1. The amount of interest that is deducted from the amount you wish to borrow in order to get proceeds is

a.	accrued interest.
b.	bank discount.
c.	simple interest.
d.	stated interest.

2. The approximate time that it takes a deposit to double at a certain interest rate is calculated by dividing the annual interest rate into the number

a.	36.
b.	48.
c.	72.
d.	100.

3. Banks calculate the monthly payment on a loan as

a.	an ordinary annuity with payment made one month in advance.
b.	an annuity due with payment made one month in advance.
c.	an ordinary annuity with payment made at end of month.
d.	an annuity due with payment made at end of month.

4. Your employer gives you a stock bonus of $1,000 in your company at the beginning of each year. You plan to retire in 20 years. The stock has a growth rate of 15 percent per annum. What will the value of your stock be in 20 years? This problem would be solved by using the formula for the

a.	future value of a lump sum.
b.	present value of a lump sum.
c.	future value of an ordinary annuity.
d.	future value of an annuity due.
e.	present value of an ordinary annuity.

5. Which of the following is not a step in the capital budgeting decision?

a.	corrective action
b.	evaluating the data
c.	formulating a proposal
d.	making a decision to minimize the greatest future benefit
e.	post audit

6. Start-up costs for a capital budgeting project include all of the following except

a.	changes in inventory storage space.
b.	investment costs in accounts receivable.
c.	service agreement costs.
d.	training costs of employees.

7. Which of the following is not part of the three-step process of controlling?

a.	establish standards for measuring the project
b.	measure actual performance against the standards established
c.	take corrective action if required
d.	take corrective action in every case

8. Risk is a term indicating all of the following except

a.	the certainty of future outcomes.
b.	the probability that an expected outcome will occur.
c.	the uncertainty of future outcomes.
d.	the variability of the expected outcome.

9. Which of the following would involve speculative risk?

a.	purchasing a life insurance policy
b.	purchasing a lottery ticket
c.	purchasing an extended warranty on your television set
d.	purchasing a burglar alarm system for your home

10. Which of the following would not reduce pure risk for a business?

a.	installing a burglar alarm system
b.	installing a camera to survey the parking lot
c.	installing a merchandise display case
d.	installing a sprinkler system

11. To have an insurable loss, all of the following criteria apply except

a.	the potential loss must be reasonably predictable.
b.	the loss must be accidental.
c.	the loss should be beyond the control of the insured.
d.	the loss should be catastrophic for the insurance company.

12. Which of the following holds true for whole life insurance?

a.	All cash value is returned upon death.
b.	Policies can be used as collateral.
c.	Premiums paid have no cash value.
d.	Premiums are paid for insurance only.

13. Which of the following is the least liquid of all investments?

a.	cash
b.	bonds
c.	certificates of deposit
d.	real estate

14. According to Moodys Corporate Bond Ratings, bonds which are rated _______________ are judged to have speculative elements.

a.	Aa
b.	Aaa
c.	Baa
d.	Ba

15. Who can participate in a tax-sheltered annuity?

a.	a college professor who is employed by a for-profit university
b.	an employee of a public corporation
c.	a public school teacher
d.	a self employed plumber

16. 401k plans

a.	are based on salary reduction.
b.	are employer contribution plans only.
c.	are separate from profit sharing plans.
d.	allow contributions of up to 25 percent of salary by the employer.

17. Wills

a.	are not vital for single business owners.
b.	are written documents that provide direction to others as to how you want your wishes carried out after death.
c.	describe the disposition of business assets.
d.	require the court to appoint an administrator.

18. Probate costs

a.	are a percent of the net estate.
b.	are a percent of the gross estate.
c.	are a percent of yearly retirement income.
d.	are a set fee.