FINAL EXAMS FINAL ANSWERS FINAL QUESTIONS

1. FIN 419 FINAL EXAMS
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1. Finance is concerned with the process institutions, markets, and instruments involved in
the transfer of money among and between individuals, businesses and government.
2. The president or chief executive officer is elected by the firm’s stockholders and has
ultimate authority to guide corporate affairs and make general policy.
3. Finance can be defined as
4. Under which of the following legal forms of organization, is ownership readily transferable?
5. _________ is the chance of loss or the variability of returns associated with a given asset.
6. Primer grade commercial paper will most likely have a higher annual return than
7. Time value of money is based on the belief that a dollar that will be received at some future
date is worth more than a dollar today.
8. In general, with an amortized loan, the payment amount grows over the life of the loan, the
principal portion of each payment grows over the life of the loan, and the interest portion
declines over the life of the loan.
9. An annuity with an infinite life is called a(n)
10. The _________ is/are a graphic depiction of the term structure of interest rates.
11. Generally, long-term loans have higher interest rates than short-term loans because of
12. Preferred stock is often considered a quasi‑debt since it yields a fixed periodic payment.
13. Unlike creditors (lenders), equity holders (both preferred and common stockholders) are
owners of the firm.
14. The claims of the equity holders on income have priority over
15. The opportunity for management to purchase a certain number of shares of their firm’s
common stock at a specified price over a certain period of time is a