Corporate Finance
Exam Preparation Guide
Course Introduction
Corporate Finance explores the principles and techniques fundamental to financial decision-making within corporations. The course covers key topics, including time value of money, risk and return analysis, capital budgeting, cost of capital, financial statement analysis, capital structure, dividend policy, and working capital management. Students will examine how firms raise capital, allocate resources, and create value for shareholders, while also considering the impact of financial markets and economic environments on corporate strategies. Real-world case studies and practical exercises help students develop analytical skills essential for careers in finance, investment banking, consulting, and corporate management.
Recommended Textbook
Corporate Finance 9th Edition by Stephen A. Ross
Available Study Resources on Quizplus
31 Chapters
2336 Verified Questions
2336 Flashcards
Source URL: https://quizplus.com/study-set/3456 Page 2
Chapter 1: Introduction to Corporate Finance
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/68671
Sample Questions
Q1) The corporate document that sets forth the business purpose of a firm is the:
A)indenture contract.
B)state tax agreement.
C)corporate bylaws.
D)debt charter.
E)articles of incorporation.
Answer: E
Q2) The Sarbanes Oxley Act of 2002 is intended to:
A)protect financial managers from investors.
B)not have any effect on foreign companies.
C)reduce corporate revenues.
D)protect investors from corporate abuses.
E)decrease audit costs for U.S.firms.
Answer: D
Q3) What should be the goal of the financial manager of a corporation? Why?
Answer: The correct goal is to maximize the current value of the outstanding stock.This goal focuses on enhancing the returns to stockholders who are the owners of the firm.Other goals, such as maximizing earnings, focus too narrowly on accounting income and ignore the importance of market values in managerial finance.
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Financial Statements and Cash Flow
Available Study Resources on Quizplus for this Chatper
91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/68670
Sample Questions
Q1) Refer to the above Table.What is the cash flow to stockholders for 2008?
A)$408
B)$417
C)$452
D)$482
E)$503
Answer: D
Q2) The long-term debts of a firm are liabilities:
A)that come due within the next 12 months.
B)that do not come due for at least 12 months.
C)owed to the firm's suppliers.
D)owed to the firm's shareholders.
E)the firm expects to incur within the next 12 months.
Answer: B
Q3) Explain why the income statement is not a good representation of cash flow. Answer: Most income statements contain some noncash items, so these must be accounted for when calculating cash flows.More importantly, however, since GAAP is used to create income statements, revenues and expenses are booked when they accrue, not when their corresponding cash flows occur.
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Financial Statements Analysis and Long-Term Planning
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/68669
Sample Questions
Q1) The financial ratio measured as net income divided by sales is known as the firm's: A)profit margin.
B)return on assets.
C)return on equity.
D)asset turnover.
E)earnings before interest and taxes.
Answer: A
Q2) It is easier to evaluate a firm using its financial statements when the firm:
A)is a conglomerate.
B)is global in nature.
C)uses the same accounting procedures as other firms in its industry.
D)has a different fiscal year than other firms in its industry.
E)tends to have one-time events such as asset sales and property acquisitions.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Discounted Cash Flow Valuation
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/68668
Sample Questions
Q1) Forty years ago, your father invested $2,500.Today that investment is worth $107,921.What is the average rate of return your father earned on his investment?
A)8.50%
B)9.33%
C)9.50%
D)9.87%
E)9.99%
Q2) An S&L provides a loan with 15 yearly repayments of $8,000 with the first payment beginning immediately.Which of the following amounts comes closest to the present value of the loan if the interest rate is 7%?
A)$72,863
B)$77,964
C)$115,648
D)$120,000
E)Not enough information is given to determine the answer.
Q3) Using the example of a savings account, explain the difference between the effective annual rate and the annual percentage rate.
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Net Present Value and Other Investment Rules
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/68667
Sample Questions
Q1) The Walker Landscaping Company can purchase a piece of equipment for $3,600.The asset has a two-year life, and will produce a cash flow of $600 in the first year and $4,200 in the second year.The interest rate is 15%.Calculate the project's payback assuming steady cash flows.Also calculate the project's IRR.Should the project be taken? Check your answer by computing the project's NPV.
Q2) Net present value:
A)cannot be used when deciding between two mutually exclusive projects.
B)is more useful to decision makers than the internal rate of return when comparing different sized projects.
C)is easy to explain to non-financial managers and thus is the primary method of analysis used by the lowest levels of management.
D)is not an as widely used tool as payback and discounted payback.
E)is very similar in its methodology to the average accounting return.
Q3) The payback period rule:
A)discounts cash flows.
B)ignores initial cost.
C)always uses all possible cash flows in its calculation.
D)Both A and C.
E)None of the above.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Making Capital Investment Decisions
Available Study Resources on Quizplus for this Chatper
89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/68666
Sample Questions
Q1) Jackson & Sons uses packing machines to prepare its products for shipping.One machine costs $136,000 and lasts about 4 years before it needs replaced.The operating cost per machine is $6,000 a year.What is the equivalent annual cost of one packing machine if the required rate of return is 12%? (Round your answer to whole dollars.)
A)$38,556
B)$50,776
C)$79,012
D)$101,006
E)$154,224
Q2) This chapter introduced three new methods for calculating project operating cash flow (OCF).Under what circumstances is each method appropriate?
Q3) The salvage value of an asset creates an after-tax cash inflow to the firm in an amount equal to the:
A)sales price of the asset.
B)sales price minus the book value.
C)sales price minus the tax due based on the sales price minus the book value. D)sales price plus the tax due based on the sales price minus the book value.
E)sales price plus the tax due based on the book value minus the sales price.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Risk Analysis, Real Options, and Capital Budgeting
Available Study Resources on Quizplus for this Chatper
90 Verified Questions
90 Flashcards
Source URL: https://quizplus.com/quiz/68665
Sample Questions
Q1) The approach that further attempts to model real world uncertainty by analyzing projects the way one might analyze gambling strategies is called:
A)gambler's approach.
B)blackjack approach.
C)Monte Carlo simulation.
D)scenario analysis.
E)sensitivity analysis.
Q2) An analysis of what happens to the estimate of the net present value when you examine a number of different likely situations is called _____ analysis.
A)forecasting
B)scenario
C)sensitivity
D)simulation
E)break-even
Q3) Can different discount rates be used for different stages in a decision tree? If so, what would be the benefit of such action?
Q4) Discuss two shortcomings in the standard decision tree analysis that a financial manager should be cognizant of?
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Interest Rates and Bond Valuation
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/68664
Sample Questions
Q1) Your firm offers a 10-year, zero coupon bond.The yield to maturity is 8.8%.What is the current market price of a $1,000 face value bond?
A)$430.24
B)$473.26
C)$835.56
D)$919.12
E)$1,088.00
Q2) An asset characterized by cash flows that increase at a constant rate forever is called a:
A)growing perpetuity.
B)growing annuity.
C)common annuity.
D)perpetuity due.
E)preferred stock.
Q3) The market price of a bond is equal to the present value of the:
A)face value minus the present value of the annuity payments.
B)annuity payments plus the future value of the face amount.
C)face value plus the present value of the annuity payments.
D)face value plus the future value of the annuity payments.
E)annuity payments minus the face value of the bond.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Stock Valuation
Available Study Resources on Quizplus for this Chatper
68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/68663
Sample Questions
Q1) Nu-Tek, Inc.is expecting a period of intense growth and has decided to retain more of its earnings to help finance that growth.As a result it is going to reduce its annual dividend by 10% a year for the next three years.After that, it will maintain a constant dividend of $.70 a share.Last month, the company paid $1.80 per share.What is the value of this stock if the required rate of return is 13%?
A)$6.79
B)$7.22
C)$8.22
D)$8.87
E)$9.01
Q2) What would be the maximum an investor should pay for the common stock of a firm that has no growth opportunities but pays a dividend of $1.36 per year? The next dividend will be paid in exactly 1 year.The required rate of return is 12.5%.
A)$9.52
B)$10.88
C)$12.24
D)$17.00
E)None of the above
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Risk and Return: Lessons From Market History
Available Study Resources on Quizplus for this Chatper
76 Verified Questions
76 Flashcards
Source URL: https://quizplus.com/quiz/68662
Sample Questions
Q1) Which one of the following types of securities has tended to produce the lowest real rate of return for the period 1926 through 2008?
A)U.S.Treasury bills
B)long-term government bonds
C)small company stocks
D)large company stocks
E)long-term corporate bonds
Q2) You just sold 200 shares of Langley, Inc.stock at a price of $38.75 a share.Last year you paid $41.50 a share to buy this stock.Over the course of the year, you received dividends totaling $1.64 per share.What is your capital gain on this investment?
A)-$550
B)-$222
C)-$3
D)$550
E)$878
Q3) What are the lessons learned from capital market history? What evidence is there to suggest these lessons are correct?
To view all questions and flashcards with answers, click on the resource link above.
12
Chapter 11: Return and Risk: the Capital Asset Pricing Model
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/68661
Sample Questions
Q1) You have a $1,000 portfolio which is invested in stocks A and B plus a risk-free asset.
$400 is invested in stock A.Stock A has a beta of 1.3 and stock B has a beta of .7.
How much needs to be invested in stock B if you want a portfolio beta of .90?
A)$0
B)$268
C)$482
D)$543
E)$600
Q2) Which one of the following would indicate a portfolio is being effectively diversified?
A)an increase in the portfolio beta
B)a decrease in the portfolio beta
C)an increase in the portfolio rate of return
D)an increase in the portfolio standard deviation
E)a decrease in the portfolio standard deviation
Q3) A portfolio is made up of 75% of stock 1, and 25% of stock 2.Stock 1 has a variance of .08, and stock 2 has a variance of .035.The covariance between the stocks is -.001.Calculate both the variance and the standard deviation of the portfolio.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: An Alternative View of Risk and Return: the Arbitrage Pricing Theory
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/68660
Sample Questions
Q1) A factor is a variable that:
A)affects the returns of risky assets in a systematic fashion.
B)affects the returns of risky assets in an unsystematic fashion.
C)correlates with risky asset returns in a unsystematic fashion.
D)does not correlate with the returns of risky assets in an systematic fashion.
E)None of the above.
Q2) Shareholders discount many corporate announcements because of their prior expectations.If an announcement causes the price to change it will mostly be driven by:
A)the expected part of the announcement.
B)market inefficiency.
C)the unexpected part of the announcement.
D)the systematic risk.
E)None of the above.
Q3) The most realistic APT model would likely include:
A)multiple factors.
B)only one factor.
C)a factor to measure inflation.
D)Both A and C.
E)Both B and C.
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Risk, Cost of Capital, and Capital Budgeting
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/68659
Sample Questions
Q1) Assuming the CAPM or one-factor model holds, what is the cost of equity for a firm if the firm's equity has a beta of 1.2, the risk-free rate of return is 2%, the expected return on the market is 9%, and the return to the company's debt is 7%?
A)10.4%
B)10.8%
C)12.8%
D)14.4%
E)None of the above.
Q2) Two stocks that have the same beta ____ have the same correlation because _______:
A)may; because correlation measures the sensitivity of the S&P to the market portfolio.
B)will; because correlation measures the tightness of fit around the regression line.
C)may not; because correlation measures the tightness of fit around the regression line.
D)may not; because correlation measures the sensitivity to change.
E)None of the above.
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: Efficient Capital Markets and Behavioral Challenges
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/68658
Sample Questions
Q1) In the five years after the offering, ___ underperform matched control groups.
A)initial public offerings
B)seasoned equity offerings
C)bond offerings
D)A and B
E)A, B, and C
Q2) The notion that actual capital markets, such as the NYSE, are fairly priced is called the:
A)Efficient Markets Hypothesis (EMH).
B)Law of One Price.
C)Open Markets Theorem.
D)Laissez-Faire Axiom.
E)Monopoly Pricing Theorem.
Q3) Explain why it is that in an efficient market, investments have an expected NPV of zero.
Q4) Define the three forms of market efficiency.
Q5) Suppose your cousin invests in the stock market and doubles her money in a single year while the market, on average, earned a return of only about 15%.Is your cousin's performance a violation of market efficiency?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Long-Term Financing: an Introduction
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/68657
Sample Questions
Q1) From this information, calculate Eaton's book value per share.
Q2) Michael's Motor Scooters has 1,000 shares outstanding each with a par value of $0.05.If they are sold to shareholders at $5 each, what would the capital surplus be?
A)$4,400
B)$4,500
C)$4,750
D)$4,950
E)$5,000
Q3) Calhoun Computech used internal financing as a source of long-term financing for 80% of its total needs in 2008.The company borrowed an additional 15% of its total needs in the long-term debt markets in 2008.What were Calhoun's net new stock issues, in percentage terms, for 2008?
A)-10%
B)-5%
C)5%
D)10%
E)15%
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Capital Structure: Basic Concepts
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/68656
Sample Questions
Q1) In a world of no corporate taxes if the use of leverage does not change the value of the levered firm relative to the unlevered firm is known as:
A)MM Proposition III that the cost of stock is less than the cost of debt.
B)MM Proposition I that leverage is invariant to market value.
C)MM Proposition II that the cost of equity is always constant.
D)MM Proposition I that the market value of the firm is invariant to the capital structure.
E)MM Proposition III that there is no risk associated with leverage in a no tax world.
Q2) The proposition that the value of a levered firm is equal to the value of an unlevered firm is known as:
A)MM Proposition I with no tax.
B)MM Proposition II with no tax.
C)MM Proposition I with tax.
D)MM Proposition II with tax.
E)static theory proposition.
Q3) Discuss Modigliani and Miller's Propositions I and II in a world without taxes.List the basic assumptions, results, and intuition of the model.
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Capital Structure: Limits to the Use of Debt
Available Study Resources on Quizplus for this Chatper
69 Verified Questions
69 Flashcards
Source URL: https://quizplus.com/quiz/68655
Sample Questions
Q1) In a Miller equilibrium, what type of investments do high tax bracket investors tend to hold?
A)Bonds
B)Stocks
C)Debentures
D)Both stocks and bonds.
E)Neither stocks nor bonds.
Q2) In general, the capital structures used by U.S.firms:
A)tend to overweigh debt in relation to equity.
B)are easily explained in terms of earnings volatility.
C)are easily explained by analyzing the types of assets owned by the various firms.
D)tend to be those which maximize the use of the firm's available tax shelters.
E)vary significantly across industries.
Q3) Corporations in the U.S.tend to:
A)minimize taxes.
B)underutilize debt.
C)rely less on equity financing than they should.
D)have extremely high debt-equity ratios.
E)rely more heavily on bonds than stocks as the major source of financing.
To view all questions and flashcards with answers, click on the resource link above.
Page 19
Chapter 18: Valuation and Capital Budgeting for the Levered Firm
Available Study Resources on Quizplus for this Chatper
51 Verified Questions
51 Flashcards
Source URL: https://quizplus.com/quiz/68654
Sample Questions
Q1) The Tip-Top Paving Co.has a beta of 1.11, a cost of debt of 11% and a debt to value ratio of .6.The current risk free rate is 9% and the market rate of return is 16.18%.What is the company's cost of equity capital?
A)7.97%
B)8.96%
C)16.97%
D)17.96%
E)26.96%
Q2) The Free-Float Company, a company in the 36% tax bracket, has riskless debt in its capital structure which makes up 40% of the total capital structure, and equity is the other 60%.The beta of the assets for this business is .8 and the equity beta is:
A)0.53
B)0.73
C)0.80
D)1.14
E)1.47
To view all questions and flashcards with answers, click on the resource link above.
Chapter 19: Dividends and Other Payouts
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/68653
Sample Questions
Q1) Murphy's, Inc.has 10,000 shares of stock outstanding with a par value of $1.00 per share.The market value is $8 per share.The balance sheet shows $32,500 in the capital in excess of par account, $10,000 in the common stock account and $42,700 in the retained earnings account.The firm just announced a 10% (small) stock dividend.What will the market price per share be after the dividend?
A)$7.20
B)$7.27
C)$7.33
D)$8.00
E)$8.80
Q2) From a tax-paying investor's point of view, a stock repurchase:
A)is equivalent to a cash dividend.
B)is more desirable than a cash dividend.
C)has the same tax effects as a cash dividend.
D)is more highly taxed than a cash dividend.
E)creates a tax liability even if the investor does not sell any of the shares he owns.
To view all questions and flashcards with answers, click on the resource link above.
21
Chapter 20: Issuing Securities to the Public
Available Study Resources on Quizplus for this Chatper
71 Verified Questions
71 Flashcards
Source URL: https://quizplus.com/quiz/68652
Sample Questions
Q1) Explain the advantages of a shelf-registration to an issuer.How can timeliness of disclosure and a potential market overhang work against a shelf-registration?
Q2) Discuss what a Dutch auction is and how it works.
Q3) The first public equity issue made by a company is a(n):
A)initial private offering.
B)initial public offering.
C)secondary offering.
D)seasoned new issue.
E)None of the above.
Q4) Dilution refers to:
A)the increase in stock value due to wider ownership of stock.
B)the loss in existing shareholder's equity.
C)the loss in new shareholder's equity.
D)the loss in all shareholder's equity, both existing shareholders and new shareholders.
E)None of the above.
Q5) Calculate the ex-rights price that would make a new stockholder indifferent between buying shares at the old stock price and exercising the rights or buying the shares ex-rights.
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 21: Leasing
Available Study Resources on Quizplus for this Chatper
50 Verified Questions
50 Flashcards
Source URL: https://quizplus.com/quiz/68651
Sample Questions
Q1) The appropriate discount rate for valuing a financial lease is:
A)the firm's after-tax weighted average cost of capital.
B)the after-tax required return on assets of risks similar to the leased asset.
C)the after-tax cost of secured borrowing.
D)Either A or B.
E)All of the above.
Q2) What is the maximum lease payment that you would be willing to make?
A)$170,655
B)$175,000
C)$187,842
D)$210,307
E)None of the above
Q3) An advantage of leasing is that the lessor does not own the asset and can cancel:
A)only financial leases.
B)only operating leases.
C)only capital leases.
D)any kind of leases anytime.
E)None of the above.
Q4) What are some of the advantages and disadvantages of leasing?
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Options and Corporate Finance
Available Study Resources on Quizplus for this Chatper
87 Verified Questions
87 Flashcards
Source URL: https://quizplus.com/quiz/68650
Sample Questions
Q1) How do options apply to capital budgeting? Explain and give an example.
Q2) Given the following information, what is the value of d<sub>2</sub> as it is used in the Black-Scholes Option Pricing Model?
Stock price $42
Time to expiration .25
Risk-free rate .055
Standard deviation .50
d<sub>1</sub> .375161
A).021608
B).125161
C).175608
D).200161
E).250161
Q3) You own both a May 20 call and a May 20 put.If the call finishes in the money, then the put will:
A)also finish in the money.
B)finish at the money.
C)finish out of the money.
D)either finish at the money or in the money.
E)either finish at the money or out of the money.
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Options and Corporate Finance: Extensions and Applications
Available Study Resources on Quizplus for this Chatper
40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/68649
Sample Questions
Q1) Why is straight NPV analysis flawed as compared to models that include option pricing in the NPV analysis?
Q2) Calculate N(d<sub>1</sub>).
A).5054
B).6508
C).6882
D).7047
E).8096
Q3) The equal rate of price change from each subsequent up state and fixed rate price change from each subsequent down state are reasonable if:
A)there is a constant variability.
B)any new information impacting prices is similar period to period.
C)interest or discount rates are constant.
D)Both A and C.
E)Both A and B.
Q4) The executive janitor of NuValue was granted 1,000,000 options.The stock price at the time of the granting of the options was $25 and the options are at the money.The risk free rate was 3% and the options expire in 3 years.The variance on the stock is .04.What is the value of the options contract?
Page 25
To view all questions and flashcards with answers, click on the resource link above.
Chapter 24: Warrants and Convertibles
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/68648
Sample Questions
Q1) Concerning convertible bonds, which of the following statements is not correct?
A)A convertible bond issue would generally have fewer restrictive covenants than an otherwise identical nonconvertible bond.
B)Convertible bonds can be issued at a lower coupon compared with otherwise non-convertible bonds.
C)If the value of a convertible bond exceeds the maximum of its straight bond value or its conversion value, the difference would be referred to as the option value.
D)Since convertible bonds will be exchanged for common stock, convertible bonds are generally not callable.
E)More than one of the above is incorrect.
Q2) Kida Consultants has 100,000 shares of stock outstanding.The firm's value net of debt is $2 million.Kida has 1,000 warrants outstanding with an exercise price of $18, where each warrant entitles the holder to purchase one share of stock.Calculate the gain from exercising a single warrant.
Q3) Illustrate and explain how a convertible bond value is based on both debt and equity value.What is the option value?
Q4) Why are warrants and convertibles issued?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 25: Derivatives and Hedging Risk
Available Study Resources on Quizplus for this Chatper
62 Verified Questions
62 Flashcards
Source URL: https://quizplus.com/quiz/68647
Sample Questions
Q1) Credit default swaps:
A)will pay the holder the LIBOR interest rate.
B)pay the borrower the LIBOR interest rate.
C)are like insurance against a loss of value if the firm defaults on a bond.
D)limit the amount of borrowing of all parties in the credit default swap.
E)None of the above.
Q2) On March 1, you contract to take delivery of 1 ounce of gold for $495.The agreement is good for any day up to April 1.Throughout March, the price of gold hit a low of $425 and hit a high of $535.The price settled on March 31 at $505, and on April 1<sup>st</sup> you settle your futures agreement at that price.Your net cash flow is:
A)$-30.
B)$-20.
C)$-15.
D)$10.
E)$20.
Q3) The futures markets are labeled as pure speculation and even gambling.Why is this an inaccurate portrayal of the market's function?
Q4) What new asset duration will immunize the balance sheet?
Q5) Calculate the duration of Tiger State Bank's assets and liabilities.
To view all questions and flashcards with answers, click on the resource link above. Page 27
Chapter 26: Short-Term Finance and Planning
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/68646
Sample Questions
Q1) Which of the following are benefits of compiling a short-term financial plan?
I.knowing ahead of time when your firm will probably require external financing
II.being able to estimate how long of a time period your firm might need a loan
III.being able to determine when your firm can best afford to spend funds on a capital expenditure
IV.knowing when your firm should have excess funds that can be invested
A)I and III only
B)I, II and IV only
C)II, III and IV only
D)I, II and III only
E)I, II, III and IV
Q2) The most common means of financing a temporary cash deficit is a:
A)long-term secured bank loan.
B)short-term secured bank loan.
C)short-term issue of corporate bonds.
D)long-term unsecured bank loan.
E)short-term unsecured bank loan.
Q3) Restrictive short-term financial policies regarding current asset management include three basic actions.List and briefly describe each action.
To view all questions and flashcards with answers, click on the resource link above.
Page 28
Chapter 27: Cash Management
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/68645
Sample
Questions
Q1) Your firm receives 10 checks per month.Of these, 6 are for $1,000 and 4 are for $500.The delay for the $1,000 checks is 5 days, and the $500 checks are delayed 8 days.Calculate the average daily float.
A)$1,533.33
B)$1,486.87
C)$1,500.00
D)$1,530.35
E)$1,590.04
Q2) Which of the following is not an important characteristic of short-term marketable securities?
A)Maturity risk
B)Marketability
C)Taxability
D)Default risk
E)All of the above are important.
Q3) During the month you receive 4 checks, one for $100, two for $200, and one for $500.They are delayed for 2 days, 4 days, and 8 days respectively.What is your average daily collection float (a month has 30 days)?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 28: Credit and Inventory Management
Available Study Resources on Quizplus for this Chatper
53 Verified Questions
53 Flashcards
Source URL: https://quizplus.com/quiz/68644
Sample Questions
Q1) The Lemon Company made a credit sale of $20,000.The invoice was sent today with the terms, 3/10 net 30.This customer normally pays at the net date.If your opportunity cost of funds is 10% the expected payment is worth how much today?
A)$15,000
B)$15,657
C)$19,843
D)$20,000
E)None of the above.
Q2) Captive finance companies are:
A)parent companies to the subsidiary.
B)subsidiaries to the parent company.
C)used by firms with good credit ratings.
D)Both A and B.
E)Both B and C.
Q3) Selling goods and services on credit is:
A)an investment in a customer.
B)never necessary unless customers cannot pay for the goods.
C)a decision independent of customers.
D)permissible if your bank lends the money.
E)None of the above.
To view all questions and flashcards with answers, click on the resource link above. Page 30
Chapter 29: Mergers and Acquisitions
Available Study Resources on Quizplus for this Chatper
83 Verified Questions
83 Flashcards
Source URL: https://quizplus.com/quiz/68643
Sample Questions
Q1) An attempt to gain control of a firm by soliciting a sufficient number of stockholder votes to replace the current board of directors is called a:
A)tender offer.
B)proxy contest.
C)going-private transaction.
D)leveraged buyout.
E)consolidation.
Q2) Firm A is planning on merging with Firm B.Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A.Firm A currently has 2,300 shares of stock outstanding at a market price of $20 a share.Firm B has 1,800 shares outstanding at a price of $15 a share.The after-merger earnings will be $6,500.What will the earnings per share be after the merger?
A)$1.67
B)$1.78
C)$1.83
D)$1.87
E)$1.92
Q3) Discuss why Bank of America purchased Merrill Lynch in 2009.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 30: Financial Distress
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/68642
Sample Questions
Q1) What is the absolute priority rule of the following claims once a corporation is determined to be bankrupt?
A)administrative expenses, wages claims, government tax claims, debtholder and then equityholder claims
B)administrative expenses, wages claims, government tax claims, equityholder and then debtholder claims
C)wage claims, administrative expenses, debtholder claims, government tax claims and equityholder claims
D)wage claims, administrative expenses, debtholder claims, equityholder claims and government tax claims
E)None of the above
Q2) How much and what percentage of their claim will the unsecured creditors receive, in total?
A)$100,000; 12.50%.
B)$290,909; 36.36%.
C)$300,000; 37.50%.
D)$600,000; 75.00%.
E)Not enough information to answer
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
95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/68641
Sample Questions
Q1) You want to invest in a riskless project in Sweden.The project has an initial cost of SKr2.1 million and is expected to produce cash inflows of SKr810,000 a year for 3 years.The project will be worthless after the first 3 years.The expected inflation rate in Sweden is 2 percent while it is 5 percent in the U.S.A risk-free security is paying 6 percent in the U.S.The current spot rate is $1 = SKr7.55.What is the net present value of this project in Swedish krona using the foreign currency approach? Assume that the international Fisher effect applies.
A)SKr185,607
B)SKr191,175
C)SKr196,910
D)SKr197,867
E)SKr202,818
Q2) Today, you can exchange $1 for £.5428.Last week, £1 was worth $1.88.If you had converted £100 into dollars last week you would now have a:
A)profit of $2.05.
B)loss of $2.01.
C)profit of £2.01.
D)loss of $2.05.
E)profit of £2.05.
To view all questions and flashcards with answers, click on the resource link above.
Page 33