Finance for Managers Exam Bank
Course Introduction
Finance for Managers is designed to equip non-financial managers with the essential concepts and tools of financial management needed to make informed business decisions. The course covers fundamental topics such as financial statement analysis, budgeting, cost control, capital investment decisions, and working capital management. Through practical examples and case studies, students learn how to interpret financial data, assess organizational performance, and apply financial principles to strategic planning and everyday managerial tasks. This course empowers future leaders to effectively communicate with financial professionals and contribute to the financial health and success of their organizations.
Recommended Textbook
Corporate Finance The Core 4th Edition by Jonathan Berk
Available Study Resources on Quizplus
19 Chapters
1748 Verified Questions
1748 Flashcards
Source URL: https://quizplus.com/study-set/3552
Page 2
Chapter 1: The Corporation
Available Study Resources on Quizplus for this Chatper
38 Verified Questions
38 Flashcards
Source URL: https://quizplus.com/quiz/70551
Sample Questions
Q1) You are a shareholder in a "C" corporation.This corporation earns $4 per share before taxes.After it has paid taxes,it will distribute the remainder of its earnings to you as a dividend.The dividend is income to you,so you will then pay taxes on these earnings.The corporate tax rate is 35% and your tax rate on dividend income is 15%.The effective tax rate on your share of the corporations earnings is closest to:
A)15%
B)35%
C)45%
D)50%
Answer: C
Q2) The largest stock market in the world by volume is:
A)the London Stock Exchange.
B)NASDAQ.
C)the American Stock Exchange.
D)the New York Stock Exchange.
Answer: B
Q3) Explain the benefits of incorporation.
Answer: 1.Limited liability 2.Unlimited life 3.Access to capital markets/availability of outside funding
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
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/70540
Sample Questions
Q1) What are the four financial statements that all public companies must produce?
Answer: 1.Balance Sheet 2.Income Statement 3.Statement of Cash Flows 4.Statement of Stockholder's Equity
Q2) Dustin's Donuts experienced a decrease in the value of the trademark of a company it acquired two years ago.This reduction in value results in:
A)an impairment charge.
B)depreciation expense.
C)an operating expense.
D)goodwill.
Answer: A
Q3) Cash is a:
A)long-term asset.
B)current asset.
C)current liability.
D)long-term liability.
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 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/70539
Sample Questions
Q1) Walgreen Company (NYSE: WAG)is currently trading at $48.75 on the NYSE.Walgreen Company is also listed on NASDAQ and assume it is currently trading on NASDAQ at $48.50.Does an arbitrage opportunity exists and if so how would you exploit it and how much would you make on a block trade of 100 shares?
A)No,no arbitrage opportunity exists.
B)Yes,buy on NASDAQ and sell on NYSE,make $25.
C)Yes,buy on NYSE and sell on NASDAQ,make $25.
D)Yes,buy on NASDAQ and sell on NYSE,make $250.
Answer: B
Q2) A project that you are considering today is expected to provide benefits worth $168,000 in one year.If the risk-free rate of interest (r<sub>f</sub>)is 4.5%,then the value of the benefits of this project today are closest to:
A)$160,440
B)$160,766
C)$168,000
D)$175,560
Answer: B
Q3) The price per share of the ETF in a normal market is:
Answer: Value of ETF = 2 × 121.57 + 3 × 36.59 + 3 × 3.15 = $362.36
Page 5
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: The Time Value of Money
Available Study Resources on Quizplus for this Chatper
91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/70538
Sample Questions
Q1) The ranking of the four alternatives from most valuable to least valuable if the interest rate is 7% per year would be:
A)1,2,3,4
B)4,3,2,1
C)3,4,2,1
D)3,1,2,4
Q2) The amount of money that would be in the account if you left the money there until your 65th birthday is closest to:
A)$29,556
B)$148,780
C)$168,824
D)$748,932
Q3) If the appropriate interest rate is 8%,then present value of $500 paid at the beginning of each of the next 40 years is closest to:
A)$23
B)$5962
C)$6439
D)$20,000
Q4) Draw a timeline detailing the cash flows from investment "A."
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/70537
Sample Questions
Q1) Which of the following statements is FALSE?
A)Because interest rates may be quoted for different time intervals,it is often necessary to adjust the interest rate to a time period that matches that of our cash flows.
B)The effective annual rate indicates the amount of interest that will be earned at the end of one year.
C)The annual percentage rate indicates the amount of simple interest earned in one year.
D)The annual percentage rate indicates the amount of interest including the effect of compounding.
Q2) Assuming that you have made all of the first 24 payments on time,then how much interest have you paid over the first two years of your loan?
Q3) Which alternative offers you the lowest effective rate of return?
A)Investment A
B)Investment B
C)Investment C
D)Investment D
Q4) What is the effective after-tax rate of each instrument,expressed as an EAR?
Q5) Should you purchase the delivery truck or lease it? Why?
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
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/70536
Sample Questions
Q1) The price today of a three-year default-free security with a face value of $1000 and an annual coupon rate of 4% is closest to:
A)$1002.78
B)$1003.31
C)$1028.50
D)$1028.61
Q2) Which of the following statements is FALSE?
A)Bond traders typically quote bond prices rather than bond yields .
B)Treasury bills are zero-coupon bonds.
C)Zero-coupon bonds always trade at a discount.
D)The yield to maturity is typically stated as an annual rate by multiplying the calculated YTM by the number of coupon payment per year,thereby converting it to an APR.
Q3) The yield to maturity for the three year zero-coupon bond is closest to:
A)5.4%
B)5.8%
C)5.6%
D)6.0%
Q4) If its YTM does not change,how does a bond's cash price change between coupon payments?
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/70535
Sample Questions
Q1) The internal rate of return (IRR)for project Alpha is closest to:
A)25.0%
B)22.2%
C)24.5%
D)22.7%
Q2) The internal rate of return (IRR)for project Beta is closest to:
A)25.0%
B)22.7%
C)24.5%
D)22.2%
Q3) The profitability index for this project is closest to:
A).44
B).26
C)0.39
D).34
Q4) The payback period for Rearden's mining operation is closest to:
A)5.00 years
B)6.00 years
C)6.25 years
D)6.50 years
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
95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/70534
Sample Questions
Q1) Which of the following statements is FALSE?
A)The simplest method used to calculate depreciation is the straight-line method.
B)A sunk cost is any unrecoverable cost for which the firm is already liable.
C)Unlevered Net Income = EBIT × <sub>c</sub>.
D)The decision to continue or abandon should be based only on the incremental costs and benefits of the project going forward.
Q2) The free cash flow from the Shepard Industries project in year two is closest to:
A)$345
B)$455
C)$275
D)-$5
Q3) The NPV of manufacturing the armatures in house is closest to:
A)1,095,000
B)1,215,000
C)1,225,000
D)1,250,000
Q4) What is an opportunity cost? Should it be included in the incremental cash flows for a project? Why or why not?
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/70533
Sample Questions
Q1) Rearden's equity cost of capital is closest to:
A)4.0%
B)6.4%
C)8.2%
D)14.0%
Q2) If CCM has $200 million of debt and 8 million shares of stock outstanding,then the share price for CCM is closest to:
A)$49.50
B)$12.50
C)$19.35
D)$24.50
Q3) What are the implications of the efficient market hypothesis for corporate managers?
Q4) Suppose you plan to hold Von Bora stock for only one year.Your capital gain rate from holding Von Bora stock for the first year is closest to:
A)3.5%
B)4.0%
C)6.0%
D)4.5%
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
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/70550
Sample Questions
Q1) The expected return on security with a beta of 0 is closest to:
A)-4.0%
B)0.0%
C)3.2%
D)4.0%
Q2) Assume that you purchased General Electric Company stock at the closing price on December 31,2008 and sold it after the dividend had been paid at the closing price on January 26,2009.Your dividend yield for this period is closest to:
A)-8.15%
B)0.75%
C)0.70%
D)-8.80%
Q3) The beta for security "X" is closest to:
A)0
B)0.80
C)1.00
D)1.25
Q4) Do expected returns for individual stocks increase proportionately with volatility?
Q5) Which pharmaceutical company faces less risk?
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
134 Verified Questions
134 Flashcards
Source URL: https://quizplus.com/quiz/70549
Sample Questions
Q1) The beta for Taggart Transcontinental is closest to:
A)0.75
B)0.80
C)1.00
D)1.10
Q2) Consider an equally weighted portfolio that contains five stocks.If the average volatility of these stocks is 40% and the average correlation between the stocks is .5,then the volatility of this equally weighted portfolio is closest to:
A).17
B).03
C).41
D).19
Q3) The beta for the risk free investment is closest to:
A)1
B)0
C)Unable to answer this question without knowing the risk free rate
D)Unable to answer this question without knowing the markets volatility
Q4) Explain how having different interest rates for borrowing and lending affects the CAPM and the SML.
13
To view all questions and flashcards with answers, click on
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/70548
Sample Questions
Q1) Which of the following statements is FALSE?
A)The CAPM states that we should use the risk-free interest rate corresponding to the investment horizon of the firm's investors.
B)To determine the risk premium for a stock using the security market line,we need an estimate of the market risk premium.
C)When surveyed,the vast majority of large firms and financial analysts reported using the yields of Treasury Bills to determine the risk-free rate.
D)The risk-free interest rate is generally determined using the yields of U.S.Treasury securities,which are free from default risk.
Q2) Which of the following statements is FALSE?
A)We should be suspicious of beta estimates that are extreme relative to industry norms.
B)When using historical data,there is always the possibility of estimation error.
C)Evidence suggests that betas tend to revert toward zero over time.
D)For stocks,common practice is to use at least two years of weekly return data or five years of monthly return data when estimating beta.
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
77 Verified Questions
77 Flashcards
Source URL: https://quizplus.com/quiz/70547
Sample Questions
Q1) Which of the following is NOT an investment likely to be found in any proxy for the market portfolio?
A)Human capital
B)Stocks
C)Bonds
D)Precious metals
Q2) A group of portfolios from which we can form an efficient portfolio are called:
A)factor portfolios.
B)semi-efficient portfolios.
C)partially efficient portfolios.
D)characteristic portfolios.
Q3) The expected alpha for Taggart Transcontinental is closest to:
A)-3.00%
B)-1.00%
C)1.00%
D)3.00%
Q4) What does the existence of a positive alpha investment strategy imply?
Q5) Explain why the market portfolio proxy may not be efficient.
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
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/70546
Sample Questions
Q1) Consider the following equation:
E + D = U = A
The E in this equation represents:
A)the value of the firm's equity.
B)the value of the firm's debt.
C)the value of the firm's unlevered equity.
D)the market value of the firm's assets.
Q2) Which of the following statements is FALSE?
A)If we can identify a comparison firm whose assets have the same risk as the project being evaluated,and if the comparison firm is levered,then we can use its equity cost of capital as the cost of capital for the project.
B)We can calculate the cost of capital of the firm's assets by computing the weighted average of the firm's equity and debt cost of capital,which we refer to as the firm's weighted average cost of capital (WACC).
C)The portfolio of a firm's equity and debt replicates the returns we would earn if the firm were unlevered.
D)When evaluating any potential investment project,we must use a discount rate that is appropriate given the risk of the project's free cash flow.
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/70545
Sample Questions
Q1) Taggart Transcontinental currently has no debt and an equity cost of capital of 16%.Suppose that Taggart decides to increase its leverage and maintain a market debt-to-value ratio of 1/3.Suppose Taggart's debt cost of capital is 9% and its corporate tax rate is 35%.Assuming that Taggart's pre-tax WACC remains constant,then with the addition of leverage its effective after-tax WACC will be closest to:
A)12.9%
B)13.0%
C)15.0%
D)16.0%
Q2) Wyatt Oil has 25 million shares outstanding and has a marginal corporate tax rate of 40%.Wyatt Oil announces that it will payout $40 million in cash to investors through a special dividend.Shareholders had previously assumed that Wyatt Oil would retain this excess cash permanently.The amount that Wyatt Oil's share price can be expected to change upon this announcement is closest to:
A)$0.56
B)$0.64
C)$0.96
D)$1.56
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/70544
Sample Questions
Q1) List five general categories of indirect costs associated with bankruptcy.
Q2) Which of the following is NOT an indirect cost of bankruptcy?
A)Loss of suppliers
B)Fire sales of assets
C)Costs of appraisers
D)Loss of employees
Q3) Suppose that MI has zero-coupon debt with a $125 million face value due next year.The yield to maturity of MI's debt is closest to:
A)12.5%
B)7.8%
C)25.0%
D)5.0%
Q4) What is the expected payoff to equity holders under JR's new riskier business strategy?
A)$15 million
B)$11 million
C)$20 million
D)$4 million
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/70543
Sample Questions
Q1) Assume that Omicron uses the entire $50 million in excess cash to pay a special dividend.The amount of the regular yearly dividends in the future is closest to:
A)$4.50
B)$5.00
C)$4.00
D)$9.00
Q2) Suppose that Iota is able to invest the $200 million in excess cash into a project that will increase future free cash flows by 30%.If you were advising the board,what course of action would you recommend,investing the $200 million in an expansion project that will raise future free cash flows by 30% or use the $200 million to repurchase shares? Which provides the higher stock price?
Q3) The effective tax disadvantage for retaining cash in 2000 is closest to:
A)15.00%
B)13.35%
C)14.75%
D)35.00%
Q4) Calculate the effective tax disadvantage for retaining cash in 1999,2001,and 2005.
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
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/70542
Sample Questions
Q1) Which of the following statements is FALSE?
A)The WACC can be used throughout the firm as the company wide cost of capital for new investments that are of comparable risk to the rest of the firm and that will not alter the firm's debt-equity ratio.
B)A disadvantage of the WACC method is that you need to know how the firm's leverage policy is implemented to make the capital budgeting decision.
C)The intuition for the WACC method is that the firm's weighted average cost of capital represents the average return the firm must pay to its investors (both debt and equity holders)on an after-tax basis.
D)To be profitable,a project should generate an expected return of at least the firm's weighted average cost of capital.
Q2) Galt's WACC is closest to:
A)6.0%
B)9.6%
C)10.3%
D)10.7%
Q3) Calculate the NPV for Iota's new project.
Q4) 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/70541
Sample Questions
Q1) If the risk-free rate of interest is 6% and the market risk premium has historically averaged 5%,then the cost of capital for Nike is closest to:
A)14.7%
B)10.2%
C)9.1%
D)13.5%
Q2) Assuming that Ideko has a EBITDA multiple of 9.4,then the continuation levered P/E ratio of Ideko in 2010 is closest to:
A)17.2
B)14.5
C)19.0
D)16.4
Q3) Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation equity value of Ideko in 2010 is closest to:
A)$181.7 million
B)$272.8 million
C)$152.8 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