Finance for Business Final Exam Questions
Course Introduction
Finance for Business explores the fundamental concepts and practices of financial management within a business context. The course covers key topics such as financial statement analysis, budgeting, investment decisions, risk management, and sources of business financing. Students will learn how to apply financial tools and techniques to inform strategic decision-making, maximize value, and ensure the financial sustainability of organizations. Through case studies and practical exercises, the course emphasizes the integration of financial principles with real-world business challenges, preparing students to make informed financial decisions in various business environments.
Recommended Textbook
CFIN 6th Edition by Scott Besley
Available Study Resources on Quizplus
16 Chapters
1206 Verified Questions
1206 Flashcards
Source URL: https://quizplus.com/study-set/2264 Page 2
Chapter 1: An Overview of Managerial Finance
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/44980
Sample Questions
Q1) A limited partner in a limited liability partnership (LLP) is _____.
A)responsible for the general management of the business
B)liable for only the amount invested in the partnership
C)responsible for negligence, irresponsibility, or similar acts committed by any other partner
D)liable to pay tax on the general partner's share of partnership income
E)personally liable for the partnership debts
Answer: B
Q2) The riskiness inherent in a firm's earnings per share (EPS) depends on both, the types of projects the firm takes on and the manner in which the projects are financed.
A)True
B)False
Answer: True
Q3) A proprietorship is an unincorporated business owned by one individual and the owner benefits from the limited liability for business, which limits personal losses to what the proprietor has invested in the company.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Analysis of Financial Statements
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/44981
Sample Questions
Q1) A firm has total assets of $500 million, including its accounts receivable, which is worth $120 million. The annual sales of the firm is $650 million. The days sales outstanding (DSO) ratio of the firm is:
A)48.2 days.
B)52.7 days.
C)39.6 days.
D)82.1 days.
E)66.5 days.
Answer: E
Q2) Which of the following ratios shows the relationship between a firm's current assets and its current liabilities?
A)Asset management ratios
B)Liquidity ratios
C)Debt management ratios
D)Profitability ratios
E)Market value ratios
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: The Financial Environment: Markets, Institutions, and Investment Banking
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/44982
Sample Questions
Q1) Which of the following examples involves the sacrifice of current income for greater expected earnings in the future?
A)Buying a car with own surplus funds
B)Buying a car with a bank loan
C)Buying a financial security (e.g., a bond or a stock) with one's own funds
D)Buying a security with borrowed funds
E)Buying a house
Answer: C
Q2) Which of the following plans is administered primarily by the trust departments of commercial banks or by life insurance companies?
A)Health insurance plans
B)Underwriting plans
C)Shelf plans
D)Pension plans
E)Initial expansion plans
Answer: D
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Time Value of Money
Available Study Resources on Quizplus for this Chatper
58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/44983
Sample Questions
Q1) The present value of an uneven cash flow can be determined by using the annuity equations.
A)True
B)False
Q2) A firm plans to make investments of $5,000 for the next 10 years, paying the amount at the end of each year. This form of cash flow pattern represents a(n) _____.
A)lump-sum payment
B)uneven cash flow stream
C)annuity due
D)ordinary annuity
E)immediate annuity
Q3) The rate of return on the best available alternative investment of equal risk is the risk-adjusted required rate of return.
A)True
B)False
Q4) The present value of an investment increases as the opportunity cost rate increases.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: The Cost of Money Interest Rates
Available Study Resources on Quizplus for this Chatper
68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/44984
Sample Questions
Q1) Which of the following is true of the real risk-free rate of interest?
A)Most experts think that the real risk-free rate fluctuates in the range of 15 to 20 percent in the United States.
B)The real risk-free rate must include a component for the average inflation.
C)The real risk-free rate is the sum of nominal rate of interest and the average inflation rate.
D)It is easy to measure the real risk-free rate precisely.
E)It is the rate of interest that would exist on default-free U.S. Treasury securities if no inflation were expected in the future.
Q2) If a stock pays a dividend of $10, and the investors need 8 percent return on their investment, then the investors should pay _____ for the stock.
A)$150
B)$200
C)$350
D)$125
E)$75
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Bonds Debt Characteristics and Valuation
Available Study Resources on Quizplus for this Chatper
142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/44985
Sample Questions
Q1) Banks that need additional funds to meet the reserve requirements of the Federal Reserve:
A)borrow from the state government of the state where their headquarters are located.
B)borrow from banks with excess reserves.
C)issue treasury bills to investors.
D)decrease the coupon interest rate on the bonds issued to raise funds.
E)exercise the call option on the loans extended to small businesses.
Q2) Devine Divots issued a bond a few years ago. The bond has a face value equal to $1,000 and pays investors $30 interest every six months. The bond has eight years remaining until maturity. If an investor requires a 7 percent rate of return to invest in this bond, what is the maximum price the investor should be willing to pay to purchase the bond?
A)$761.15
B)$939.53
C)$940.29
D)$965.63
E)$1,062.81
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Stocks Equity Characteristics and Valuation
Available Study Resources on Quizplus for this Chatper
72 Verified Questions
72 Flashcards
Source URL: https://quizplus.com/quiz/44986
Sample Questions
Q1) Which of the following is true about the payment of dividends by a firm?
A)Dividends are paid only to the bondholders of the firm.
B)Common stockholders have priority over preferred stockholders with regard to dividend payments.
C)Preferred stocks pay accumulated dividends only once i.e. at the time of maturity.
D)Growth stocks pay little or no dividends; rather, the firms retain most of their earnings each year to reinvest in assets.
E)Common stockholders generally receive a fixed amount of dividend every year.
Q2) A call provision gives the issuing corporation the right to call in the preferred stock for redemption.
A)True
B)False
Q3) According to the convertibility provision, a common stock can be converted to a certain number of shares of preferred stock at the stated conversion price.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Risk and Rates of Return
Available Study Resources on Quizplus for this Chatper
77 Verified Questions
77 Flashcards
Source URL: https://quizplus.com/quiz/44987
Sample Questions
Q1) The variance of the returns of Stock X is 62.5 percent, and the expected return from the stock is 18 percent. Calculate the coefficient of variation of the stock.
A)3.47
B)0.44
C)40.98
D)0.29
E)1.86
Q2) Isabel invested in four-stock portfolio; she invested 20 percent of her money in Stock A, 30 percent of her money in Stock B, 25 percent of her money in Stock C, and 25 percent of her money in Stock D. The betas for Stock A, B, C, and D are 0.4, 1.2, 2.5, and 1.75, respectively, and their expected returns are 12 percent, 24 percent, 30 percent, and 28 percent, respectively. What is the beta of Isabel's portfolio?
A)1.82
B)1.96
C)1.50
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Capital Budgeting Techniques
Available Study Resources on Quizplus for this Chatper
73 Verified Questions
73 Flashcards
Source URL: https://quizplus.com/quiz/44988
Sample Questions
Q1) The traditional payback period technique that is used in capital budgeting analyses:
A)is the simplest and oldest formal method used to evaluate capital budgeting projects.
B)directly accounts for the time value of money.
C)considers the discounted value of cash flows beyond the project's payback period.
D)always results in maximizing the value of the firm when used to evaluate mutually exclusive projects.
E)incorporates risk into the discount rate that is used to compute the payback period.
Q2) The ultimate purpose of a capital budget is to forecast _____.
A)the target payback periods of the projects undertaken by a firm
B)the funds required to purchase fixed assets for future projects
C)the future value of the cash inflows from various projects
D)the terminal value of the cash flows from different projects
E)whether projects have multiple internal rates of return
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Project Cash Flows and Risk
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/44989
Sample Questions
Q1) Which of the following statements is correct concerning various techniques used for assessing a capital budgeting project's stand-alone risk?
A)Sensitivity analysis fails to consider the range of likely values for the key input variables that are used to evaluate a capital budgeting project.
B)When using sensitivity analysis, the sensitivity of input variables can be compared by graphing their relationships with such measures as net present value (NPV) and internal rate of return (IRR). When comparing two of the variables, the variable that has the graph with the steeper line (slope) is considered less risky than the graph with the flatter line.
C)The primary advantage of using simulation analysis to evaluate a capital budgeting project is that it provides an accurate point (single) estimate of the project's net present value (NPV).
D)Compared to scenario analysis, one important benefit of using simulation analysis to evaluate a capital budgeting project is that once the analysis is complete, simulation provides a clear accept/reject decision rule.
E)When using simulation analysis to evaluate a capital budgeting project, only a few discrete alternative scenarios are included.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: The Cost of Capital
Available Study Resources on Quizplus for this Chatper
55 Verified Questions
55 Flashcards
Source URL: https://quizplus.com/quiz/44990
Sample Questions
Q1) Bouchard Company's stock sells for $20 per share, its last dividend (D0) was $1.00, its growth rate is a constant 6 percent, and the company must pay flotation cost equal to 20 percent when it issues new common stock. What is Bouchard's cost of issuing new common stock?
A)11.00%
B)12.25%
C)12.63%
D)11.30%
E)11.56%
Q2) Byron Corporation forecasts that its income will be $21,000 next year. The firm pays out 30 percent of earnings as dividends to common stockholders. Its target capital structure is 40 percent debt and 60 percent common equity. What Byron's retained earnings break point?
A)$35,000
B)$24,500
C)$6,300
D)$36,750
E)$10,500
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Capital Structure
Available Study Resources on Quizplus for this Chatper
76 Verified Questions
76 Flashcards
Source URL: https://quizplus.com/quiz/44991
Sample Questions
Q1) Which of the following statements concerning capital structures around the world is correct?
A)There have been no significant observed differences between the capital structures of U.S. corporations and their German and Japanese counterparts.
B)All countries use essentially the same international accounting conventions with respect to reporting assets on foreign companies' financial statements.
C)Differences among countries in both bankruptcy costs and equity reporting costs leads to the conclusion that U.S. firms should have more equity and less debt than firms in Japan and Germany.
D)Equity monitoring costs are higher in the United States than in Japan and Germany.
E)Debt monitoring costs are lower in the United States than in Japan and Germany.
Q2) If the debt/assets ratio increases, the costs of both debt and equity normally decrease.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Distribution of Retained Earnings: Dividends and Stock Repurchases
Available Study Resources on Quizplus for this Chatper
43 Verified Questions
43 Flashcards
Source URL: https://quizplus.com/quiz/44992
Sample Questions
Q1) LTD, Inc. plans to initiate a 5-for-1 stock split. LTD's stock currently sells for $180 per share. What will be the per share price of the stock immediately following the split?
A)$36.00
B)$900.00
C)$72.00
D)$27.78
E)$12.96
Q2) The primary factor that influences the dividend policies of companies around the world is the level of protection that exists for the rights of minority stockholders.
A)True
B)False
Q3) The dividend policy that strikes a balance between current dividends and the firm's future growth is called the ______ policy.
A)optimal dividend
B)dividend irrelevance
C)compromise dividend
D)dividend signaling
E)dividend preference
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Managing Short-Term Financing Liabilities
Available Study Resources on Quizplus for this Chatper
68 Verified Questions
68 Flashcards
Source URL: https://quizplus.com/quiz/44993
Sample Questions
Q1) The following information relates to Zync Corporation: \(\begin{array}{ll}
\text { Current assets } & \$ 200,000 \\
\text { Current liabilities } & \$ 150,000 \\
\text { Long-term assets } & \$ 600,000 \\
\text { Long-term liabilities } & \$ 400,000 \end{array}\)
Based on the information given above, the net working capital of the company is:
A)$250,000.
B)$50,000.
C)$350,000.
D)$10,000,000.
E)$650,000.
Q2) Net working capital is equal to:
A)current assets.
B)current liabilities.
C)current assets divided by current liabilities.
D)current assets minus current liabilities.
E)current assets plus current liabilities.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Managing Short-Term Assets
Available Study Resources on Quizplus for this Chatper
65 Verified Questions
65 Flashcards
Source URL: https://quizplus.com/quiz/44994
Sample Questions
Q1) Governments often impose _____ to restrict the quantities of foreign products that multinational firms can bring into their countries.
A)stockout rules
B)negative tariffs
C)quotas
D)custom exclusions
E)expropriation restrictions
Q2) The lower the level of current assets that is required to support its operations, the more closely a firm can adhere to a _____ current asset investment policy.
A)relaxed
B)restricted
C)moderate
D)lean-and-mean
E)precautionary
Q3) A firm's credit policy includes procedures that it follows to collect its accounts receivable.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 16: Financial Planning and Control
Available Study Resources on Quizplus for this Chatper
73 Verified Questions
73 Flashcards
Source URL: https://quizplus.com/quiz/44995
Sample Questions
Q1) Managements does not need to consider economies of scale in operations when constructing pro forma financial statements because economies of scale do not directly affect financial statements.
A)True
B)False
Q2) To produce sales of $4,500,000, Azure Inc. uses only 80 percent of its plant capacity. Therefore, Azure can increase its sales to _____ without having to increase its plant and equipment.
A)$22,500,000
B)$3,600,000
C)$5,625,000
D)$5,400,000
E)$8,100,000
Q3) Operating costs that do not change when production levels change are called ______ costs
A)variable
B)lumpy
C)direct
D)fixed
E)forecasting
To view all questions and flashcards with answers, click on the resource link above. Page 18