1. To increase a given future value, the discount rate should be adjusted?

a. first upward and then downward

b. upward
c. None of the above answer are correct
d. downward
2. A portfolio has two securities and the expected return on them is 12% and 16%,
respectively. What is return of portfolio if first security weights 40% of total
portfolio?
a. 13.4%
b. 15.4%
c. 14.4%
d. 12.4%
3. To compute the required rate of return for equity in a firm using the CAPM, it is
necessary to know all of the following except?
a. the earnings for the next time period
b. the risk-free rate
c. the beta for the firm
d. the market return expected for the time period
4. Which of the following is considered a financial activities related to the asset
management decision of a business?
a. Paying suppliers
b. All the answer are correct dc the hien BCDKT
c. Cash management
d. Collecting from customers
5. Mr Dam invests a portfolio including 5 stocks: A, B, C, D, E. He wants to put half
his money in stock A, an equal amount in B and C, and a tenth of his money in
stock D. and E's weight is 20%. If the beta of the 5 stocks mentioned above
(A,B,C,D,E) are 1, 2, 3, 4 and 5, respectively. What is the beta of Mr Dam's
portfolio?
a. 1.5
b. Can not determined
c. 2.4
d. 1.8
6. You want to buy an ordinary annuity that will pay you $4,000 a year for the next
20 years. You expect annual interest rates will be 8% over that time period. The
maximum price you would be willing to pay for the annuity is closers to?
a. $42.343
b. $40,000
c. $32,000
d. $39,272
7. What does Modigliani and Miller's (M and M) Proposition II suggest about a
company's cost of equity?
a. The cost of equity remains constant regardless of changes in the economic
environment
b. The cost of equity increases as the company takes on more debt to
compensate for higher financial risk.
c. The cost of equity is independent of the company's level of debt.
d. The cost of equity decreases as the company takes on more debt.
8. ABC Inc.'s $100 par value preferred stock just paid its $10 per share annual
devidend. The preferred stock has a current market price of $96 a share. The
corporate tax rate is 40 percent, and the firm plans to maintain its current capital
structure relationship into the future. The component cost of preferred stock to
ABC Inc would be closest to?
a. 10%
b. 6.25%
c. c.10.4% 10/96
d. 6%
9. The long-run objective of financial management is to?
a. maximize earnings per share
b. maximize market share
c. maximize the value of the firm's common stock
d. maximize return on investment
10. A firm's intrinsic value is?
a. All the answers above are incorrect
b. An estimate of the stock's "true" value
c. The actual market price based on perceived but possibly incorrect
information
d. An alternative term for long-term market value
11. A major advantage of the corporate form of organization is ?
a. limited owner liability.
b. legal restrictions
c. reduction of double taxation
d. easy of organization
12. Which one of the following is the theory that a firm should borrow up to the point
where the additional tax benefit from an extra dollar of debt equals the additional
costs associated with financial distress from that additional debt?
a. None of above
b. M and M proposition I, with taxes
c. M and M proposition Il, with taxes
d. M and M proposition I, without taxes
13. NQ corporation is planning to implement a project. This project requires an initial
investment of $10,000. After that, the project will bring to the company $1,500 in
year 1, $2,000 in year 2, $2,000 in year 3, $2,000 in year 4 and $5,500 in year 5.
What is the NPV of this project if the cost of capital is 10%?
a. $930.45
b. $699.75
c. -$930.45
d. -$699.75
14. The expected rate of return on a bond if bought at its current market price and held
to maturity is?
a. Current yield
b. yield to call
c. coupon yield
d. yield to maturity
15. Assume ABC In. had 200 million shares outstanding at the end of 2020. From the
income statement, Goscape had a net income of $450 million for the year, and
total dividends were $120 million. What was DPS?
a. $1.5
b. $0.6 120/200
c. c.$2.25
d. $4.5
16. An unlevered firm has an equity value of $20 million. If the corporate tax rate is
30% and the company refinances with 40% debt. the new value of firm will be?
a. $20 million
b. $15.6 million 40%* 20
c. $22.4 million VL= 20+30%*8
d. $14.4 million
17. When the market's require rate of return for a particular bond is much less than its
coupon rate, the bond is selling at?
a. par value
b. a premium
c. cannot be determined without more information
d. a discount
18. With compounding at 10 percent for 30 years, compounding annually the future
value of an initial investment of $2,000 is closest to?
a. $328,282
b. $34,898 2000(1+10%)^30
c. c.$40,171
d. $164,500
19. Fill in a blank: The greater the beta, the ... of the security involved?
 a. less the systematic risk
b. less the unsystematic risk
c. greater the systematic risk
d. greater the unsystematic risk
20. The company is financed with common equity, so a decrease in the firm's marginal
tax rate would...?
a increase the cost of capital because of a higher after-tax cost of debt
b. increase the cost of capital because of a higher after tax cost of debt and equity
c. not affect the cost of capital
d. decrease the cost of capital because of a lower after-tax cost of debt and equity
21. The cost of preferred stock is computed the same as the?
a. after-tax cost of debt
b. return on an annuity
c. return on a perpetuity
d. pre-tax cost of debt
22. Suppose that a firm has 20% debt and 80% equity in its capital structure. The
interest rate is 12.5% and cost of equity is 15%. The corporate tax rate is 20%.
What is the overall cost of capital?
a. 14.5%
b. 13%
c. 14% 20%*12.5%*(1-20%)+80%*15%
d. 13.5%
23. What is the process of planning and managing a firm's long-term investments?
a. Working capital management
b. Capital budgeting
c. Fixed assets
d. Capital Structure
24. Which of the following is the type of business owned by one person?
a. Corporation
b. General partnership
c. Limited partnership
d. Sole proprietorship
25. Supposing Winwin Corporation paid a dividend of $4 per share last year; The
stock currently sells for $60 per share, You estimate that the dividend will grow
steadily at a rate of 6% per year into the indefinite future; What is the cost of
equity capital for Winwin?
a. 13.07% r =(D1/P0)+g = (4*(1+6%)/60)+6%
b. 12.67%
c. 7.07%
d. 6.67%
26. What is the interest rate expressed as if it were compounded once per year?
a. Effective annual rate (EAR)
b. Annual percentage rate (APR)
c. Stated/quoted interest rate
d. All the answers are wrong
27. Corporation had last year dividend of $4.5 per share; lts stock is currently traded at
$58 per share; Assume the dividend with a rate of 4% per year forever; What is the
cost of equity capital for Sunny Corporation?
a. 11.67%
b. 11.76%
c. 11.98%
d. 12.076
28. Annually, you deposit $1,000 at the beginning of each year for the next seven
years; The interest rate is 6% per year; How much will you have at the end of year
7?
a. $8,393.84
b. $8,292.33
c. $8,264.60
d. $8,897,47
29. Which of the following factors affects the value of a bond?
a. Coupon payment
b. The required rate of return
c. Par value
d. All the answers are correct
30. Ms Anna is going to receive $5,000 today plus $1,200 a year for the next three
years; What is the present value of these monies to her if the discount rate is
8.5%?
a. $3.064
b. $8,064
c. $5,064
d. $9.064
31. ABC calculated net present value (NPV) is negative, the discount rate used is
.......?
a. greater than the internal rate of return (IRR)
b. less than the internal rate of return (IRR)
c. equal to the internal rate of return (IRR)
d. All the answers above are incorrect
32. Regarding an ordinary annuity and an annuity due with the same payments and
positive interest rate, which of the following statements is least accurate?
a. The present value of the ordinary annuity is greater than the annuity due.
 b. The future value of the ordinary annuity is less than an annuity due.
c. The future value of the annuity due is greater than the ordinary annuity.
d. Cash flow of the ordinary annuity is discounted one period more than cash
flow of the annuity due
33. An analyst has gathered the following data about a company with a 12% cost of
capital: Project A: Cost: $18.500; Life: 5 years; Cash inflows: $5,000/year. Project
B: Cost: $25,000; Life: 5 years; Cash inflows: $7,500/year. If the projects are
independent, what should the company do?
a. Accept both Project A and Project B
b. Accept Project A and reject Project B
c. Reject both Project A and Project B
d. Accept Project 8 and reject Project A
34. ABC Corp plans to finance a $1 million project with 30% debt and 70% equity;
The pre-tax cost of debt is 8%, the cost of equity is 20%, the corporate tax rate is
40%; Calculate WACC?
a. 15.92%
b. 16.40%
c. 20.00%
d. 15.44% 30%*8%*60%+70%*20%
35. If using the compounded interest rate, which of the following choices will yield te
smallest future value of the lump sums?
a. The interest rate is compounded annually
b. The interest rate is compounded semiannually
c. The interest rate is compounded quarterly
d. The interest rate is compounded monthly
36. The capital structure of ABC Company consists solely of debt and common stock.
Given the following information about a company's capital structure: Debt
outstanding, market value $10 million; Common stock outstanding, market value
$30 million; tax rate 40%; Cost of debt 8%; Expected market return 11%; market
risk premium: 5%; beta 1.2. What is the weighted average cost of capital closest
to?
a. 10.20% 10/40*8%*60%+75%*12%
b. 14.85%
c. 10.35%
d. All the answers are incorrect
37. ABC company has preferred stock outstanding that paying an annual dividend of
$3.50 per share. If an investor wants to earn a rate of return on 10%, how much
should he be willing to pay for a share of ABC's preferred stock?
a. $31.88
b. $35.00 3.5/10
 c. $42.10
d. $44.92
38. A stated annual interest rate of 8% compounded semiannually results in an
effective annual rate closest to:
a. 8.16% EAR= ((1+8%/2)^2)-1
b. 8.27%
c. 16.36%
d. 16%
39. ABC corporation is planning to implement a project that requires an initial
investment of $12,000; and then, the project will bring to the company $1,500 in
year 1, $3,500 in year 2, $3,500 in year 3, $3,500 in year 4 and $5,500 in year 5;
What is the NPV of this project if the cost of capital is 10%?
a. $596.02
b. $978.34
c. $691.41
d. $702.45
40. In the formula re = (D1/P0) + g, what does (D1/PO) represent?
a. The expected capital gains yield from a common stock.
b. The expected dividend yield from a common stock.
c. The dividend yield from a preferred stock.
d. The interest payment from a bond.
41. ABC Co issued 15-year bonds 2 years ago at a coupon rate of 10%; The bonds
make annual payments and have a par value of $1,000; If the on these bonds is
9%, what is the current bond price?
a. $1,077.86
b. $1,070.89
c. $1,071.61
d. $1,074.87
42. There are two projects which are the same in initial investment, duration, and total
nominal income. Which of the following is true?
a. These two projects always have the same NPV
b. These two projects always have the same IRR
c. The project with the earlier cash flow (lower DPP) is more efficient.
d. A&B is correct
43. Debt is cheaper than equity because ……?
a. debt is less risky than equity.
b. dividends are tax deductible and interest payments are not.
c. debtors have a lower claim to assets at liquidation than do shareholders.
d. dividend payments on common share are optional.
44. Tax shield from interest when a business borrows debt is determined by which
formula?
a. Interest rate * Debt
b. Interest * personal income tax rate
c. Interest rate * Debt * Corporate tax rate
d. Interest amount * corporate income tax amount
45. Which of the following are not financial assets?
a. Raw material
b. Bank loans
c. Stocks
d. Bonds
46. A woman who is currently 26 years old has a goal of becoming a millionaire by
the time she reaches the age of 55; Assuming she can earn an average return of 8%
on her investments, how much money does she need to save at the end of each
year to reach her goal?
a. $8,050.18
b. $9,618.54
c. $8,694.19
d. $9,484.11
47. A_share of common stock in a company will have a constant dividend that is
much like a share of preferred stock?
a. zero-growth
b. constant-growth
c. nonconstant-growth
d. two-stage growth
48. The rationale for using dividend discount models to value equity is that ........?
a. The inputs are easily estimated and the model's estimates are robust
b. The extrinsic value of a stock is the present value of its future dividends
c. The model works well for the finite period of time over which dividends
are paid
d. The intrinsic value of a stock is the present value of its future dividends
49. A ……. share of common stock in a company will have a constant dividend
that is much like a share of preferred stock?
a. zero-growth
b. constant-growth
c. nonconstant-growth
d. two-stage growth
50. If the calculated net present value (NPV) is negative, the discount rate used is
.......?
a. greater than the internal rate of return (IRR)
 b. less than the internal rate of return (IRR)
c. equal to the internal rate of return (IRR)
d. All the answers above are incorrect
51. Which one of the following is correct if the time period is increased while the
interest rate remains constant?
a. The annual payments from a given present value amount will increase.
b. The present value required to reach a given future value will increase.
c. The present value of an annuity will decrease.
d. The future value of a given present value will increase.
52. You deposit an amount of $2,000 in a savings account; The interest rate is 8.5%
per year; How long will it take to double your initial amount?
a. 7.7 years
b. 8.5 years
c. 9.5 years
d. 10.2 years
53. Which of the following decisions is not the decision made by financial managers?
a. Should the firms hire this person?
b. Which projects should the firm invest?
c. Which one, debt or equity, should the firm use to finance its new project?
d. How much dividend the firm should pay this year?
54. HoDu Corp has the following financial information in 2022: Revenue: 5400
billion (VND), variable costs accounted for 60% of revenue, fixed costs: 1200
billion (VND); Debt 2000 billion (VND), loan interest rate 12%; Average number
of circulating shares is 90 million shares; corporate income tax rate: 20%; What is
the tax shield (VND billion) and EPS (VND/CP) of HoDu?
a. 48; 6400
b. 48; 8533
c. 192; 6400
d. 192; 8533
55. …….. is …….. in which the cash flows continue forever?
a. A perpetuity; an annuity
b. An annuity; a perpetuity
c. Compounding: interest rate
d. Interest rate: compounding
56. Which of the following statements is true about tax shields?
a. Only interest expense and amortization cost create tax shield
b. All costs create a tax shield
c. Operating costs create tax shields but financial costs do not
d. Financial costs create tax shields but operating costs do not
57. The agency cost of a joint stock company is incurred due to
 a. There is a separation of ownership and management rights in the company
b. There is a conflict between the owner and the company's agent
c. There exists asymmetric information between the owner (retail shareholder)
and the representative of the company (the board of directors)
d. All of the above statements are correct
58. Which of the following would be considered an advantage of the corporation
form of business organization?
a. Wide access to capital
b. Limited life
c. Income is taxed at only one level
d. Unlimited liability
59. When project cash flows are unconventional there may be
a. A&B are incorrect
b. A&amp:B are correct
c. multiple IRR
d. no IRR
60. What is the primary goal of financial management?
A. Maximizing firm's profits
B. Maximizing sharecholder’s wealth
C.Minimizing firm's costs
D. Maximizing manager's wealth
61. Which of the following choices would be considered the best effort to reduce the
agency cost?
A. Bonus for senior management an amount proportional to the number of
employees recruited each year
B. Bonus shares for senior management when the company improves
production efficiency
C. Increase salaries for the board of directors when the company opens new
stores
D. Providing cars and accommodation for the company's board
62. Which of the following is considered a daily financial activities of a business?
A. Invest in new factories
B. Release Stock
C. Pay the supplier
D. Decide on the dividend ratio
63. Which of the following makes the diversification best beneficial in terms of risk
minimization When two stocks…….
a. are perfectly positively correlated
b. have no correlation
c. are somewhat correlated
 d. are perfectly negatively correlated
64. A company has revenue of 500,000 USD, operating expenses of 350,000 USD,
interest expense of 50,000 USD, tax rate of 20%, common stockholders' equity of
525,000 USD. What is return on equity?
A. 15,24% ((1-20%)*(500-350-50))/525
B. 16,0%
C. 19.05%
D. 28,57%
65. Suppose ABC had 200 million shares outstanding at the end of 2023. Net income
for the year was $450 million, tax rate was 20%, total dividends were $120
million. What was ABC's 2023 EPS?
A. $0.48 per share
B. $0.60 per share
C. $1.80 per share
D. $2.25 per share 450/200
66. Lada Inc. has revenue of 800,000 USD, operating expenses of 612,000 USD,
interest expense of 30,000 USD and corporate tax rate of 25%. How much is this
company's EBT?
A. $188,000
B. $158,000 800-612-30
C. $141,000
D. $118,500
67. 80. Which of the following interest compounding methods provides the smallest
future value of a lump sum?
A. compounded annually
B. compounded quarterly
C. compounded semiannually
D. compounded monthly
68. What is the value of a perpetuity with a payment of $1,000 annually and a rate of
5.25% compounded annually?
A. $19,047.62
B. $5,250.00
C. $52.50
D. $190,47
69. When market interest rates decrease, what will the value of the coupon bond be?
A. Reduce
B. Increase
C. Depends on dividends
D. Depends on EAT
70. What is a financial asset that pays out a fixed amount of cash at the end of each
period for a specified period called?
A. Perpetuity
B. Ordinary annuity cuoi ki
C. Lump sums
D. Annuity due dau ki
71. The project requires an initial investment of $12,000. After that, the project will
bring to the company $1,500 in year 1, $3,500 in year 2, $3,500 in year 3, $3,500
in year 4 and $5,500 in year 5.
a. What is the NPV of this project if the cost of capital is 10%?
A. $596.02
B. $691.41
C. $702.45
D. $978.34
b. What is the IRR of this project?
A. 10.0%
B. 10.9%
C. 11.0%
D. 11.9%
72. What is the project's discounted payback period (DPP)?
A. From 1 to 2 years
B. From 3 to 4 years
C. From 2 to 3 years
D. From 4 to 5 years
73. Ms. A deposit an amount of $2,000 in a savings account. The interest rate is 8.5%
per year. How long will it take to double your initial amount?
A. 7.7 years
B. 8.5 years
C. 9.5 years
D. 10.2 years
74. You want to retire 30 years from now with an amount of $1,00,000. Assume you
can earn an interest rate of 8% per year. How much will you need to save today to
achieve your goal?
A. $97,643.7
B. $98,145.6
C. $99,377.3
D. $101,121.8
75. Ms. A receives $5,000 today and $1,200 a year for the next three years. What is
the present value of this amount to her if the discount rate is 8.5%?
A. $3,064
 B. $5,064
C. $8,064
D. $9,064
76. A 10-year treasury bond currently has a yield of 5%. The required rate of return
of the market portfolio is 12%. Stock B has a beta coefficient of 1.2. What is the
required rate of return on stock B?
A. 11.0%
B. 12.0%
C. 13.4% 5% + 1.2 * (12% - 5%)
D. 19.4%
77. Company's target capital structure calls for 40% debt and 60% common equity. Its
pre-tax cost of debt is 10.0%, its cost of equity is 15% and its income tax rate is
20%. What is its WACC?
A. 11.90%
B. 12.00%
C. 12.20%
D. 13.00%
78. The purchase of new machinery and equipment is also referred to as the …..
A. Financing decision
B. Asset Management decision
C. Investment decision
D. Devidend decision
79. Which of the following issues is an example of agency problems?
A. Managers follow their own objectives, not to maximize the shareholders'
wealth.
B. The CEO assigns a task for the CFO but the CFO does not obey.
C. The CEO assigns a task for the staff but the staff does not obey.
D. The CEO does not obey the Chairman of the Board.
80. Which of the following is not a decision of the financial manager?
A. Which projects should the company invest in?
B. Which debt or equity should the company use to finance its new project?
C. Should companies hire this CFO?
D. How much dividend should the company pay this year?
81. In 2023, Sunny Ltd. had total expenses of $400,000; debt of $600.000 with
interest rate of 10% per year and tax rate of 20%. How much was its tax shield
from interest expense in 2023?
A. $8,000
B. $12,000
C. $80,000
D. $120,000
82. Which of the following should be the primary goal of a publicly-owned
corporation?
A. maximizing profit
B. maximizing shareholders' wealth
C. minimizing risk
D. minimizing market share
83. ABC's bond has coupon payment at the end of each year whereas FTP's bond has
its at the beginning of each year. Both bonds have the same par value, maturity,
coupon payment and required rate of return, which bond has the higher intrinsic
value?
A. ABC's bond
B. FTP's bond
C. The same
D. Not enough information to answer
84. What disadvantage of IRR does MIRR overcome?
A. IRR is difficult to calculate
B. IRR is not closely related to NPV
C. IRR can be more than one rate
D. All the answers are correct
85. At the end of each year, project X has $4,200 in year 1; $5,300 in year 2; $6,100
in year 3; $7,400 in year 4 and a discount rate of 14%. The initial cost of this
project is $9,000
a. What is the discounted payback period for these cash flows?
A. Between 0 to 1 years
B. Between 2 to 3 years
C. Between 1 to 2 years
D. Between 3 to 4 years
b. What is the NPV for this project?
A. $691,41
B. $12691,41
C. $7.261
D. $16.261
86. A 26 year-old woman wants to be a millionaire at the age of 55. She can earn an
average of 8% on her investments, how much does she have to save at the end of
each year to reach her goal?
A. $34,482.15
B. $1,738.91
C. $2,279.35
D. $ 9,619
87. Which of the following makes the diversification best beneficial in terms of risk
minimization?
A. The stocks are perfectly positively correlated
B. The stocks are perfectly negatively correlated
C. The stocks are somewhat correlated
D. The stocks have no correlation
88. FRT is financed with stocks and debt of $70 million and $30 million, repectively.
The YTM on their debt is 10% and the expected rate of return on the stocks is
20%. If the corporate tax rate is 25%, what is the firm's WACC?
A.16.25% 70*20%+30*10%*75%
B. 13.00%
C. 14.75%
D. 11.25%
89. Suppose the risk-free rate is 8%, the expected return on the stock S is 20%. what
is the projected risk premium on stock S?
A. 20%
B. 12%
C. 8%
D. All are wrong
90. Stock A has an initial price of $68 per share, paid a dividend of $1.65 per share in
last year and had an ending share price of $73. What is the percentage total return?
A. 9.11%
B. 9.78% [(73 - 68 + 1.65) / 68]
C. 6.84%
D. 7.89%
91. A security is less risky than the average stock if its beta is…….
A. Bigger than 1
B. Smaller than 1
C. Equal to 1
D. Equal to 0
92. Suppose you hold a portfolio of five risky assets. This portfolio is equally
weighted. So, how much weight does each asset account for in the portfolio?
A. 20.00%
B. 25.00%
C. 33.33%
D. 50.00%
93. The rate of return for a firm has been estimated as a 10% probability of earning a
15% rate of return, a 40% probability of a 7% return, a 30% probability of a 5%
return and a 20% probability of a -3% (negative) return. What is the expected rate
of return?
 A.5.2% 0,1*0,15+0,4*0,07+0,3*0,05+0,2*0,03
B. 6.0%
C. 6.4%
D. 7.5%
94. Which of the following statements best describes the amortized loan schedule?
Each year ....
A. the amount of interest paid is decreasing and the amount of principal
repayment is decreasing.
B. the amount of interest paid is increasing and the amount of principal
repayment is increasing
C. the amount of interest paid is decreasing and the amount of principal
repayment is increasing.
D. the amount of interest paid is increasing and the amount of principal
repayment is decreasing.
95. Which of the following is considered an advantage of a joint stock company?
A. Limited life
B. Income is taxed at only one level
C. Wide access to capital
D. Unlimited liability
96. Which of the following is incorrect about the order of profit distribution of Joint-
stock companies?
A. Interest expenses are paid before corporate income tax.
B. Bond interest is paid after preferred dividends.
C. Preferred dividends are paid after corporate income tax.
D. Preferred dividends are distributed before dividends of common stocks