Fmi Practice final

Fmi Practice final - FORM A FNCE 3020 INSTRUCTIONS: (1)...

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FORM A FNCE 3020 Example Final Exam Fall 2006 INSTRUCTIONS: (1) Enter your name (last name, first name, and middle initial) and your student identification number on the computer graded answer sheet and completely fill in the appropriate circles with a No. 2 pencil. (2) There are 55 questions on this exam. [The real final will probably have 60 questions, with each of the first 20 worth 1 point, and each of the rest worth 2 points.] (3) All possibly needed formulas are provided on the back page. 1. The interest rate that equates the present value of the cash flow received from a debt instrument with its market price today is the ______ (a) simple interest rate (b) discount rate (c) yield to maturity (d) real interest rate 2. Bonds that are sold in a foreign country and are denominated in the country’s currency are known as ______ (a) foreign bonds (b) Eurobonds (c) Eurocurrencies (d) Eurodollars 3. Financial markets improve economic welfare because ______ (a) they allow funds to move from those without productive investment opportunities to those who has such opportunities. (b) they allow consumers to time their purchase better. (c) they weed out inefficient firms. (d) they do all of the above. (e) they do (a) and (b) of the above. 4. Which of the following concepts is based on the common-sense notion that a dollar paid to you in the future is less valuable to you than a dollar today? ______ (a) present value (b) future value (c) interest (d) deflation 5. With an interest rate of 8 percent, the present value of $100 received one year from now is approximately ______. (a) $93 (b) $96 (c) $100 (d) $108 6. The term structure of interest rate is ______. (a) the relationship among interest rates of different bonds with the same maturity. (b) the structure of how interest rates move over time. (c) the relationship among the terms to maturity of different bonds. 1
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FORM A (d) the relationship among interest rates on bonds with different maturities. 7. Out of the following situations, ______ would cause the interest rate to decline. (a) an increase in the expected inflation rate (b) a cut in federal income tax rate (c) a business expansion cycle (d) a very bullish stock market 8. Which of the following long-term bonds should have the highest interest rate? (a) Corporate Baa bonds (b) U.S. Treasury bonds (c) Corporate Aaa bonds (d) Municipal bonds 9. When yield curves are upward-sloping, ______. (a) long-term interest rates are above short-term interest rates. (b) short-term interest rates are above long-term interest rates (c) short-term interest rates are about the same as long-term interest rates. (d) short-term interest rates are expected to rise in the future. 10. The efficient market hypothesis applies to _____
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This note was uploaded on 02/27/2008 for the course CHEN 1000 taught by Professor Degrazia,j during the Spring '04 term at Colorado.

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Fmi Practice final - FORM A FNCE 3020 INSTRUCTIONS: (1)...

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