Easy Principles of Finance Practice Questions

143 free easy-difficulty Principles of Finance questions, drawn live from KomFi's calibrated bank. Build the foundation first: these test the core mechanics every harder question assumes.

1. Which loan has the higher effective annual rate (EAR)?
2. Using the Capital Asset Pricing Model (CAPM), calculate the cost of equity for a firm with a beta (β) of 1.2
3. What is its current market price?
4. What is the Multiple of Invested Capital (MOIC) for the equity investors?
5. What is its Modified Duration?
6. What is the Cash Flow from Operations (CFO)?
7. What is the net profit per share for the investor?
8. What is its Degree of Financial Leverage (DFL)?
9. What are its Current Ratio and Quick Ratio respectively?
10. Using the Capital Asset Pricing Model (CAPM), what is the expected return of the stock?
11. Using Hamada's equation, what is the levered beta (β_L) of a firm if its unlevered beta (β_U) is 0.90, its deb
12. According to the Pecking Order Theory, which of the following is a firm's least preferred source of funding?
13. An investor holds a portfolio with a daily standard deviation of 1.5%. Using the parametric method, what is th
14. Using the Gordon Growth Model assumptions, what is the firm's sustainable growth rate (g)?
15. If the WACC is 10%, what is the Equivalent Annual Annuity (EAA) of Project A?
16. A 10-year corporate bond with a face value of $1,000 pays an annual coupon of 6%. If the current market yield
17. What is the expected return of the portfolio?
18. What is the Enterprise Value (EV) of the firm?
19. A perpetuity pays $100 every year forever. If the discount rate is 8%, what is the present value of this perpe
20. What is the Interest Coverage Ratio?
21. In the context of the Fama-French Three-Factor Model, what does the 'HML' factor represent?
22. Using the formula for future value, what will the account balance be after 10 years?
23. According to the Net Present Value criterion, which project should be chosen?
24. Calculate the 'Profitability Index' for a project with an initial cost of 200,000 and a present value of futur
25. What is the primary difference between an 'Ordinary Annuity' and an 'Annuity Due'?
26. If the firm is 100% equity financed, what is its ROE?
27. If the market yield to maturity (YTM) suddenly increases to 5.5%, what will happen to the bond's price?
28. If the required rate of return is 10%, what is the Net Present Value (NPV)?
29. If a firm increases its use of financial leverage (debt) while its operating income (EBIT) remains constant, w
30. Which of the following would be categorized as a 'Cash Flow from Investing Activities' on the Statement of Cas

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