ADMS3530_MidtermTest_TypeAQ_s_A_s_S1_2007[1]

ADMS3530_MidtermTest_TypeAQ_s_A_s_S1_2007[1] - Name Section...

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Name Section ID # Professor Bert Kohen B (Tuesdays/Thursdays, 4-7 pm), and Professor Tissenbaum’s Sections D (Tuesdays/Thursdays, 7-10 pm) AK/ADMS 3530.03 Finance Midterm Test Summer S1 2007 May 27, 2007 Type A Exam This exam consists of 30 multiple-choice questions and carries a total of 100 points . The 20 numerical questions are worth 4 marks each and the 10 conceptual questions are worth 2 marks each. Choose the response that best answers each question. Circle your answer below , and fill in your answers on the bubble sheet . Only the bubble sheet is used to determine your exam score . Please do not forget to write your name and ID # at the top of this cover page and on the bubble sheet. Also please write the type of your exam (A or B) on the bubble sheet. Please note the following points : 1) Read the questions carefully and use your time efficiently . 2) Choose the answers that are closest to yours, because of possible rounding. 3) Keep at least 2 decimal places in your calculations and final answers. 4) Each question is worth 2 points. 5) Unless otherwise stated, interest rates are annual , and bonds have a face value (or par value) of $1,000 . 6) You may use the back of the exam paper as your scrap paper.
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Conceptual Questions 1 : If a manager's compensation plan offers financial incentives based on increases in quarterly profitability, then there may be agency problems because: a. short-term, not long-term profits become the focus b. investors desire stable profits c. the board of directors may claim the credit d. the managers are not motivated by personal gain The correct answer is a 2 : In the case of a professional corporation, ________ has/have limited liability. a. only the professionals. b. only the business. c. both the professionals and the business. d. neither the professionals nor the business. The correct answer is b 3 : The more frequent the compounding period (other things being equal): a. the higher the effective annual interest rate b. the higher the APR c. the lower the effective annual interest rate d. the lower the APR The correct answer is a 4 : Which of the following best describes inflation? a. A spike in interest rates b. A rise in the price of food c. An overall rise in prices d. An economic expansion The correct answer is c 5 : If an investor purchases a bond when its current yield is less than the coupon rate, then the bond's price will be expected to: a. be less than the face value at maturity. b. Exceed the face value at maturity. c. Decline over time, reaching par value at maturity. d. Increase over time, reaching par value at maturity. The correct answer is c 6 : A bond's yield to maturity takes into consideration: a. neither current yield nor price changes of a bond. b. Current yield but not price changes of a bond.
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ADMS3530_MidtermTest_TypeAQ_s_A_s_S1_2007[1] - Name Section...

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