With simple interest, which of the following statements is true regarding how interest is calculated? Interest rate changes over time Interest is compounded annually Interest is calculated on the principal and interest Interest is earned only on the original amount

Interest is earned only on the original amount

Financial Management Flashcards: Time Value of Money & Investment Analysis

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Finance - Personal Finance

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Cards in this deck(50)

In the context of international relations, a consul in Canada or the United Kingdom is an example of a:

Which of the following financial statements summarizes a firm's revenues and expenses over a specific period?

With simple interest, which of the following statements is true regarding how interest is calculated?

Assume you're investing $100 in a savings account today. Which term refers to the total value of this investment one year from now?

Cullen invested $5000 five years ago and earns 6% annual interest. By leaving the interest earnings in his account, he increases the amount of interest he earns each year. This process is known as:

Haley won a lottery and will receive $1000 each year for the next 30 years. The current value of these winnings is called the:

Andrew just calculated the present value of a $15,000 bonus he will receive next year. The interest rate he used in his calculation is referred to as the:

The process of determining the present value of future cash flows in order to know their value today is referred to as:

Your aunt promised to give you $5000 when you graduate college. This promise will _____ your net worth upon receipt.

Which of the following variables is the exponent in the present value formula?

Which one of the following actions will increase the present value of an amount to be received sometime in the future?

Which of the following determines the standards and procedures by which audited financial statements are presented and prepared?

Which one of the following is most likely to be a fixed cost for a business?

The debt-equity ratio is represented by which of the following formulas?

Which of the following statements regarding the weighted average cost of capital (WACC) is accurate?

A highly liquid bond that pays no interest but might entitle its holder to rental income from assets is most apt to be a:

What is the model called that determines the present value of a stock based on its next annual dividend, the dividend growth rate, and the applicable discount rate?

The dividend growth model requires the growth rate to be _____ the required return.

Preferred stock may have all of the following characteristics in common with bonds except:

A discount bond's coupon rate is equal to the annual interest divided by the bond's:

All else constant, a bond will sell at _____ when the coupon rate is _____ the yield to maturity.

When evaluating any capital project proposal, the cost of capital:

Callable bonds generally:

Forecasting risk is defined as the possibility that:

When analyzing a project, scenario analysis is best suited for accomplishing which one of the following?

The primary purpose of credit analysis is to:

Smith & Company received an unexpected opportunity. This opportunity is considered to be:

Float is defined as the:

Which one of the following methods of project analysis is defined as computing the value of a project based on the present value of the project's anticipated cash flows?

If a firm accepts Project X, it will not be feasible to also accept Project Z because both projects would require the simultaneous and exclusive use of the same piece of machinery. These projects are considered to be:

Which of the following are key reasons why companies temporarily accumulate large cash surpluses?

New working capital can create either an initial cash inflow or outflow. This is because:

Under MACRS depreciation, a 5-year asset is depreciated for how many years?

Which of the following best illustrates erosion as it relates to a snack stand at the beach?

Humberto is fairly cautious when analyzing a new project and thus he projects the most optimistic, the most realistic, and the most pessimistic outcome that can reasonably be expected. Which type of analysis is he using?

Sensitivity analysis determines the degree to which the net present value reacts to changes in a single variable. This is important because:

A bond that is payable to whomever has physical possession of the bond is said to be in:

Municipal bonds typically pay interest that is free from federal taxation. This feature makes them attractive to:

You cannot attend the shareholder's meeting for Alpha United, so you authorize another shareholder to vote on your behalf. What is the granting of this authority called?

XYZ Corporation issued bonds 3 years ago. A list of collateral used as bond security is known as:

Which of the following is classified as tangible fixed assets?

Which of the following is a source of cash for a company?

Which of the following is a current liability?

Financial planning considers multiple options and scenarios. This approach helps in:

On the statement of cash flows, which one of the following is considered a financing activity?

On the statement of cash flows, which is considered an operating activity?

Ratios that measure how efficiently a firm manages its assets and operations to generate net income are referred to as _____ ratios.

All else constant, if a firm decreases its operating costs, which one of the following will also decrease?

The financial planning process tends to place the least emphasis on a firm's:

Shareholders' equity represents the residual value of the firm. This means it is:

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Financial Management Flashcards: Time Value of Money & Investment Analysis

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