1.

Treasury bills
A) have a maturity of up to five years C) are commonly sold at par value
B) have an active secondary market D) commonly offer coupon payments
2. What's the effective rate of return on an investment that generates a return of 12%,
compounded quarterly?
A) 12.55% B) 12.00% C) 14.34% D) 13.26%
3. An investor is considering acquiring a common stock that he would like to hold for one
year. He expects to receive both $1.50 in dividends and $26 from the sale of the stock at the
end of the year. What is the maximum price he should pay for the stock today to earn a 15
percent return?
A) $24.11 B) $23.91 C) $27.30 D) $25.60
4. Compute the present value of a perpetuity with $100 payments beginning four years
from now. Assume the appropriate annual interest rate is 10%.
A) $1,000 B) $683 C) $893 D) $751
5. What is the maximum price an investor should be willing to pay (today) for a 10 year
annuity that will generate $500 per quarter (such payments to be made at the end of each
quarter), given he wants to earn 12%, compounded quarterly?
A) $11,300.00 B) $11,557.00 C) $6,440.00 D) $6,788.00
6. A firm that uses higher estimates of assets' useful lives or salvage values relative to its
peers will report:
A) Lower depreciation expense and lower net income
B) Lower depreciation expense and higher net income
C) Higher depreciation expense and higher net income
D) None of the above
A longer useful life spreads the cost of the asset over more years, resulting in smaller
depreciation expense each year. Similarly, a higher salvage value reduces the total depreciable
amount (asset cost minus salvage value), also lowering annual depreciation. Lower depreciation
expense means lower total expenses, which increases net income in the short term.
7. Which of the following statements best describes risk aversion?
A) There is an indirect relationship between expected returns and expected risk
B) The investor will always choose the asset with the least risk
C) Given a choice between two assets of equal return, the investor will choose the asset with the
least risk
D) All of the above
8. Those financial markets that facilitate the flow of short-term funds are known as
A) money markets B) capital markets
C) primary markets D) secondary markets
15. There is a…………. relationship between the risk of a security and the expected return
from investing in the security
A) positive B) negative
C) indeterminable D) none of the above
16. The quick ratio is considered a more conservative measure of liquidity than the current
ratio because the quick ratio excludes:
A) accounts receivable, which may not be collectible in the short term
B) short-term marketable securities, which may need to be sold at a significant loss
C) inventories, which are not necessarily liquid
D) All of the above
18. Sarah Parker is buying a new $25,000 car. Her trade-in is worth $5,000 so she needs to
borrow $20,000. The loan will be paid in 48 monthly installments and the annual interest
rate on the loan is 7.5%. If the first payment is due at the end of the first month, what is
Sarah's monthly car payment?
A) $416.67 B) $480.57 C) $483.58 D) $497.68
19. If a security is undervalued, some investors would capitalize from this by purchasing
that security. As a result, the security's price will………., resulting in a………return for
those investors.
A. rise, lower B) fall; higher C. fall; lower D) rise; higher
22. ………is a short-term debt instrument issued only be well-known, creditworthy firms
and is normally issued to provide liquidity or finance a firm's investment in inventory and
accounts receivable.
A) A banker's acceptance B) A repurchase agreement
C) Commercial paper D) A Treasury bill
24. A zero-coupon bond has a yield to maturity of 9.6% (annual basis) and a par value of
$1,000. If the bond matures in 10 years, today's price of the bond would be:
A) $399.85 B) $391.54 C) $422.41 D) $450.32
25. What value would an investor place on a 20-year, $1,000 face value, 10% annual
coupon bond, if the investor required a 9% rate of return?
A) $920 B) $1,120 C) $879 D) $1,091
26. If a preferred stock that pays a $11.50 dividend is trading at $88.46, what is the
market's required tau of return for this security?
A) 7.69% B) 13.00% C) 11.76% D) 8.00%
28. A $500 investment offers a 7.5% annual rate of return. How much will it be worth in
four years?
A) $650 B) $892 C) $668 D) $716
29. Assume investors require a 5 percent annualized return on a six-month T-bill with a
par value of $10,000. The price investors would be willing to pay is $.......
A) 10,000 B) 9,524 C) 9,756 D) none of the above
30. Steve Hall wants to give his son a new car for his graduation. If the cost of the car is
$15,000 and Hall finances 80% of the value of the car for 36 months at 8% annual interest,
his monthly payments will be:
A) $413 B) $289 C) $325 D) $376
31. Which of the following is a capital market instrument?
A) a six-month CD
B) a three-month Treasury bill
C) a ten-year bond
D) an agreement for a bank to loan funds directly to a company for nine months.
32. If an investor puts $5,724 per year, starting at the end of the first year, in an account
earning 8% and ends up accumulating $500,000, how many years did it take the investor?
A) 26 years B) 87 years C) 27 years D) 86 years
33. ….. are long-term debt obligations issued by corporations and government agencies to
support their operations.
A) Common stock B) Derivative securities
C) Bonds D) None of the above
34. The most likely result of increasing the estimated useful life of a depreciable asset is
that: -> Net income tăng
A) Return on assets will decrease B) Asset turnover will increase
C) Net profit margin will increase D) All of the above
35. Which of the following is a money market security?
A) Treasury note B) municipal bond C) mortgage D) commercial paper
36. In a net present value (NPV) profile, the internal rate of return is represented as the:
A) intersection of the NPV profile with the vertical axis
B) intersection of the NPV profile with the horizontal axis (NPV vertical - IRR horizontal)
C) point where two NPV profiles intersect
D) none of the above
37. The term……. involves decisions such as how much funding to obtain, and how to
invest the proceeds to expand operations. (kết hợp cả capital budgeting + capital structure)
A) corporate finance B) investment management
C) financial markets and institutions D) None of the above
38. Bill Jones is creating a charitable trust to provide six annual payments of $20,000 each,
beginning next year. How much must Jones set aside now at 10% interest compounded
annually to meet the required disbursements?
A) $87,105.21 B) $154,312.20 C) $95,815.74 D) $100,312.48
39. The yield on NCDs is………. the yield of Treasury bills of the same maturity. The
difference between their yields would be especially large during a………period.
A) greater than; recessionary B) greater than; boom economy
C) less than; boom economy D) less than; recessionary
NCD is risker than T bills
40. Which of the following statements about the payback period is NOT correct?
A) The payback period is the number of years it takes to recover the original cost of the
investment
B) The payback method considers all cash flows throughout the entire life of a project (đến lúc
thu hồi chứ k phải entire life)
C) The payback period provides a rough measure of a project's liquidity and risk
D) None of the above