FIN 571 final exam - 1 Occurs when inaccurate information...

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1) Occurs when inaccurate information can falsely exist. A. free-rider problem B. adverse selection C. moral hazard D. The Principle of Valuable Ideas 2) Which principle states that extraordinary returns are achievable with new ideas? A. The Principle of Valuable Ideas B. The Principle of Risk-Return Trade-Off C. The Principle of Incremental Ideas D. The Notional Principle 3) Which of the following statements is true? A. The difference between the value of one action and the value of the best alternative is called an opportunity cost. B. An agent-manager can never make bad decisions. C. A security is a claim issued by a firm that pays owners interest but not dividends. D. A call option analyzes conflicts of interest and behavior in a principal-agent relationship. 4) Generally accepted accounting principles (GAAP) refers to A. the extent to which something can be sold for cash quickly and easily without loss of value. B. the length of an asset’s life when it is issued. C. a technical accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. D. a report issued annually by a firm that includes, at a minimum, an income statement, a balance sheet, a statement of cash flows, and accompanying notes. 5) Remaining maturity refers to: A. the amount of time remaining until its maturity. B. the length of an asset’s life when it is issued. C. a technical accounting term that encompasses the conventions, rules, and procedures necessary to define accepted accounting practice at a particular time. D. a report issued annually by a firm that includes, at a minimum, an income statement, a balance sheet, a statement of cash flows, and accompanying notes. 6) The annual report refers to A. the extent to which something can be sold for cash quickly and easily without loss of value. B. a report issued annually by managers to primarily convey information about select working capital ratios. C. the length of time remaining until an asset’s maturity. D. a report issued annually by a firm that includes, at a minimum, an income statement, a balance sheet, a statement of cash flows, and accompanying notes. 7) The firm’s assets in the balance sheet refer to: A. the extent to which something can be sold for cash quickly and easily without loss of value. B. the productive resources in the firm’s operations. C. the statement of a firm's financial position at one point in time, including its assets and the claims on those assets by creditors (liabilities) and owners (stockholders' equity).
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8) Book value (or Net book value) refers to: A. the net amount shown in the accounting statements. B. the length of an asset’s life when it is issued. C. the statement of a firm's financial position at one point in time, including its assets and the claims on those assets by creditors (liabilities) and owners (stockholders' equity). D. the price for which something could be bought or sold in a reasonable length of time, where
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This note was uploaded on 07/04/2011 for the course FIN FIN taught by Professor Goodman during the Spring '11 term at Superior University Lahore.

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FIN 571 final exam - 1 Occurs when inaccurate information...

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