose prices have been rising for several days.
C) performing fundamental analysis of stocks using data contained in annual reports.
D) using inside information.

E) A) and D)
F) A) and B)

Correct Answer

verifed

verified

Suppose you put $500 into a bank account today.Interest is paid annually and the annual interest rate is 5.5 percent.The future value of the $500 is


A) $637.50 after 5 years and $822.09 after 10 years.
B) $637.50 after 5 years and $775.00 after 10 years.
C) $653.48 after 5 years and $854.07 after 10 years.
D) $688.36 after 5 years and $915.56 after 10 years.

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

Sometimes On Time (SOT) Airlines is considering buying a new jet.SOT would be more likely to buy a new jet if there were either


A) a decrease in the price of a new jet or a decrease in the interest rate.
B) a decrease in the price of a new jet or an increase in the interest rate.
C) an increase in the price of a new jet or a decrease in the interest rate.
D) an increase in the price of a new jet or an increase in the interest rate.

E) All of the above
F) B) and D)

Correct Answer

verifed

verified

Showing 221 - 240 of 461

Related Exams

Show Answer