Financial Management
Final Exam
Course Introduction
Financial Management is a foundational course that explores the principles and practices essential to effective organizational finance. The course examines key topics such as financial statement analysis, budgeting, capital structure, risk and return, valuation, and working capital management. Students will learn how financial decisions are made within firms, understand the impact of financial markets, and develop the analytical tools necessary for investment decisions, corporate financing, and managing resources. Emphasis is placed on both theoretical understanding and practical application, preparing students to analyze real-world financial challenges and contribute to the strategic financial goals of organizations.
Recommended Textbook
Corporate Finance Core Principles and Applications 5th Edition by Stephen Ross
Available Study Resources on Quizplus
21 Chapters
1630 Verified Questions
1630 Flashcards
Source URL: https://quizplus.com/study-set/2042
Page 2
Chapter 1: Introduction to Corporate Finance
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/40644
Sample Questions
Q1) The Securities Act of 1933 focuses on
A)all new and outstanding stock transactions.
B)the issuance of new securities.
C)the redemption of outstanding debt.
D)insider trading.
E)Federal Deposit Insurance Corporation (FDIC)insurance.
Answer: B
Q2) The articles of incorporation
A)establish the rights of the shareholders.
B)are rules that apply only to limited liability companies.
C)address only those issues related to a corporation's managers and directors.
D)establish the compensation to be granted to senior managers.
E)include only the name,purpose,and intended life of the corporation.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Financial Statements AMCQ Cash Flow
Available Study Resources on Quizplus for this Chatper
85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/40643
Sample Questions
Q1) An example of a current liability is
A)a loan secured by a mortgage and payable in 8 months.
B)any loan payable to a bank.
C)all accounts due from customers within the next year.
D)a note payable in full in 18 months.
E)an account due from a customer that is past due.
Answer: A
Q2) A change in which one of these accounts is treated as a cash flow from operating activities in an accounting statement of cash flows?
A)Long-term debt
B)Inventory
C)Dividends
D)Fixed assets
E)Depreciation
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Financial Statements Analysis Amcq Financial
Models
Available Study Resources on Quizplus for this Chatper
88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/40642
Sample Questions
Q1) A firm has 4,250 shares of stock outstanding with a market value of $16.65 a share,$64,800 of long-term debt with an interest rate of 7.5 percent,$21,900 of short-term debt,cash on hand of $5,200,sales of $213,000,costs of $126,200,and depreciation of $13,400.The tax rate is 35 percent.What is the enterprise value multiple?
A)1)50 times
B)1)67 times
C)2)33 times
D)2)18 times
E)1)92 times
Answer: A
Q2) The quick ratio is calculated as
A)current assets divided by current liabilities.
B)current assets minus inventory,divided by current liabilities.
C)net working capital divided by current liabilities.
D)cash on hand divided by current liabilities.
E)current liabilities divided by current assets.
Answer: B
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
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/40641
Sample Questions
Q1) The effective annual rate (EAR)of a loan will increase if
A)the frequency of the interest rate compounding is decreased.
B)the interest is changed from compound to simple interest at the same annual percentage rate (APR).
C)the annual percentage rate (APR)is decreased.
D)either the annual percentage rate (APR)or the compounding frequency is increased.
E)the compounding of interest is changed from continuous compounding to daily compounding.
Q2) Annuities with payments occurring at the end of each time period are called ________,whereas annuities with payments occurring at the beginning of each time period are called ________.
A)ordinary annuities;early annuities
B)ordinary annuities;annuities due
C)annuities due;ordinary annuities
D)straight annuities;deferred annuities
E)deferred annuities;straight annuities
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Interest Rates AMCQ Bomcq Valuation
Available Study Resources on Quizplus for this Chatper
91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/40640
Sample Questions
Q1) Which one of these is included in the term structure of interest rates and remains constant over the term?
A)Default risk premium
B)Interest rate risk premium
C)Liquidity premium
D)Real rate of interest
E)Inflation premium
Q2) Which one of these definitions is correct?
A)Negative covenant: a "thou shalt" agreement
B)Premium bond: bond that sells for less than face value
C)Dirty price: market price,excluding accrued interest
D)Call provision: issuer's right to repurchase a bond prior to maturity
E)Unfunded debt: long-term corporate debt
Q3) What is the market price of a bond with a $5,000 face value if the price quote is 101.1629?
A)$4,942.52
B)$5,058.15
C)$5,581.45
D)$4,938.08
E)$5,116.29
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Stock Valuation
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/40639
Sample Questions
Q1) Webster preferred stock pays an annual dividend of $6.20 a share.What is the maximum price you should pay today to purchase this stock if you desire a rate of return of 14.25 percent?
A)$40.12
B)$43.51
C)$46.50
D)$51.88
E)$55.02
Q2) Which one of these represents the portion of a stock's rate of return that is attributable to the growth rate of the dividends?
A)Capital gains yield
B)Real rate of return
C)Interest yield
D)Inflation rate
E)Dividend yield
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Net Present Value AMCQ Other Investment Rules
Available Study Resources on Quizplus for this Chatper
80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/40638
Sample Questions
Q1) A project is expected to have annual cash flows of $36,800,$24,600,and -$9,200 for Years 1 to 3,respectively.The initial cash outlay is $44,500 and the discount rate is 11 percent.What is the modified IRR?
A)14.66%
B)13.22%
C)12.73%
D)18.67%
E)15.70%
Q2) Webster's wants to introduce a new product that has a start-up cost of $7,800.The product has a 2-year life and will provide cash flows of $6,700 in Year 1 and $4,300 in Year 2.The required rate of return is 14 percent.Should the product be introduced? Why or why not?
A)Yes;the NPV is $1,108.15.
B)Yes;the IRR is 12.97 percent.
C)Yes;the IRR is 28.72 percent.
D)Yes;the NPV is $1,409.27.
E)No;the IRR is 12.94 percent.
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Making Capital Investment Decisions
Available Study Resources on Quizplus for this Chatper
81 Verified Questions
81 Flashcards
Source URL: https://quizplus.com/quiz/40637
Sample Questions
Q1) Which one of these statements related to depreciation is correct for a firm with taxable income of $121,600 and after-tax income of $74,200?
A)Depreciation increases the net book value of the firm's assets.
B)Depreciation is a noncash expense that increases the firm's cash flows.
C)Depreciation lowers the firm's net income but does not affect its cash flows.
D)Depreciation has no effect on either the firm's net income or its cash flows.
E)Depreciation decreases both the firm's net income and its cash flows.
Q2) A proposed project will require $410,000 in fixed assets that would be depreciated straight-line to zero over the 3-year life of the project.These assets have an expected aftertax salvage value of $110,000 at the end of the project. The project would require $48,000 of net working capital,all of which is recoverable,along with $220,000 in annual expenses.What is the minimum annual price you should bid on this project if you require a rate of return of 17 percent and have a tax rate of 30 percent?
A)$410,208
B)$393,760
C)$408,211
D)$427,009
E)$367,984
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Risk Analysis, Real Options, AMCQ Capital Budgeting
Available Study Resources on Quizplus for this Chatper
80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/40636
Sample Questions
Q1) Ernestine is analyzing a 4-year project with an initial cost of $87,000,a required rate of return of 14 percent,and a chance of success of 4 percent.If the project succeeds,the annual cash flow will be $1,789,000.If the project fails,the annual cash flow will be -$131,000.The project can be shut down after the first 2 years but all monies invested will be lost.None of the initial cost can be recouped after 4 years.What is the net present value of this project at Time 0?
A)$150,050.32
B)-$49,666.71
C)-$238,212.04
D)-$85,578.77
E)$59,412.95
Q2) Assume a project currently has a negative net present value.Which one of these expectations would indicate that the timing option for that project may have a positive value?
A)The life of the project's product is expected to decrease each year.
B)Competition in the project's product market is on the increase.
C)The demand for the project's product is expected to decrease within 6 months.
D)The project's cash flow projections are expected to remain constant over time.
E)The contribution margin for the project is expected to improve next year.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Risk Amcq Return: Lessons From Market History
Available Study Resources on Quizplus for this Chatper
80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/40635
Sample Questions
Q1) A stock returned 11 percent,16 percent, 7 percent,and 13 percent annually for the past 4 years.Based on this information,what is the 99.74 percent probability range for any one given year?
A) 34.54 to 38.04%
B) 36.1 to 40.1%
C) 32.5 to 35.5%
D) 40.06 to 43.56%
E) 44.82 to 47.32%
Q2) The higher the Sharpe ratio,the
A)greater the total risk.
B)greater the return per unit of risk.
C)more the security resembles the overall market.
D)greater the risk per unit of return.
E)lower the level of total risk.
Q3) How did long-term U.S.Treasury bonds perform in 2008?
A)Decreased by more than 15 percent
B)Decreased between 5 and 15 percent
C)Changed between -5 and +5 percent
D)Increased between 5 and 15 percent
E)Increased more than 15 percent
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Return Amcq Risk: the Capital Asset Pricing
Model Capm
Available Study Resources on Quizplus for this Chatper
89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/40634
Sample Questions
Q1) Mr.Rhoades is the CEO of Daily News.The majority of stockholders do not approve of the decisions made by Mr.Rhoades and have repeatedly requested that he be ousted.Over the last couple of months,it has become apparent that the CEO is going to be replaced by a member of the board,Mr.Bentley,who is highly respected.This morning,the official announcement was made that Mr.Rhoades has stepped down and will be replaced immediately by Mr.Bentley.How is the stock price of the Daily News most apt to react to this announcement?
A)Highly positive and immediate reaction
B)A slow but positive reaction
C)An immediate negative reaction
D)Middling reaction over multiple days
E)No reaction
Q2) The beta of a security is calculated by dividing the
A)variance of the market by the covariance of the security with the market.
B)correlation of the security with the market by the variance of the security.
C)variance of the market by the correlation of the security with the market.
D)covariance of the security with the market by the variance of the market.
E)covariance of the security with the market by the variance of the security.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Risk, cost of Capital, AMCQ Valuation
Available Study Resources on Quizplus for this Chatper
83 Verified Questions
83 Flashcards
Source URL: https://quizplus.com/quiz/40633
Sample Questions
Q1) Which of these may occur if a company uses its overall cost of capital as the discount rate for all projects? I.Profitable low-risk projects may be incorrectly rejected.
II)Only projects with risks similar to the current company will be accepted.
III)Too many high-risk projects may be accepted.
IV)Only low-risk projects will be accepted.
A)II only
B)II and IV only
C)I and III only
D)I and IV only
E)I,II,and III only
Q2) If a company is all-equity financed,its WACC will equal
A)R<sub>F.</sub>
B) R<sub>F</sub><sub>.</sub>
C) R<sub>S</sub><sub>.</sub>
D)R<sub>S.</sub>
E)R<sub>M.</sub> <sub
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Efficient Capital Markets Amcq Behavioral Challenges
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/40632
Sample Questions
Q1) The research done by Ikenberry,Lakonishok,and Vermaelen supports the argument that mangers:
A)effectively time IPOs but not SEOs.
B)cannot effectively time IPOs.
C)cannot effectively time either stock sales or repurchases.
D)effectively time stock repurchases.
E)can effectively time stock sales but not repurchases.
Q2) Representativeness,according to financial economists,leads to A)overreactions in stock returns.
B)abnormal long-term profits.
C)stock price under reactions to new information.
D)stable stock returns over both short and long periods of time.
E)strong form efficient financial markets.
Q3) Given the vast resources available to mutual fund managers,these managers on average have generally
A)outperformed the overall market on a risk-adjusted basis.
B)eliminated excess profits for arbitrageurs.
C)beat broad-based indexes.
D)proved the market to be strong form efficient.
Page 15
E)underperformed the market on a risk-adjusted basis.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Capital Structure: Basic Concepts
Available Study Resources on Quizplus for this Chatper
80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/40631
Sample Questions
Q1) Delta Mills and Franklin Mill are identical firms except for their capital structures.Delta is an unlevered firm with $680,000 of equity.Franklin is a levered firm with $425,000 of equity and $255,000 of debt at an interest rate of 6.2 percent.Both Delta and Franklin have an expected EBIT of $84,000.Ignore taxes.Delta has a WACC of ________ percent and Franklin's WACC is ________ percent.
A)12.35;11.05
B)12.35;14.10
C)12.35;12.35
D)14.10;14.10
E)16.10;14.10
Q2) Ignoring taxes,financial leverage affects the performance of a firm by
A)increasing the volatility of the firm's EBI.
B)decreasing the volatility of the firm's EBI.
C)decreasing the volatility of the firm's net income.
D)increasing the volatility of the firm's EPS.
E)lowering the firm's level of risk.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Capital Structure: Limits to the Use of Debt
Available Study Resources on Quizplus for this Chatper
56 Verified Questions
56 Flashcards
Source URL: https://quizplus.com/quiz/40630
Sample Questions
Q1) The complete termination of a firm as a going business concern is called a A)merger.
B)repurchase program.
C)liquidation.
D)divestiture.
E)reorganization.
Q2) The optimal debt-equity ratio tends to
A)remain constant when agency costs of equity are considered.
B)support the all-debt capital structure.
C)increase when agency costs of equity exist.
D)be directly related to the costs of financial distress.
E)decrease as the tax rate increases.
Q3) In a world with corporate taxes,MM theory implies that that all firms should
A)maintain a constant value.
B)decrease in value as the leverage of the firm increases.
C)choose an all-debt capital structure.
D)select the capital structure that maximizes the firm's WACC.
E)select the capital structure that equates the marginal cost of debt with the marginal benefits.
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Dividemcqs AMCQ Other Payouts
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/40629
Sample Questions
Q1) Which of the following tend to keep dividends low? I.Potential for companies to use excess cash on negative NPV projects
II)Restrictive terms contained in bond indenture agreements
III)Manager's desire to maintain constant dividends over time
IV)Flotation costs
A)II and III only
B)I and IV only
C)II,III,and IV only
D)I,II,and III only
E)I,II,III,and IV
Q2) In respect to a balance sheet,a stock split will
A)not affect the total value of any of the equity accounts.
B)increase the total value of the common stock account.
C)decrease the total book value of owners' equity.
D)increase the value of the capital in excess of par value account.
E)decrease the value of the retained earnings account.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: Options Amcq Corporate Finance
Available Study Resources on Quizplus for this Chatper
80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/40628
Sample Questions
Q1) Assume the delta of a call option on a firm's assets is 0.481.This means that a new $498,000 project will increase the value of equity by
A)$336,259
B)$349,725
C)$239,538
D)$280,790
E)$208,244
Q2) Which one of the following will cause the value of a call to decrease?
A)Lowering the risk level of the underlying security
B)Increasing the time to expiration
C)Increasing the risk-free rate
D)Lowering the exercise price
E)Increasing the stock price
Q3) The ticker symbol for a stock option indicates all of the following except the
A)underlying stock.
B)expiration date.
C)intrinsic value.
D)type of option.
E)strike price.
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Short-Term Finance Amcq Planning
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/40627
Sample Questions
Q1) Which one of these managers is most apt to post customer payments to their accounts?
A)Credit manager
B)Controller
C)Cash manager
D)Marketing manager
E)Payables manager
Q2) Smithfield's has a line of credit with a local bank of $75,000.The loan agreement calls for interest of 6 percent with a compensating balance requirement of 3 percent that is based on the total amount borrowed.What is the effective interest rate if the firm needs $58,000 for 1 year to finance a fixed asset purchase?
A)8)55%
B)6)34%
C)7)13%
D)7)38%
E)6)19%
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Raising Capital
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/40626
Sample Questions
Q1) Which of the following have been offered as justification for stock price declines following an SEO announcement? I.Investors assume managers issue stock when shares are overvalued.
II)Corporate taxes imposed on stock offerings lower the value of the issuer's cash flows.
III)Issuing equity may be considered a signal that the issuer has too much debt.
IV)Issue costs reduce the value of the issuing firm.
A)I and III only
B)II and IV only
C)I,III,and IV only
D)II,III,and IV only
E)I,II,III,and IV
Q2) A lockup agreement:
A)temporarily supports the market price of IPO shares.
B)maximizes the return on an IPO to a firm's original owners.
C)increases the volume of trading for shares of a recent IPO.
D)limits price volatility on the first day shares of an IPO trade.
E)guarantees a minimum number of IPO shares sold.
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: International Corporate Finance
Available Study Resources on Quizplus for this Chatper
79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/40625
Sample Questions
Q1) Which one of these expresses the concept that a commodity will cost the same regardless of where the commodity is located or the currency used to pay for it?
A)Interest rate parity
B)Uncovered interest rate parity
C)Absolute purchasing power parity
D)International Fisher effect
E)Relative purchasing power parity
Q2) Assume you can exchange Can$179 for £100.Also assume you can exchange Can$1.1238 for $1 and $1.6024 for £1.How much profit can you earn in U.S.dollars if you start out with $500? Ignore transaction costs.
A)$3.01
B)$2.61
C)$3.57
D)$3.64
E)$2.90
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: Mergers Amcq Acquisitions Web Only
Available Study Resources on Quizplus for this Chatper
49 Verified Questions
49 Flashcards
Source URL: https://quizplus.com/quiz/40624
Sample Questions
Q1) Which of these may be a source of synergy? I.Unused debt capacity
II.Economies of scale
III.Increase in overall revenue
IV.Unused net operating losses
A)I and IV only
B)II and III only
C)II,III,and IV only
D)I,II,and III only
E)I,II,III,and IV
Q2) A tender offer is often contingent upon the
A)approval of the target firm's board of directors.
B)approval of both the acquirer's and bidder's shareholders during their respective shareholder meetings.
C)acquisition being friendly in nature.
D)bidder obtaining its desired percentage of voting shares in the target firm.
E)approval of the target firm's officers.
To view all questions and flashcards with answers, click on the resource link above.
23