1. During 2003, Boeing Aircraft Corporation had an inventory period of 178 days, a receivables period of 136 days and a payables period of 460 days. What was Boeing's operating cycle?

A. 136 days

B. 42 days

C. 178 days

D. 314 days

2. You invest $2,000 at the end of this year, at the end of next year, and at the end of the year after that. How much will you have at the end of the fourth year if interest rates are steady at 10% pa?

A. $7,282

B. $7,382

C. $7,182

D. $7,482

3. The Present Value Interest Factor (PVIF) is:

A. 1 minus the FVIF

B. 1 multiplied by the FVIF

C. 1 plus the FVIF

D. 1 divided by the FVIF

4. Bank A charges 10.2% compounded semi-annually, and Bank B charges 10.0% compounded quarterly. Which bank would you rather borrow from?

A. bank B

B. neither

C. bank A

D. either

5. The nominal rate of interest will always be ____________ the effective rate of interest:

A. more than

B. less than or equal to

C. less than

D. more than or equal to

6. An investment has doubled in 5 years. What is the annually compounded rate of return?

A. 14.87%

B. 15.87%

C. 13.87%

D. 16.87%

7. The risk that arises for bond owners from fluctuating interest rates is called:

A. operational risk

B. yield to maturity risk

C. price risk

D. interest rate risk

8. Periodic distributions of profit by a company to its shareholders are:

A. coupon

B. dividends

C. interest

D. both interest and coupon

9. The internal rate of return on a bond is known as the:

A. coupon rate

B. discount rate

C. required rate of return

D. yield to maturity

10. There is an inverse relationship between interest rates and:

A. bond prices

B. term to maturity

C. coupon

D. face value