FINANCIAL MANAGEMENT QUESTIONS
100 WORDS PER ANSWER
1. Define a growth rate and a discount rate. What is the difference between them?
2. What is the Rule of 72?
3. What is the difference between a series of payments and an annuity? What are the two specific characteristics of a series of payments that make it an annuity?
4. What is the difference between an ordinary annuity and an annuity due?
5. What does the term risk-free interest mean, and why do we usually use the U.S. Treasury bill yield as the risk-free rate?
6. Why does a mortgage typically have a lower interest rate than a car loan?
7. What are liquidity ratios? Give an example of a liquidity ratio and how it helps evaluate a company’s historical performance or future performance from an outsider’s view.
8. What are solvency ratios? Which ratio would be of most interest to a banker considering a debt loan to a company? Why?
