Fin 221 mcqs | Business & Finance homework help


Multiple Choice

Identify the valuable that best completes the announcement or answers the topic.

 

       1)            Which of the succeedingcited could interpret why a duty faculty cull to act as a strengthening rather than as a uncombined tenantship or a lineage?

A.

Corporations generally aspect fewer regulations.

B.

Less of a strengthening's proceeds is generally question to taxes.

C.

Corpoobjurgate distributeholders are unprotected to dejected impost, but this constituent is offset by the tax utilitys of disconnection.

D.

Corpoobjurgate endueors are unprotected to unbounded impost.

E.

Corporations generally confront it easier to construct excellent.

 

 

       2)            The original unconditional view of a publicly-owned immovable animated in serving its storeholders should be to

A.

Maximize its look-fored aggregate oppidan proceeds.

B.

Maximize its look-fored EPS.

C.

Minimize the chances of losses.

D.

Maximize the store appraisement per distribute aggravate the covet run, which is the store's immanent compute.

E.

Maximize the store appraisement on a restricted target bound.

 

 

       3)            Which of the succeedingcited announcements is CORRECT?

A.

A amiable view for a immovable's administration is maximization of look-fored EPS.

B.

Most duty in the U.S. is conducted by strengthenings, and strengthenings' popularity results catholicly from their propitious tax composition.

C.

One copy of an production intercommunity is the one among storeholders and managers.

D.

Corporations and lineages entertain an utility aggravate tenantships accordingly a uncombined tenant is unprotected to unbounded impost, but the impost of all endueors in the other types of dutyes is advance poor.

E.

Firms in greatly competitive industries are advance slight to consciously training "social responsibility" than are immovables in oligopolistic industries.

 

 

       4)            How fur would $1, growing at 5% per year, be estimate succeeding 100 years?

A.

$141.05

B.

$131.50

C.

$164.52

D.

$144.50

E.

$155.94

 

 

       5)            Suppose a U.S. legislation compact promises to pay $2,249.73 three years from now. If the going action objurgate on 3-year legislation compacts is 6%, how fur is the compact estimate today?

A.

$2,011.87

B.

$2,591.45

C.

$2,324.89

D.

$1,888.92

E.

$2,854.13

 

 

       6)            The U.S. Treasury proffers to retail you a compact for $613.81. No liquidations accomplish be made until the compact matures 10 years from now, at which spell it accomplish be redeemed for $1,000. What action objurgate would you deserve if you bought this compact at the prproffer appraisement?

A.

5.91%

B.

6.71%

C.

7.10%

D.

5.59%

E.

5.00%

 

 

       7)            Your senior is environing to retreat, and he wants to buy an annuity that accomplish agree him behind a timeliness $50,000 of proceeds a year for 20 years, behind a timeliness the primeval liquidation coming immediately. The going objurgate on such annuities is 6%. How fur would it require him to buy the annuity today?

A.

$607,905.82

B.

$416,110.34

C.

$517,513.68

D.

$615,976.84

E.

$488,349.15

 

 

       8)            Your girlfriend fitting won the Power Ball lottery. She has the valuable of $10,000,000 today or a 30-year annuity of $500,000, behind a timeliness the primeval liquidation coming today. What objurgate of retaliate is built into the annuity?

A.

2.71%

B.

3.08%

C.

4.10%

D.

3.59%

E.

3.91%

 

 

       9)            What annual liquidation would you entertain to entertain in direct to deserve an 8% objurgate of retaliate on a persistence that require $1,500?

A.

$127.84

B.

$134.54

C.

$151.29

D.

$120.00

E.

$143.65

 

 

     10)            At a objurgate of 8%, what is the coming compute of the succeedingcited cardinal glide tendency? $0 at Spell 0; $100 at the end of Year 1; $300 at the end of Year 2; $0 at the end of Year 3; and $500 at the end of Year 4?

A.

$907.91

B.

$991.43

C.

$943.46

D.

$975.89

E.

$968.40

 

 

     11)            Bank A proffers to hypothecation you $10,000 at a suppositious objurgate of 7%, compounded monthly. The hypothecation (original plus action) must be recompensated at the end of the year. Bank B to-boot proffers to hypothecation you the $10,000, but it accomplish direct 8%, behind a timeliness action due at the end of the year. What is the separation in the able annual objurgates directd by the two banks?

A.

0.77%

B.

1.71%

C.

1.10%

D.

1.59%

E.

0.91%

 

 

     12)            You are buying your primeval lineage for $220,000, and are paying $30,000 as a down liquidation. You entertain arranged to finance the retaining $190,000 30-year advance behind a timeliness a 7% suppositious action objurgate and monthly liquidations. What are the resembling monthly liquidations you must constitute?

A.

$1,513

B.

$1,110

C.

$1,264

D.

$1,976

E.

$1,349

 

 

     13)            Your sister crabbed 30 today, and she is planning to reserve $3,000 per year for retreatment, behind a timeliness the primeval deposit to be made one year from today. She accomplish endue in a reciprocal cardinal, which she look-fors to agree a retaliate of 10% per year. She plans to retreat 35 years from today, when she turns 65, and she look-fors to subsist for 30 years succeeding retreatment, to age 95. Under these assumptions, how fur can she expend in each year succeeding she retreats? Her primeval behind a timelinessdrawal accomplish be made at the end of her primeval retreatment year.

A.

$78,976

B.

$91,110

C.

$88,513

D.

$86,250

E.

$83,049

 

 

     14)            It is now January 1, 2005. Tom and Jerry are cousins who were twain born on January 1, 1975. Twain crabbed 30 today. Their grandsenior gave Tom $4,000 on his 25th birthday, January 1, 2000, putting the cardinals into a duty that accomplish be compensated to Tom on his 70th birthday, January 1, 2045. Each year gone 2000, the grandsenior put an joined $4,000 in the recital on Tom's birthday, and the grandfather's own dutyee accomplish hold making the $4,000 liquidations until January 1, 2045, when a 46th and decisive $4,000 assistance accomplish be made on Tom's 70th birthday. The grandsenior wants Tom to result, not be a "duty cardinal baby," but he to-boot wants to stabilitate that Tom is well-mannered-mannered agreed for in his old age.

 

The grandsenior has until now has been disappointed behind a timeliness Jerry, heresucceeding has not attached him everything, but they of-late reconciled, and the grandsenior has ruled to constitute an equipollent food for Jerry. He accomplish constitute the primeval liquidation to a duty for Jerry today, and he has instructed his dutyee to constitute joined annual liquidations each year until January 1, 2045, when the 41st and decisive liquidation accomplish be made. If twain dutys deserve an annual retaliate of 10%, how fur must the grandsenior put into Jerry's duty to empower him to entertain the selfselfcorresponding quantity as Tom on January 1, 2045, when they aim age 70?

A.

$6,110

B.

$6,492

C.

$7,513

D.

$5,976

E.

$8,349

 

 

     15)            You are analyzing the compute of an enduement by farsighted the bestow compute of its look-fored cardinal glides. Which of the succeedingcited would action the enduement to appear meliorate?

A.

The remittance objurgate abates.

B.

The cardinal glides are liberal aggravate a coveter epoch of spell, but the aggregate quantity of the cardinal glides offal the selfsame.

C.

The remittance objurgate extensions.

D.

The surrenderiness of the project's cardinal glides extensions.

E.

The aggregate quantity of cardinal glides offal the selfsame, but advance of the cardinal glides are entertaind in the succeeding years and near are entertaind in the prior years.

 

 

     16)            Which of the succeedingcited announcements touching a 30-year (360-month) $100,000 unwandering-objurgate advance is CORRECT? (Ignore all taxes and businesss requires.)

A.

The retaining counteract succeeding three years accomplish be $100,000 near the aggregate quantity of action compensated during the primeval 36 months.

B.

The correlation of the monthly liquidation that goes towards reliquidation of original accomplish be conspicuous 10 years from now than it accomplish be this year.

C.

The monthly liquidation on the advance accomplish steadily dismiss aggravate spell.

D.

The uncollected counteract gets compensated off at a faster objurgate present in a hypothecation's condition, rather than succeeding.

E.

Beaction it is a unwandering objurgate advance, the quantity compensated in action per liquidation is invariable.

 

 

     17)            Which of the succeedingcited announcements is CORRECT?

A.

The NYSE does not halt as a tangible location; rather it represents a sparse gathering of dealers who employment store electronically.

B.

An copy of a original traffic business would be your uncle exchangering 100 distributes of Wal-Mart store to you as a birthday boon.

C.

Capital traffic instruments involve twain covet-term obligation and contemptible stores.

D.

If your uncle in New York sold 100 distributes of Microsoft through his broker to an endueor in Los Angeles, this would be a original traffic business.

E.

While the two constantly complete concordant functions, enduement banks generally specialize in hypothecationing cardinal, since commercial banks generally succor companies construct catholic blocks of excellent from endueors.

 

 

     18)            Money traffics are traffics for

A.

Foreign currencies.

B.

Consumer automobile hypothecations.

C.

Corpoobjurgate stores.

D.

Long-term compacts.

E.

Short-term obligation securities such a Treasury bills.

 

 

     19)            You of-late sold to your tally 200 distributes of Disney store, and the exchange was made through a broker. This is an copy of:

A.

A cardinal traffic business.

B.

A original traffic business.

C.

A resultant traffic business.

D.

A comings traffic business.

E.

An aggravate-the-counter traffic business.

 

 

     20)            If the store traffic is semistrong-form fertile, which of the succeedingcited announcements would be CORRECT?

A.

The required retaliates on all stores are the selfsame, and the required retaliates on stores are conspicuous than the required retaliates on compacts.

B.

The required retaliates on stores resembling the required retaliates on compacts.

C.

A trading temporization in which you buy stores that entertain of-late procumbent in appraisement is slight to agree you behind a timeliness a retaliate that excel the retaliate on the aggravateall store traffic.

D.

If you entertain internallyr notification environing a feature store, you cannot look-for to deserve an aggravate mean retaliate on this notification accordingly it is already incorporated into the vulgar store appraisement.

E.

Even if a traffic is semistrong-form fertile, an endueor could quiescent deserve a melioadmonish retaliate than the traffic retaliate if he or she had internally notification.

 

 

     21)            Suppose the objurgate of retaliate on a 10-year T-compact is vulgarly 5.00% and that on a 10-year Treasury Inflation Protected Security (TIP) is 2.10%. Suppose advance that the MRP on a 10-year T-compact is 0.9%, that no MRP is required on TIPs, and that no liquidity bonuss are required on any T-bonds. Attached this facts, what is the look-fored objurgate of inflation aggravate the proximate 10 years? Disregard cross-product conditions, i.e., if averaging is required, use the arithmetic mean.

A.

1.80%

B.

1.90%

C.

2.00%

D.

2.10%

E.

2.20%

 

 

     22)            Keys Corporation's 5-year compacts comply 6.50%, and 5-year T-bonds comply 4.40%. The genuine surrender-free objurgate is r* = 2.5%, the inflation bonus for 5 years compacts is IP = 1.50%, the want surrender bonus for Keys' compacts is DRP = 0.50% versus naught for T-bonds, and the manliness surrender bonus for all compacts is set behind a timeliness the formula MRP = (t - 1)*0.1%, where t = enumerate of years to manliness. What is the liquidity bonus (LP) on Keys' compacts?

A.

1.30%

B.

1.40%

C.

1.50%

D.

1.60%

E.

1.70%

 

 

     23)            Suppose 1-year Treasury compacts comply 3.0% timeliness 2-year T-bonds comply 4.5%. Assuming the spotless look-forations assumption is set-right and thus the manliness surrender bonus is naught, what should the comply be on a 1-year T-compact one year from now?

A.

5.91%

B.

6.02%

C.

6.13%

D.

6.24%

E.

6.35%

 

 

     24)            Which of the succeedingcited announcements is CORRECT?

A.

If the manliness surrender bonus (MRP) is senior than naught, the comply flexion must be upward sloping.

B.

If the manliness surrender bonus (MRP) resemblings naught, the comply flexion must be horizontal.

C.

If inflation is look-fored to extension in the coming and the manliness surrender bonus (MRP) is senior than naught, the comply flexion accomplish be upward sloping.

D.

If the look-forations assumption holds, the comply flexion accomplish never be downward sloping.

E.

Beaction covet-term compacts are surrenderier than short-term compacts, complys on covet-term Treasury compacts accomplish constantly be conspicuous than complys on short-term T-bonds.

 

 

     25)            Which of the succeedingcited constituents would be most slight to control to an extension in suppositious action objurgates?

A.

Households subjugate their decrement and extension their savings.

B.

A new technology enjoy electricity has fitting been introduced, and it extensions enduement opportunities.

C.

There is a abate in look-fored inflation.

D.

The administration falls into a recession.

E.

The Federal Reserve decides to try to intensify the administration.