BU34S : Managerial Finance I

Question 1

Bonds are bought and sold in __________ markets.

equity

debt

derivatives

foreign exchange

Question 2

The fundamental starting point of all the accounting statements is the __________ identity.

accounting

computing

investing

financing

Question 3

You need $32,000 at the end of 6 years. If you can earn 0.625% per month, how much would you need to invest today to meet your objective?

$17,600

$18,319

$20,735

$20,433

Question 4

The future value three years from today of a $100 three-year annuity due compounded at a rate of 10% is equal to:

$300.00.

$331.00.

$364.10.

$133.10.

Question 5

What type of loan requires both principal and interest payments as you go by making equal payments each period?

Amortized loan

Interest-only loan

Discount loan

Compound loan

Question 6

To determine the interest paid each compounding period, we take the advertised annual percentage rate and simply divide it by the __________ to get the appropriate periodic interest rate.

number of compounding periods for the length of an investment

number of discounting periods for the length of an investment

number of compounding periods per year

number of compounding periods per month

Question 7

The __________ is the face value of the bond.

current yield

maturity date

par value

coupon rate

Question 8

A basis point is:

one-thousandth of a percentage point.

one percentage point.

one-tenth of a percentage point.

one-hundredth of a percentage point.

Question 9

Bonds are different from stocks because:

bonds promise fixed payments for the length of their maturity.

bonds give payments only after other owners are paid.

bonds do not have maturity dates.

bonds promise growth in earnings.

Question 10

Robert invested in stock and received a positive return over a 9-month period. Which of the following types of returns will be greater?

Holding period return (HPR)

Effective annual return

Annual percentage rate

There is not enough information to make a definitive choice.