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Mid Term Question

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24 views6 pages

Mid Term Question

Uploaded by

amin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FACULTY OF BUSINESS, ACCOUNTING, FINANCE, LAW

AND HUMANITY

MID TERM EXAMINATION

COURSE TITLE : CORPORATE FINANCE

COURSE CODE : FIN2013

PROGRAMME(S) : BBAODL

STUDENT NAME :
STUDENT ID :
INSTRUCTION: ANSWER ALL THE QUESTION

Q1. “Shareholder wealth” in a firm is represented by:


A. The number of people employed in the firm
B. The book value of the firm’s assets less the book value of its liabilities
C. The amount of salary paid to its employees
D. The market price per share of the firm’s common stock

Q2. The long-run objective of financial management is to:


A. Maximize earnings per share
B. Maximize the value of the firm’s common stock
C. Maximize return on investment
D. Maximize market share

Q3. A(n) would be an example of a principle, while a(n)


would be an example of an agent.
A. Shareholder; manager
B. Manager: owner
C. Accountant; bondholder
D. Shareholder; bondholder

Q4. Aina now has RM125. Calculate the amount that would she have after 8 years if she
leaves it invested at 8.5% with annual compounding.
A. RM216.67
B. RM228.07
C. RM240.08
D. RM205.83

Q5. You want to go to Europe 5 years from now, and you can save RM3,100 per year,
beginning one year from today. You plan to deposit the funds in a mutual fund that you think
will return 8.5% per year. Under these conditions, find the total amount would you have just
after you make the 5th deposit, 5 years from now.
A. RM18,368.66
B. RM4661.34
C. RM18645.34
D. RM21,264
E. RM22,327
Q6. Future value can be defined as ________________________________.
A. Value today of a cash flow to be received in the future, given a specific interest rate
earned.
B. Interest paid on the principal of an investment and on the interest earned in the
previous period.
C. Interest payment incurred in an investment for one time period on the initial principal
of investment.
D. Value of an investment made today measured at a specific future date using either
simple interest or compound interest.

Q7. Mr. X has deposited RM5, 000 today and compounded for four years yields on the
deposit with interest of 4%. Calculate the future value lump sum payment.
A. RM 5,200
B. RM 5,001.17
C. RM 5, 849.29
D. RM 5,839.00

Q8. Jennifer wishes to accumulate RM10, 000 in her bank account in three years’ time. She
decides to invest her money in a three-year deposit account which pays an annual
compounded rate of 6%. Calculate the present value of a single amount that she put into the
account today to achieve her goal.
A. RM 8,396.19
B. RM 9,433.96
C. RM 839.62
D. RM 2,441.41

Q9. Suppose your city is building a new park, and issues bonds to raise the money to build it.
You obtain a RM1,000 bond that pays 5% interest annually that matures in 5 years. Find the
interest will you earn.
A. 1250
B. 250
C. 2500
D. 25

Q10. A certificate of deposit (CD) is a savings instrument that many banks offer. It usually
gives a higher interest rate, but you cannot access your investment for a specified length of
time. Suppose you deposit RM3000 in a CD paying 6% interest, compounded monthly.
Calculate the amount you will have in the account after 20 years.
A. 9621.41
B. 7959.89
C. 9931.61
D. 9930.61
Q11. You want to quit your job and go back to University for study degree 4 years from now,
and you plan to save RM3,500 per year, beginning immediately. You will make 4 deposits in
an account that pays 5.7% profit. Under these assumptions, calculate amount will you have 4
years from today.
A. RM16,111,99
B. RM16,917.65
C. RM17,763.23
D. RM18,652.00

Q12. Calculate the present value of the following cash flow stream at a rate of 6.25%.
Years: 0 1 2 3 4

| | | | |

CFs: RM0 RM75 RM225 RM0 RM300

A. RM411.57
B. RM433.23
C. RM456.03
D. RM480.03
E. RM505.30

Q13. At a rate of 6.5%, calculate the future value of the following cash flow stream.
Years: 0 1 2 3 4

| | | | |

CFs: RM0 RM75 RM225 RM0 RM300

A. RM526.01
B. RM526.01
C. RM553.69
D. RM582.83
E. RM721.02

Q14. Find the present value of an ordinary annuity with 10 payments of RM2,700 if the
appropriate interest rate is 5.5%.
A. RM16,576.12
B. RM17,449.21
C. RM18,367.97
D. RM19,333.65
E. RM20,351.59
Q15. Time lines are useful for visualizing complex problems prior to doing actual
calculations.
A. True
B. False

Q16. is concerned with the acquisition, financing and management of


assets with some overall goal in mind.
A. Financial management
B. Profit maximization
C. Agency theory
D. Social responsibility

Q17. The weighted average of possible returns with the weights being the probabilities of
occurrence is referred to as .
A. a probability distribution
B. the expected return
C. the standard deviation
D. coefficient of variation

Q18. Interest paid (earned on both the original principal borrowed (lent) and previous interest
earned is often referred to as .
A. present value
B. simple interest
C. future value
D. compound interest

Q19. is concerned with the maximization of a firm’s stock price.


A. Shareholder wealth maximization
B. Profit maximization
C. Stakeholder welfare maximization
D. EPS maximization
Q20. Suppose a Sime Darby Corporation bond will pay RM4,500 ten years from now. If the
going interest rate on safe 10-year bonds is 4.25%, find amount of the bond worth today.
A. RM2,819.52
B. RM2,967.92
C. RM3,116.31
D. RM3,272.13
E. RM3,435.74

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