Top 15 Finance Questions and Answers  # Top 15 Finance Questions and Answers

Finance is a critical aspect of personal and business life, encompassing the management of money, investments, and financial resources. To navigate this complex field, individuals and organizations often grapple with a multitude of questions. Here are the top 15 finance questions and answers to help shed light on some of the most pressing financial matters. Whether you’re looking to secure your financial future, make informed investment decisions, or simply enhance your financial literacy, these answers will provide valuable insights and guidance. From understanding the basics of budgeting to exploring complex investment strategies, this collection of questions and answers offers a broad perspective on the world of finance.

Now, let’s move on to the Top 15 Finance Questions and Answers

Select one:
a. \$958
b. \$756
c. \$728
d. \$924

Select one:
a. \$338,941.27
b. \$347,028.19
c. \$328,995.61
d. \$341,985.85

Select one:
a. 18.23 percent
b. 6.57 percent
c. 9.54 percent
d. 8.73 percent

Select one:
a. \$11,193.97
b. \$7,908.48
c. \$6,000.00
d. \$7,715.61

Select one:
a. 7.48 percent
b. 9.13 percent
c. 9.48 percent
d. 6.75 percent

### Q6. To move a cash flow in time from period 4 to period 6 we would need to

Select one:
a. Multiply the cash flow by a number greater than one.
b. Square the cash flow.
c. Cut the cash flow in half.
d. Divide the cash flow by a number greater than one.

### Q7. Assume we want to move a cash flow from period 7 to period 5. The calculation of the new amount of the cash flow would include

Select one:
a. Adding the interest rate to number one and raising the result to the power of 2.
b. Adding the interest rate to number one and raising the result to the power of 5.
c. Raising the interest rate to the power of 5.
d. Raising the interest rate to the power of 2.

### Q8. Assume you deposit \$100 in an account today and that a friend of yours deposits \$100 in an account of another bank, also today. In one year, you have \$110 in your account and your friend has \$108 in his/her account. We can conclude that

Select one:
a. Your friend earned a lower rate of interest than you.
b. Your friend is getting a compound interest while you are getting a simple interest.
c. Your friend earned a higher rate of interest than you.
d. One of the two banks made a mistake in calculating the interest payment.

### Q9. Compounding interest means the following:

Select one:
a. Interest is earned not only on the initial balance, but also on previously received interest payments.
b. The interest rate is determined by the borrower, not the lender.
c. Dividing the interest into components.
d. Two different interest rates are used for the same loan.

### Q10. Which of the following will not increase a present value?

Select one:
a. None of these answers is correct
b. Increase the interest rate
c. Increase the future value
d. Decrease the number of periods

### Q11. A dollar paid (or received) in the future is

Select one:
a. not comparable to a dollar paid (or received) today.
b. not worth as much as a dollar paid (or received) today.
c. worth more than a dollar paid (or received) today.
d. worth as much as a dollar paid (or received) today.

Select one:
a. compounding.
b. computing.
c. multiplying.
d. discounting.

### Q13. People borrow money because they expect:

Select one:
a. the time value of money to apply only if they are saving money.
b. interest rates to rise.
c. that consumers don’t need to calculate the impact of interest on their purchases.
d. their purchases to give them the satisfaction in the future that compensates them for the interest payments charged on the loan.

### Q14. All of the below are correct EXCEPT:

Select one:
a. Each individual has his/her own rate of time preference.
b. People that value future consumption less than most of the other people will most likely end up being net lenders in the market.
c. \$1 today is more valuable than \$1 tomorrow
d. Needing to assign correct values to future cash flows of companies is why we need to be able to adjust for the rate of time preference.

### Q15. Assume \$500 to be received in year 3 has a present value equal to \$400. If we keep the same interest rate assumption, but instead assume that the \$500 is received in year 2 we know that the resulting present value must be

Select one:
a. Equal to \$400.
b. Smaller than \$400.
c. Larger than \$500.
d. Larger than \$400.

1. a
2. d
3. d
4. b
5. c
6. a
7. a
8. a
9. a
10. b
11. b
12. d
13. d
14. b
15. c