Question 1

Suppose you purchase one ANZ share at $28.38 in the morning and then sell it again at $27.57 at the close of trading that day.What has been your rate of return over the holding period?

Accepted Answer

A)  2.94%
B)  - 2.94%
C)  2.85%
D)  - 2.85% D

Question 2

When compared to Australian adult individuals,institutional investors rarely hold a significant portion of any one corporation.

Accepted Answer

A) True 
 B)False  False

Question 3

An asset has a market value of $100,and intrinsic value of $105,and a present value of $113.What is the maximum amount you would want to pay now for the asset?

Accepted Answer

A)  $105
B)  $113
C)  $100
D)  Some other amount C

Question 4

The capital market is where companies purchase and sell real (productive)assets.

Accepted Answer

A) True 
 B)False

Question 5

Market capitalisation represents the market value of the firm.

Accepted Answer

A) True 
 B)False

Question 6

Fisher's Separation Theorem demonstrates how individuals can substitute present consumption for future consumption.

Accepted Answer

A) True 
 B)False

Question 7

Shares and bonds both give their holder a proportional ownership in the firm that issues them.

Accepted Answer

A) True 
 B)False

Question 8

Individual companies will normally acquire funding through the sale of capital assets.

Accepted Answer

A) True 
 B)False

Question 9

Capital budgeting is:

Accepted Answer

A)  Buying real (productive) assets
B)  Analysing potential projects' returns
C)  Allocating cash flows generated by productive assets to shareholders,bondholders or reinvest in the business
D)  All of the above

Question 10

To ensure optimal benefit to an economy,corporations should apply which of the following resources in the most efficient way possible?

Accepted Answer

A)  Energy and time
B)  Factories and machinery
C)  Plant and equipment
D)  Capital and labour

Question 11

Who make the major decisions on how a company carries out its business?

Accepted Answer

A)  The board of directors
B)  Shareholders
C)  The chief executive officer
D)  Creditors

Question 12

In corporate finance we focus on which type of asset?

Accepted Answer

A)  Sentimental
B)  Nominal
C)  Real
D)  Financial

Question 13

Cash flows generated by the firm can be ________________

Accepted Answer

A)  Reinvested within the corporation
B)  Paid to shareholders
C)  Paid to bondholders
D)  All of the above

Question 14

An asset has a market value of $105,and an intrinsic value of $100,and a present value of $113.What is the maximum amount you would want to pay now for the asset?

Accepted Answer

A)  $100
B)  $105
C)  $113
D)  Some other amount

Question 15

Which of these is the financing decision?

Accepted Answer

A)  The form in which returns generated by the firm are passed on to equity holders
B)  The mix of funding obtained from capital markets,in terms of proportional holdings of equity and liabilities
C)  The level of directors remuneration
D)  The manner in which funds raised in the capital markets are employed in productive activities

Question 16

The notion that $1 in the future is not the equivalent of $1 today is referred to as ____________________

Accepted Answer

A)  The rate of return
B)  An opportunity cost
C)  The intrinsic value
D)  The time value of money

Question 17

Suppose you bought one NAB share for $28.38 on 1 July and then sold it for $27.57 on 1 August.On 25 July,you received a dividend of $1.47 on the share.What has been your rate of return over the holding period?

Accepted Answer

A)  2.4%
B)  8.0%
C)  8.3%
D)  2.3%

Question 18

Which of the following does the ASIC not regulate?

Accepted Answer

A)  Insurance issuers
B)  Financial advisers
C)  Australian financial markets
D)  None of the above

Question 19

The manner in which funds raised in capital markets are to be employed in productive activities is the subject of the ____________ decision.

Accepted Answer

A)  Financing
B)  Investment
C)  Gearing
D)  Capital budgeting

Question 20

Corporate finance is concerned with making decisions about what investments a company should make,how these investments are financed and how company directors should be remunerated.

Accepted Answer

A) True 
 B)False

Exam 1: Preliminary Concepts

Suppose you purchase one ANZ share at $28.38 in the morning and then sell it again at $27.57 at the close of trading that day.What has been your rate of return over the holding period?

When compared to Australian adult individuals,institutional investors rarely hold a significant portion of any one corporation.

An asset has a market value of $100,and intrinsic value of $105,and a present value of $113.What is the maximum amount you would want to pay now for the asset?

The capital market is where companies purchase and sell real (productive)assets.

Market capitalisation represents the market value of the firm.

Fisher's Separation Theorem demonstrates how individuals can substitute present consumption for future consumption.

Shares and bonds both give their holder a proportional ownership in the firm that issues them.

Individual companies will normally acquire funding through the sale of capital assets.

Capital budgeting is:

To ensure optimal benefit to an economy,corporations should apply which of the following resources in the most efficient way possible?

Who make the major decisions on how a company carries out its business?

In corporate finance we focus on which type of asset?

Cash flows generated by the firm can be ________________

An asset has a market value of $105,and an intrinsic value of $100,and a present value of $113.What is the maximum amount you would want to pay now for the asset?

Which of these is the financing decision?

The notion that $1 in the future is not the equivalent of $1 today is referred to as ____________________

Suppose you bought one NAB share for $28.38 on 1 July and then sold it for $27.57 on 1 August.On 25 July,you received a dividend of $1.47 on the share.What has been your rate of return over the holding period?

Which of the following does the ASIC not regulate?

The manner in which funds raised in capital markets are to be employed in productive activities is the subject of the ____________ decision.

Corporate finance is concerned with making decisions about what investments a company should make,how these investments are financed and how company directors should be remunerated.