Finance: Net Present Value and Options Principle Objective
FIN/571 Final Examination Study Guide
This study guide will prepare you for the Final Examination you will complete in the final week. It contains practice questions, which are related to each week’s objectives. In addition, refer to each week’s readings and your student guide as study references for the Final Examination.
Week One: Foundations of Finance
Objective: Discuss 12 principles of foundational corporate finance.
1. __________ occurs when inaccurate information exists.
a. 0 The principle of valuable ideas
b. 0 Free-rider problem
c. 0 Moral hazard
d. 0 Adverse selection
Objective: Discuss 12 principles of foundational corporate finance.
2. __________ refers to situations wherein the agent can take unseen actions for personal benefit even though such actions are costly to the principal.
a. 0 Moral hazard
b. 0 Zero-sum game
c. 0 Adverse selection
d. 0 The behavioral principle
Objective: Discuss 12 principles of foundational corporate finance.
3. Which of the following correctly completes the next sentence? The value of any asset is the present value of all future
a. 0 profits it is expected to provide
b. 0 revenue it is expected to provide
c. 0 net working capital it is expected to provide
d. 0 cash flows it is expected to provide
Objective: Compare and contrast the market value of an asset or liability from the book value.
4. Original maturity refers to
a. 0 a technical accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time
b. 0 the price for which something could be bought or sold in a reasonable length of time, where reasonable length of time is defined in terms of an item’s liquidity
c. 0 the length of an asset’s life when it is issued
d. 0 the net amount, or net book value, for something shown in quarterly accounting statements
Week Two: Business Valuation
Objective: Apply the capital-asset pricing model to
This study guide will prepare you for the Final Examination you will complete in the final week. It contains practice questions, which are related to each week’s objectives. In addition, refer to each week’s readings and your student guide as study references for the Final Examination.
Week One: Foundations of Finance
Objective: Discuss 12 principles of foundational corporate finance.
1. __________ occurs when inaccurate information exists.
a. 0 The principle of valuable ideas
b. 0 Free-rider problem
c. 0 Moral hazard
d. 0 Adverse selection
Objective: Discuss 12 principles of foundational corporate finance.
2. __________ refers to situations wherein the agent can take unseen actions for personal benefit even though such actions are costly to the principal.
a. 0 Moral hazard
b. 0 Zero-sum game
c. 0 Adverse selection
d. 0 The behavioral principle
Objective: Discuss 12 principles of foundational corporate finance.
3. Which of the following correctly completes the next sentence? The value of any asset is the present value of all future
a. 0 profits it is expected to provide
b. 0 revenue it is expected to provide
c. 0 net working capital it is expected to provide
d. 0 cash flows it is expected to provide
Objective: Compare and contrast the market value of an asset or liability from the book value.
4. Original maturity refers to
a. 0 a technical accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time
b. 0 the price for which something could be bought or sold in a reasonable length of time, where reasonable length of time is defined in terms of an item’s liquidity
c. 0 the length of an asset’s life when it is issued
d. 0 the net amount, or net book value, for something shown in quarterly accounting statements
Week Two: Business Valuation
Objective: Apply the capital-asset pricing model to