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Quiz 2 Lecturer - Answer - Accounting and Finance

The document appears to be a quiz containing multiple choice questions related to accounting, finance, and investment concepts. It includes 25 questions testing understanding of topics like compound interest, present and future values, bond yields, stock returns, risk, and diversification. The student answered 21 out of 25 questions correctly.

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henry
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67 views

Quiz 2 Lecturer - Answer - Accounting and Finance

The document appears to be a quiz containing multiple choice questions related to accounting, finance, and investment concepts. It includes 25 questions testing understanding of topics like compound interest, present and future values, bond yields, stock returns, risk, and diversification. The student answered 21 out of 25 questions correctly.

Uploaded by

henry
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Quiz 2 Accounting and Finance

Puntos totales21/25

Correo*
[email protected]
Name*
Henry Efe Onomakpo Onomakpo
What is the future value of $10,000 on deposit for 2 years at 6%
simple interest?
1/1
A) $10,600
B) $11,236
C) $11,200
D) $13,382.26
How much interest is earned in just the third year on a $1,000
deposit that earns 7% interest compounded annually?
1/1
A) $70.00
B) $80.14
C) $105.62
D) $140.00
How much interest will be earned in the next year on an investment
paying 12% compounded annually if $100 was just credited to the
account for interest?
1/1
A) $88
B) $100
C) $112
D) $200
The concept of compound interest refers to:
1/1
A) earning interest on the original investment.
B) payment of interest on previously earned interest.
C) investing for a multiyear period of time.
D) determining the APR of the investment.
If interest is compounded semi-annually rather than annually, then:
1/1
A) future values and present values will both be higher.
B) futures values and present values will both be lower.
C) future values will be lower and present values will be higher.
D) Future values will be higher and present values will be lower.
Assume the total expense for your current year in college equals
$20,000. How much would your parents have needed to invest 21
years ago in an account paying 8% compounded annually to cover
this amount?
1/1
A) $952.46
B) $1,600.00
C) $1,728.08
D) $3,973.11
An investment of $100 pays interest of 2.5% per quarter. What will
be the value of this investment at the end of 3 years?
1/1
A) $107.69
B) $133.10
C) $134.49
D) $313.84
Given the future value, which of the following will contribute to
a lower present value?
1/1
A) Higher discount rate
B) Fewer time periods
C) Less frequent discounting
D) Lower discount factor
Cash flows occurring in different periods should not be compared
unless:
1/1
A) interest rates are expected to be stable.
B) the flows occur no more than one year from each other.
C) high rates of interest can be earned on the flows.
D) the flows have been discounted to a common date.
A stream of equal cash payments lasting forever is termed:
1/1
A) an annuity.
B) an annuity due.
C) an installment plan.
D) a perpetuity.
A share of stock currently sells for $60, pays an annual dividend of
$4.00, and earned a rate of return of 20% over the past year. What
did this stock sell for one year ago?
1/1
A) $42.00
B) $46.15
C) $48.46
D) $53.33
Sue purchased a stock for $25 a share, held it for one year, received
a $1.34 dividend, and sold the stock for $26.45. What nominal rate
of return did she earn?
1/1
A) 11.16%
B) 14.23%
C) 12.09%
D) 10.55%
Real rates of return are typically less than nominal rates of return
due to:
1/1
A) inflation.
B) capital gains.
C) dividend payments.
D) depreciation.
Volatility is likely to be highest in which of the following
investments?
1/1
A) Common stocks
B) Preferred stock
C) Corporate bonds
D) Treasury bonds
Risks that are peculiar to a single firm:
1/1
A) are called market risks
B) cannot be diversified away
C) are called specific risks
D) tend to cause stocks to move together
Which one of these is the safest investment?
1/1
A) Corporate bonds
B) Common stock
C) U.S. Treasury bills
D) Preferred stock
The wider the dispersion of returns on a stock, the:
1/1
A) lower the expected rate of return.
B) higher the standard deviation.
C) lower the real rate of return.
D) lower the variance.
Which one of the following risks can be progressively eliminated by
adding stocks to a portfolio?
0/1
A) Systematic risk
B) Specific risk
C) Market risk
D) Inflation rate risk
Respuesta correcta
B) Specific risk
Which one of these is a specific risk?
1/1
A) Revision to the corporate tax laws.
B) Inflation increase of 2.3%.
C) Deterioration in the overall economic outlook.
D) A fire at the company's main factory.
A stock's beta measures the:
0/1
A) average return on the stock.
B) sensitivity of the stock's returns to those of the market portfolio.
C) difference between the return on the stock and the return on the market portfolio.
D) market risk premium on the stock.
Respuesta correcta
B) sensitivity of the stock's returns to those of the market portfolio.
Which one of the following is fixed for the life of a given bond?
1/1
) Current price
B) Current yield
C) Yield to maturity
D) Coupon rate
Which one of the following bond values will change when interest
rates change?
0/1
A) The expected cash flows
B) The present value
C) The coupon payment
D) The maturity value
Respuesta correcta
B) The present value
A bond's par value can also be called its:
1/1
A) coupon payment.
B) present value.
C) market value.
D) face value.
The current yield of a bond can be calculated by:
1/1
A) multiplying the price by the coupon rate.
B) dividing the price by the annual coupon payments.
C) dividing the price by the par value.
D) dividing the annual coupon payments by the price.
As the coupon rate of a bond increases, the bond's:
0/1
A) face value increases.
B) current price decreases.
C) interest payments increase.
D) maturity date is extended.
Respuesta correcta
C) interest payments increase.
Este formulario se creó en Universitas Gadjah Mada.

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