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Principles of Finance Questions - vpbpllc - 07-30-2012
Hey guys,
During my studies for the Principles of Finance DSST I am finding numerous posts by other people all over the internet with interesting questions that I frankly don't have the answers to and that is making me worried for my test. I was originally hoping to take it this coming Friday, however due to work and the difficulty of this test I just don't feel I am at a level where I could pass it. Would love help understanding these questions if you would be so kind.
1. How often do banks pay interest on savings - I thought this varied with each bank, but isn't it semi-annually, or is it monthly?
2. Pure discount bonds sell at? - I am unsure if this is above or below value.
3. If a business has a lot of assets in slow-moving inventory, which measure is the best indicator of their situation? - liquidity ratio??
4. Which measure is best to determine return on assets - I am entirely clueless
5. How would a firm minimize exchange rate risk? - All that I can think of is by having a commercial letter of credit, however that doesn't prevent exchange risk that just guarantees payment. All I can think of is for them to have inside knowledge of when the currency prices change.
6. If a business has a lot of assets in slow-moving inventory, which measure is the best indicator of their situation? - I am entirely unsure here.
7. Characteristics of common stock - All I can think of is that they are the "true" owners of the company, with them bearing the most risk. They are able to vote. What else is there??
8. If a person can spend 5000 annually on a car within 4 years and the interest rate is 6%, what is the price of a vehicle that the person can afford (calculate present value and sum it) - This should be 5000 pmt, 4n, 6i, = 17325.53 PV correct?
9. When is ordinary annuity paid? - This is end of the month correct, not the beginning or middle?
10. How do I compare average tax rate to the marginal tax rate?
11. Which activities increase cash? - I assume the original writer meant assets instead of cash but I could be wrong. Any suggestions on this?
12. What is a spot rate trade? - I do not know this one.