Series 66: Chapter 1 Practice Questions

Chapter 1 Practice Questions

1. 1. Which of the following would not be a current asset?
2. A. Inventory
3. B. Accounts receivable
4. C. Cash
5. D. Trademarks
6. 2. The best place to look for a current list of the long-term debts a company must repay is its:
7. A. Prospectus
8. B. Form 144
9. C. Balance sheet
10. D. Income statement
11. 3. All of the following are components of a company’s quick ratio except:
12. A. Inventory
13. B. Accounts receivable
14. C. Cash
15. D. Current liabilities
16. 4. An investor calculating the investing merits of a payment or payments not yet received might potentially use all of the following except:
17. A. Present value
18. B. Net present value
19. C. Future value
20. D. Internal rate of return
21. 5. Jim wishes to calculate the future value of $1,000 three years from now if it earns 8%. Which of the following could be used to calculate this amount?
22. A. $1,000 / (1 + 0.08)3
23. B. $1,000 x (1 + 0.08)3
24. C. 3 x $1,000 x (1 + 0.08)
25. D. 3 x $1,000 / (1 + 0.08)
26. 6. Which balance sheet item is deducted from current assets in arriving at the acid test or quick ratio?
27. A. Accounts receivable
28. B. Inventory
29. C. Taxes
30. D. Equipment
31. 7. My ABC Company sells personalized ABC books and has a current ratio of 4:1. If the company has $40,000 in current assets, how much working capital does it have?
32. A. $40,000
33. B. $30,000
34. C. $10,000
35. D. $160,000
36. 8. You have received the following facts about various companies. One of the pieces of information has an error. Which company is most likely to have the error?
37. A. Company A has a quick ratio of 0.2
38. B. Company B has a working capital of -$30 million
39. C. Company C has a P/E of 15
40. D. Company D has a current ratio of -2
41. 9. Ste