Sample Exam

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Spring 2012 Finance 3130 1. Sample Exam 1A Questions for Review The form of organization for a business is an important issue, as this decision has very significant effect on the income and wealth of the firm 's owners. a. b. True False 2. There are three primary disadvantages of a regular partnership: (1) unlimited liability, (2) limited life of the organization, and (3) difficulty of transferring ownership. These combine to make it difficult for partnerships to attract large amounts of capital and thus to grow to a very large size. a. b. True False 3. If an individual investor buys or sells a currently owned stock through a broker, this is a primary market transaction. a. True b. False One of the functions of NYSE…show more content…
d. e. 9. What would the future value of $125 be after 8 years at 8.5% compound interest? $205.83 $216.67 $228.07 a. b. c. d. e. 10. $240.08 $252.08 Last year Toto Corporation 's sales were $225 million. If sales are Projected to be $375 million 5 years from now. What would be Toto’s Compound annual growth rate in sales over the next 5 years? 5.02% 6.12% 8.10% 10.76% 12.59% a. b. c. d. e. 11. Suppose the U.S. Treasury offers to sell you a zero coupon bond for $747.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price? a. b. c. d. e. 4.37% 4.86% 5.40% 6.00% 6.60% 12. Last year Mason Corp 's earnings per share were $2.50, and its growth rate during the prior 5 years was 9.0% per year. If that growth rate were maintained, how many years would it take for Mason’s EPS to double? a. b. c. d. e. 5.86 6.52 7.24 8.04 8.85 13. You want to go to Europe 5 years from now, and you can save $3,100 per year, beginning one year from today. You plan to deposit the funds in a mutual fund which you expect to return 8.5% per year. Under these conditions, how much will you have just after you make the 5th deposit, 5 years from now? a. b. c. d. $18,368.66 $19,287.09 $20,251.44 $21,264.02 e. $22,327.22 14. You want to go to Europe 5 years from now, and you can save

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