Business Administration
Textbook Exam Questions
Course Introduction
Business Administration is a comprehensive course that introduces students to the core principles and practices governing modern organizations and enterprises. Covering topics such as management, marketing, finance, human resources, operations, and entrepreneurship, the course equips learners with essential skills for effective decision-making and strategic planning. Through case studies and real-world examples, students gain insight into how businesses operate in dynamic environments, preparing them for leadership roles and fostering an understanding of both domestic and global business landscapes.
Recommended Textbook
Fundamentals of Corporate Finance Global 3rd Edition by Jonathan Berk
Available Study Resources on Quizplus
31 Chapters
2316 Verified Questions
2316 Flashcards
Source URL: https://quizplus.com/study-set/3400
Page 2
Chapter 1: The Corporation
Available Study Resources on Quizplus for this Chatper
37 Verified Questions
37 Flashcards
Source URL: https://quizplus.com/quiz/67484
Sample Questions
Q1) You own 100 shares of a Sub Chapter "S" corporation in the U.S.. The corporation earns $5.00 per share before taxes. Once the corporation has paid any corporate taxes that are due, it will distribute the rest of its earnings to its shareholders in the form of a dividend. If the corporate tax rate is 40% and your personal tax rate on (both dividend and non-dividend)income is 30%, then how much money is left for you after all taxes have been paid?
A)$210
B)$300
C)$350
D)$500
Answer: C
Q2) Which of the following organization forms accounts for the greatest number of firms in the U.S.?
A)"S" corporation
B)Limited partnership
C)Sole proprietorship
D)"C" corporation
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Introduction to Financial Statement Analysis
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/67483
Sample Questions
Q1) Which of the following balance sheet equations is INCORRECT?
A)Assets - Liabilities = Shareholders' Equity
B)Assets = Liabilities + Shareholders' Equity
C)Assets - Current Liabilities = Non-current (Long Term)Liabilities
D)Assets - Current Liabilities = Non-current (Long Term)Liabilities + Shareholders' Equity
Answer: C
Q2) Luther's current ratio for 2012 is closest to:
A)0.84
B)0.92
C)1.09
D)1.19
Answer: D
Q3) Which of the following is an example of an intangible asset?
A)Brand names and trademarks
B)Patents
C)Customer relationships
D)All of the above are intangible assets.
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Financial Decision Making and the Law of One
Price
Available Study Resources on Quizplus for this Chatper
89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/67482
Sample Questions
Q1) If the interest rate is 7%, the NPV of alternative #1 is closest to:
A)$350,000
B)$357,000
C)$375,500
D)$400,000
Answer: A
Q2) If we use future value rather than present value to decide whether to make an investment:
A)we will make a bad decision, since the future value will always be higher if the discount rate is positive.
B)we will make a bad decision, since the future value will always be lower if the discount rate is positive.
C)we will make the same decision using either future value or present value.
D)There is not enough information given to answer the question.
Answer: C
Q3) The price per share of the ETF in a normal market is:
Answer:
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: The Time Value of Money
Available Study Resources on Quizplus for this Chatper
89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/67481
Sample Questions
Q1) Draw a timeline detailing Joe's cash flows from the sale of the family business.
Q2) Assume that college costs continue to increase an average of 4% per year and that all her college savings are invested in an account paying 7% interest. Draw a timeline that details the amount of money she will need to have in the future four each of her four years of her undergraduate education.
Q3) Assuming that college costs continue to increase an average of 4% per year and that all her college savings are invested in an account paying 7% interest, then the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education is closest to:
A)$97,110
B)$107,532
C)$101,291
D)$50,000
Q4) At an annual interest rate of 7%, the present value of this timeline in year 0 is closest to:
A)$3,080
B)$3,600
C)$3,770
D)$4,035
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Interest Rates
Available Study Resources on Quizplus for this Chatper
68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/67480
Sample Questions
Q1) The present value of the lease payments for the delivery truck is closest to:
A)$206,900
B)$207,050
C)$207,680
D)$198,420
Q2) Wyatt oil is considering drilling a new oil well that is initially expected to produce oil at a rate of 10 million barrels per year. Wyatt has a long-term contract that allows them to sell the oil at a profit of $2.50 per barrel. The cost of drilling the rig is $175,000,000. If the rate of oil production from the rig declines by 3% over the year and the discount rate is 9% per year (EAR), then using continuous compounding, the NPV of this new oil well is closest to:
A)-$333,333,000
B)$28,128,000
C)$33,333,000
D)$39,340,000
Q3) The effective annual rate on your firm's borrowings is closest to:
A)6.00%
B)6.14%
C)6.25%
D)6.30%
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Valuing Bonds
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/67479
Sample Questions
Q1) Based upon the information provided in the table above, you can conclude
A)that the yield curve is flat.
B)nothing about the shape of the yield curve.
C)that the yield curve is downward sloping.
D)that the yield curve is upward sloping.
Q2) Consider a zero coupon bond with 20 years to maturity. The amount that the price of the bond will change if its yield to maturity decreases from 7% to 5% is closest to:
A)$120
B)-$53
C)$53
D)$673
Q3) The YTM of a 4 year default free security with a face value of $1000 and an annual coupon rate of 5.25% is closest to:
A)5.2%
B)5.0%
C)4.9%
D)5.25%
Q4) What is the relationship between a bond's price and its yield to maturity?
Q5) Plot the zero-coupon yield curve (for the first five years).
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Investment Decision Rules
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/67478
Sample Questions
Q1) If your new strip mall will have 15,000 square feet of retail space available to be leased, to which businesses should you lease and why?
Q2) Which of the following statements is FALSE?
A)The payback rule is useful in cases where the cost of making an incorrect decision might not be large enough to justify the time required for calculating the NPV.
B)The payback rule is reliable because it considers the time value of money and depends on the cost of capital.
C)For most investment opportunities expenses occur initially and cash is received later.
D)Fifty percent of firms surveyed reported using the payback rule for making decisions.
Q3) Larry should:
A)reject the offer because the NPV < 0.
B)accept the offer even though the IRR < 10%, because the NPV > 0.
C)reject the offer because the IRR < 10%.
D)accept the offer because the IRR > 0%.
Q4) If the discount rate for project A is 16%, then what is the NPV for project A?
Q5) If the discount rate for project B is 15%, then what is the NPV for project B?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Fundamentals of Capital Budgeting
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/67477
Sample Questions
Q1) Epiphany would like to know how sensitive the project's NPV is to changes in the discount rate. How much can the discount rate vary before the NPV reaches zero?
Q2) The NPV for Epiphany's Project is closest to:
A)$4,825
B)$39,000
C)$11,946
D)$20,400
Q3) Which of the following statements is FALSE?
A)Sensitivity analysis allows us to explore the effects of errors in our estimated inputs in our NPV analysis for the project.
B)To compute the NPV for a project, you need to estimate the incremental cash flows and choose a discount rate.
C)Estimates of the cash flows and cost of capital are often subject to significant uncertainty.
D)When we are certain regarding the input to a capital budgeting decision, it is often useful to determine the break-even level of that input.
Q4) What is the NPV of the Epiphany's project?
Q5) How does scenario analysis differ from sensitivity analysis?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Valuing Stocks
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/67476
Sample Questions
Q1) Which of the following statements is FALSE?
A)Even two firms in the same industry selling the same types of products, while similar in many respects, are likely to be of different size or scale.
B)In the method of comparables we estimate the value of the firm based on the value of other, comparable firms or investments that we expect will generate very similar cash flows in the future.
C)Consider the case of a new firm that is identical to an existing publicly traded company. If these firms will generate identical cash flows, the Law of One Price implies that we can use the value of the existing company to determine the value of the new firm.
D)A valuation multiple is a ratio of some measure of the firm's scale to the value of the firm.
Q2) Rearden's equity cost of capital is closest to:
A)4.0%
B)6.4%
C)8.2%
D)14.0%
Q3) What are some common multiples used to value stocks?
Q4) Calculate the enterprise value for DM Corporation.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Capital Markets and the Pricing of Risk
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/67475
Sample Questions
Q1) Using the data provided in the table, calculate the average annual return, the variance of the annual returns, and the standard deviation of the average returns for Stock B from 2000 to 2009.
Q2) The expected overall payoff to Bank A is:
A)$5,000,000
B)$6,000,000
C)$94,000,000
D)$95,000,000
Q3) The standard deviation of the overall payoff to Bank A is closest to:
A)$689,000
B)$751,000
C)$2,179,000
D)$2,375,000
Q4) Which of the following is NOT a diversifiable risk?
A)The risk that oil prices rise, increasing production costs
B)The risk of a product liability lawsuit
C)The risk that the CEO is killed in a plane crash
D)The risk of a key employee being hired away by a competitor
Q5) Do expected returns for individual stocks increase proportionately with volatility?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Optimal Portfolio Choice and the Capital Asset Pricing Model
Available Study Resources on Quizplus for this Chatper
133 Verified Questions
133 Flashcards
Source URL: https://quizplus.com/quiz/67474
Sample Questions
Q1) Which of the following statements is FALSE?
A)The risk premium of a security is equal to the market risk premium (the amount by which the market's expected return exceeds the risk-free rate), divided by the amount of market risk present in the security's returns measured by its beta with the market.
B)We refer to the beta of a security with the market portfolio simply as the securities beta.
C)There is a linear relationship between a stock's beta and its expected return.
D)A security with a negative beta has a negative correlation with the market, which means that this security tend to perform will when the rest of the market is doing poorly.
Q2) The expected return on the market portfolio (which is a 50-50 combination of the value and growth portfolios)is closest to:
A)12.0%
B)13.5%
C)15.0%
D)19.0%
Q3) What is the efficient frontier and how does it change when more stocks are used to construct portfolios?
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Estimating the Cost of Capital
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/67473
Sample Questions
Q1) Which of the following statements is FALSE?
A)One difficulty when trying to estimate beta for a security is that beta depends on the correlation and volatilities of the security's and market's returns in the future.
B)It is common practice to estimate beta based on the expectations of future correlations and volatilities.
C)One difficulty when trying to estimate beta for a security is that beta depends on investors expectations of the correlation and volatilities of the security's and market's returns.
D)Securities that tend to move less than the market have betas below 1.
Q2) Suppose that you are holding a market portfolio and you have invested $18,000 in Taggart Transcontinental. The number of shares of Wyatt Oil that you hold is closest to:
A)90 shares
B)460 shares
C)615 shares
D)770 shares
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Investor Behavior and Capital Market Efficiency
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/67472
Sample Questions
Q1) The alpha that investors in Galt's fund expect to receive is closest to:
A)-.80%
B)0.0%
C)0.80%
D)1.8%
Q2) Assume that you are an investor with the disposition effect and you bought each of these stocks in January. Suppose that it is currently the end of March, which stocks are you most inclined to sell? 1. Taggart Transcontinental
2. Rearden Metal
3. Wyatt Oil
4. Nielson Motors
A)1 only
B)1 and 3 only
C)2 only
D)2 and 4 only
Q3) The market value for Bernard is closest to:
A)$12.0 million
B)$10 million
C)$15.0 million
D)$12.5 million
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Capital Structure in a Perfect Market
Available Study Resources on Quizplus for this Chatper
98 Verified Questions
98 Flashcards
Source URL: https://quizplus.com/quiz/67471
Sample Questions
Q1) Suppose you are a shareholder in d'Anconia Copper holding 500 shares, and you disagree with the decision to lever the firm. You can undo the effect of this decision by:
A)borrowing $2,000 and buying 100 shares of stock.
B)selling 100 shares of stock and lending $2,000.
C)borrowing $1,200 and buying 60 shares of stock.
D)selling 60 shares of stock and lending $1,200.
Q2) Assume that MM's perfect capital markets conditions are met and that you can borrow and lend at the same 5% rate as with. You have $5000 of your own money to invest and you plan on buying With stock. Using homemade (un)leverage you invest enough at the risk-free rate so that the payoff of your account will be the same as a $5000 investment in Without stock? The number of shares of With stock you purchased is closest to:
A)100
B)425
C)1650
D)825
Q3) Show mathematically that the stock price of Rockwood does not depend on whether they issue new stock or borrow to fund their expansion.
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Debt and Taxes
Available Study Resources on Quizplus for this Chatper
95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/67470
Sample Questions
Q1) Which of the following statements is FALSE?
A)Once investors know the recap will occur, the share price will rise immediately to a level that reflects the value of the interest tax shield that the firm will receive from its recapitalization.
B)When securities are fairly priced, the original shareholders of a firm capture the full benefit of the interest tax shield from an increase in leverage.
C)In the presence of corporate taxes, we do not include the interest tax shield as one of the firm's assets on its market value balance sheet.
D)We can analyze the recapitalization using the market value balance sheet; it states that the total market value of a firm's securities must equal the total market value of the firm's assets.
Q2) If Flagstaff maintains a .5 debt to equity ratio, then Flagstaff's pre-tax WACC is closest to:
A)10.5%
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Financial Distress, Managerial Incentives, and Information
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/67469
Sample Questions
Q1) Assume that in the event of default, 20% of the value of MI's assets will be lost in bankruptcy costs and suppose that MI has zero-coupon debt with a $125 million face value due next year. The present value of MI's financial distress costs is closest to:
A)$20.0 million
B)$6.6 million
C)$6.3 million
D)$19.0 million
Q2) Which of the following agency problems represents a form of moral hazard?
A)asset substitution
B)debt overhang
C)cashing out
D)All of the above are examples of moral hazard.
Q3) Suppose that the managers at Rearden Metal will increase risk to maximize the expected payoff to equity holders. If Rearden has $230 million in debt due in one year, then the expected value of Rearden's assets are closest to:
A)$280 million
B)$295 million
C)$300 million
D)$900 million
Page 18
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: Payout Policy
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/67468
Sample Questions
Q1) Which of the following statements is FALSE?
A)In perfect capital markets, holding fixed the investment policy of a firm, the firm's choice of dividend policy is irrelevant and does not affect the initial share price.
B)In a perfect capital market, when a dividend is paid, the share price drops by the amount of the dividend when the stock begins to trade ex-dividend.
C)In perfect capital markets, an open market share repurchase has no effect on the stock price, and the stock price is the same as the ex-dividend price if a dividend were paid instead.
D)In perfect capital markets, investors are indifferent between the firm distributing funds via dividends or share repurchases. By reinvesting dividends or selling shares, they can replicate either payout method on their own.
Q2) If Wyatt Oil distributes the $70 million as a share repurchase, then the number of shares outstanding after the repurchase will be closest to:
A)16.0 million
B)16.5 million
C)17.5 million
D)18.0 million
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Capital Budgeting and Valuation With Leverage
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/67467
Sample Questions
Q1) Which of the following statements is FALSE?
A)In the real world, specific projects should differ only slightly from the average investment made by the firm.
B)We can estimate r<sub>U</sub> for a new project by looking at single-division firms that have similar business risks.
C)The project's equity cost of capital depends on its unlevered cost of capital, r<sub>U</sub>, and the debt-equity ratio of the incremental financing that will be put in place to support the project.
D)Projects may vary in the amount of leverage they will support-for example, acquisitions of real estate or capital equipment are often highly levered, whereas investments in intellectual property are not.
Q2) If KT expects to maintain a debt to equity ratio for this project of 1, then KT's equity cost of capital, r<sub>E</sub>, for this project is closest to:
A)17.0%
B)5.0%
C)15.0%
D)12%
Q3) Calculate the debt capacity of Omicron's new project for years 0, 1, and 2.
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Valuation and Financial Modeling: a Case Study
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/67466
Sample Questions
Q1) Based upon Ideko's Sales and Operating Cost Assumptions, what production capacity will Ideko require in 2009?
A)1,505 units
B)1,115 units
C)1,323 units
D)1,702 units
Q2) The unlevered beta for Oakley is closest to:
A)0.70
B)1.50
C)1.00
D)0.60
Q3) Assuming that Ideko has a EBITDA multiple of 9.4, then the continuation enterprise value of Ideko in 2010 is closest to:
A)$181.7 million
B)$152.8 million
C)$272.8 million
D)$301.7 million
Q4) What is the purpose of the sensitivity analysis?
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Financial Options
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/67465
Sample Questions
Q1) You have decided to buy 10 January 2009 call options on Merck with an exercise price of $45 per share. How much will this transaction cost you and are these contracts in or out of the money?
Q2) Which of the following statements is FALSE?
A)When a holder of an option enforces the agreement and buys or sells a share of stock at the agreed-upon price, he is exercising the option.
B)There are two kinds of options. European options allow their holders to exercise the option on any date up to and including a final date called the expiration date.
C)Because an option is a contract between two parties, for every owner of a financial option, there is also an option writer, the person who takes the other side of the contract. D)The price at which the holder buys or sells the share of stock when the option is exercised is called the strike price or exercise price.
Q3) You are long both a put option and a call option on Rockwood stock with the same expiration date. The exercise price of the call option is $40 and the exercise price of the put option is $30. Graph the payoff of the combination of options at expiration.
To view all questions and flashcards with answers, click on the resource link above.
22
Chapter 21: Option Valuation
Available Study Resources on Quizplus for this Chatper
41 Verified Questions
41 Flashcards
Source URL: https://quizplus.com/quiz/67464
Sample Questions
Q1) Using the binomial pricing model, the calculated price of a one-year put option on KD stock with a strike price of $20 is closest to:
A)$2.00
B)$1.45
C)$2.40
D)$2..15
Q2) Luther Industries does not pay dividend and is currently trading at $25 per share. The current risk-free rate of interest is 5%. Calculate the price of a call option on Luther Industries with a strike price of $30 that expires in 75 days when N(d<sub>1</sub>)= .639 and N(d<sub>2</sub>)= .454.
Q3) The risk neutral probability of an up state for KD Industries is closest to:
A)37.5%
B)60.0%
C)40.0%
D)62.5%
Q4) Using risk neutral probabilities, calculate the price of a two-year put option on Kinston stock with a strike price of $9.
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Real Options
Available Study Resources on Quizplus for this Chatper
59 Verified Questions
59 Flashcards
Source URL: https://quizplus.com/quiz/67463
Sample Questions
Q1) Which of the following statements is FALSE?
A)An alternative to using the Black-Scholes formula is to compute the value of growth options using risk neutral probabilities.
B)Future growth options are not only important to firm value, but can also be important in the value of an individual project.
C)While the Black-Scholes formula values American options, most growth options cannot be exercised at any time.
D)Out-of-the-money calls are riskier than in-the-money calls, and because most growth options are likely to be out-of-the-money, the growth component of firm value is likely to be riskier than the ongoing assets of the firm.
Q2) The equivalent annual benefit of project A is closest to:
A)$21.70
B)$5.05
C)$24.00
D)$3.40
Q3) Assuming you are able to see the plant, draw a decision tree detailing this problem.
Q4) Do out-of-the-money real options have value?
To view all questions and flashcards with answers, click on the resource link above.
24
Chapter 23: Raising Equity Capital
Available Study Resources on Quizplus for this Chatper
51 Verified Questions
51 Flashcards
Source URL: https://quizplus.com/quiz/67462
Sample Questions
Q1) Which of the following statements is FALSE?
A)The preferred stock issued by young companies typically does not pay regular cash dividends.
B)The preferred stock issued by young companies usually gives the owner an option to convert it into common stock on some future date, so it is often called callable preferred stock.
C)If the company runs into financial difficulties, the preferred stockholders have a senior claim on the assets of the firm relative to any common stockholders.
D)Preferred stock issued by mature companies such as banks usually has a preferential dividend and seniority in any liquidation and sometimes special voting rights.
Q2) What will the offer price of these shares be if Luther is selling 800,000 shares?
Q3) The amount that Wyatt Oil raised during the IPO is closest to:
A)$113 million
B)$141 million
C)$150 million
D)$329 million
E)$350 million
To view all questions and flashcards with answers, click on the resource link above.
Chapter 24: Debt Financing
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/67461
Sample Questions
Q1) You own a bond with a face value of $1,000 and a conversion ratio of 45. The conversion price is closest to:
A)$18
B)$22
C)$45
D)$1,000
Q2) In January 2010, the U.S. Treasury issued a $1000 par, five-year, inflation-indexed note with a coupon of 5%. On the date of issue, the consumer price index (CPI)was 250. By January 2015, the CPI had decreased to 200. The principal payment that was made in January 2015 is closest to:
A)$800
B)$1000
C)$1250
D)$1500
Q3) The largest sector of the asset-backed security market is the ________ market.
A)collateralized debt obligation
B)mortgage-backed security
C)real property-backed security
D)double-barreled security
Q4) What is the Yield to Call (YTC)on this bond?
Page 26
To view all questions and flashcards with answers, click on the resource link above.
Chapter 25: Leasing
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/67460
Sample Questions
Q1) If Luther acquires the new fleet of delivery trucks using an operating lease, Luther's Debt to Equity ratio will be closest to:
A)2.0
B)1.5
C)0.80
D)0.66
Q2) If Luther acquires the new fleet of delivery trucks using a capital lease, Luther's Debt to Equity ratio will be closest to:
A)0.66
B)1.5
C)0.80
D)2.0
Q3) Assuming that Rearden's annual lease payments are $1.2 million, then the effective after-tax lease borrowing rate is closest to:
A)7.2%
B)8.0%
C)8.8%
D)9.1%
To view all questions and flashcards with answers, click on the resource link above.
Chapter 26: Working Capital Management
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/67459
Sample Questions
Q1) The percentage of Wyatt's receivables that are past due is closest to:
A)20.1%
B)32.1%
C)38.3%
D)42.2%
Q2) Luther Industries bills its accounts on terms of 2/10, net 30. The firm's accounts receivable include $250,000 that has been outstanding for 10 or fewer days, $375,000 outstanding for 11 to 30 days, $70,000 outstanding for 31 to 40 days, $35,000 outstanding for 41 to 50 days, $20,000 outstanding for 51 to 60 days, and $8,000 outstanding for more than 60 days. Prepare an aging schedule for Luther Industries.
Q3) The difference between a firm's operating cycle and its cash cycle is:
A)there is no difference between the cash and operating cycles.
B)its account receivable days.
C)its accounts payable days.
D)its inventory days.
Q4) Describe "just-in-time" inventory management.
Q5) Your firm purchases goods from its supplier on terms of 2/10, net 45. Calculate the effective annual cost to your firm if it chooses not to take advantage of the trade discount offered.
To view all questions and flashcards with answers, click on the resource link above. Page 28
Chapter 27: Short-Term Financial Planning
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/67458
Sample Questions
Q1) Luther Industries is offered a $1 million dollar loan for four months at an APR of 9%. Luther's bank requires that the firm maintain a compensating balance equal to 5% of the loan amount in a non-interest bearing account and the bank charges a 1% origination fee. Calculate the the effective annual rate EAR for this loan.
Q2) A firm issued three-month commercial paper with a $2,000,000 face value and received $1,964,000. The effective annual rate that this firm is paying is closest to:
A)8.0%
B)7.5%
C)1.8%
D)7.3%
Q3) A short-term bank loan that is often used until a firm can arrange for long-term financing is called:
A)a committed line of credit.
B)a short-term mortgage loan.
C)a bridge loan.
D)a single, end-of-period-payment loan.
Q4) Calculate the temporary working capital needs for each of the four quarters for Hasbeen Toys.
To view all questions and flashcards with answers, click on the resource link above.
Page 29
Chapter 28: Mergers and Acquisitions
Available Study Resources on Quizplus for this Chatper
56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/67457
Sample Questions
Q1) An extremely lucrative severance package that is guaranteed to a firm's senior managers in the event that the firm is taken over and the managers are let go is called a:
A)golden parachute.
B)white knight.
C)poison pill.
D)classified board.
Q2) If Ford Motor Company bought The Goodyear Tire & Rubber Company, this would be an example of a ________ merger.
A)conglomerate
B)vertical
C)horizontal
D)diagonal
Q3) The savings that a large company can enjoy from producing goods in high volume, that are not available to a small company is called:
A)economies of scale.
B)horizontal integration.
C)vertical integration.
D)economies of scope.
To view all questions and flashcards with answers, click on the resource link above.
Page 30
Chapter 29: Corporate Governance
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/67456
Sample Questions
Q1) Which of the following statements is FALSE?
A)New SEC rules require firms to report option grants within two days of the grant date, which may help prevent further abuses.
B)Studies have found evidence that the practice of timing the release of information to maximize the value of CEO stock options is widespread.
C)Managers have an incentive to manipulate the release of financial forecasts so that good news comes out before options are granted and bad news is delayed until after the options are granted.
D)The factor contributing most to the climb in CEO total compensation for the 1990s was the sharp increase in the value of stock and options granted each year.
Q2) Directors who are not as directly connected to the firm but who have existing or potential business relationships with the firm are called:
A)gray directors.
B)independent directors.
C)advising directors.
D)inside directors.
Q3) Describe the "stakeholder" model of corporate governance.
To view all questions and flashcards with answers, click on the resource link above. Page 31
Chapter 30: Risk Management
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/67455
Sample Questions
Q1) Which of the following statements is FALSE?
A)Long-term supply contracts such contracts cannot be entered into anonymously; the buyer and seller know each other's identity. This lack of anonymity may have strategic disadvantages.
B)A futures contract is an agreement to trade an asset on some future date, at a price that is locked in today.
C)An alternative to vertical integration or storage is a long-term supply contract.
D)Long-term supply contracts are unilateral contracts negotiated by a seller.
Q2) The actuarially fair premium for this insurance policy is closest to:
A)$417,000
B)$446,000
C)$500,000
D)$568,000
Q3) What are some of the disadvantages of long-term supply contracts?
Q4) What is the duration of a five-year zero-coupon bond?
A)2.5 Years
B)1 Year
C)5 Years
D)0 Years
To view all questions and flashcards with answers, click on the resource link above. Page 32
Chapter 31: International Corporate Finance
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/67454
Sample Questions
Q1) Which of the following statements is FALSE?
A)If the U.S. tax rate exceeds the combined tax rate on all foreign income, it is valid to assume that the firm pays the same tax rate on all income no matter where it is earned.
B)Firms can lower their taxes by pooling multiple foreign projects and accelerating the repatriation of earnings.
C)Under U.S. tax law, multinational corporations may use any excess tax credits generated in high-tax foreign countries to offset their net U.S. tax liabilities on earnings in low-tax foreign countries.
D)If the foreign tax rate exceeds the U.S. tax rate, because the U.S. tax credit exceeds the amount of U.S. taxes owed, no tax is owed in the United States.
Q2) Incorporated Tools total U.S. tax liability on its foreign earnings is closest to:
A)$0
B)$81 million
C)$106 million
D)$112 million
Q3) What is the dollar present value of the project?
To view all questions and flashcards with answers, click on the resource link above. Page 33