Introduction to Finance Solved Exam
Questions
Course Introduction
Introduction to Finance provides students with a foundational understanding of financial principles and practices used in both personal and corporate settings. The course covers topics such as time value of money, risk and return, financial statement analysis, capital budgeting, and the functioning of financial markets and institutions. Through real-world examples and case studies, students will learn how financial decisions are made, the impact of financial management on organizational success, and the ethical considerations involved in financial decision-making. This course equips students with essential skills for analyzing financial data and developing strategies for effective financial planning and management.
Recommended Textbook
Corporate Finance 4th Edition by Jonathan Berk
Available Study Resources on Quizplus
31 Chapters
2362 Verified Questions
2362 Flashcards
Source URL: https://quizplus.com/study-set/3285
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/65238
Sample Questions
Q1) An investment is said to be liquid if the investment:
A)has large day to day fluctuations in price.
B)has a large bid-ask spread.
C)can easily be converted into cash.
D)is traded on a stock exchange.
Answer: C
Q2) Which of the following are subject to double taxation?
A)Corporation
B)Partnership
C)Sole proprietorship
D)A and B
Answer: A
Q3) Which of the following organization forms accounts for the greatest number of firms?
A)"S" corporation
B)Limited partnership
C)Sole proprietorship
D)"C" corporation
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Introduction to Financial Statement Analysis
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/65227
Sample Questions
Q1) Luther's Operating Margin for the year ending December 31,2008 is closest to:
A)0.5%
B)0.7%
C)5.4%
D)6.8%
Answer: C
Q2) If Moon Corporation has depreciation or amortization expense,which of the following is TRUE?
A)Its EBITDA /Interest Coverage ratio will be greater than its EBIT/Interest Coverage ratio.
B)Its EBITDA /Interest Coverage ratio will be less than its EBIT/Interest Coverage ratio.
C)Its EBITDA /Interest Coverage ratio will be equal to its EBIT/Interest Coverage ratio.
D)Not enough information to answer the question.
Answer: A
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/65216
Sample Questions
Q1) Which of the following statements is FALSE?
A)Financial transactions are not sources of value,but merely serve to adjust the timing and risk of the cash flows to best suit the needs of the firm or its investors.
B)The NPV of trading a security in a normal market is zero.
C)We cannot separate a firm's investment decision from the decision of how to finance the investment.
D)In normal markets,trading securities neither creates nor destroys value.
Answer: C
Q2) When we express the value of a cash flow or series of cash flows in terms of dollars today,we call it the ________ of the investment.If we express it in terms of dollars in the future,we call it the ________.
A)present value;future value
B)future value;present value
C)ordinary annuity;annuity due
D)discount factor;discount rate
Answer: A
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
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: The Time Value of Money
Available Study Resources on Quizplus for this Chatper
91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/65213
Sample Questions
Q1) Which of the following statements regarding the timeline is TRUE?
A)Date 1 is the beginning of the first year.
B)Date 2 is the beginning of the second year.
C)Date 1 is the beginning of the second year.
D)Date 0 is the end of the first year.
Q2) Which of the following is NOT a valid time value of money function in Excel?
A)PMT
B)NPER
C)I
D)FV
Q3) Your son is about to start kindergarten in a private school.Currently,the tuition is $12,000 per year,payable at the start of the school year.You expect annual tuition increases to average 6% per year over the next 13 years.Assuming that you son remains in this private school through high school and that your current interest rate is 7%,then the present value of your son's private school education is closest to:
A)$332,300
B)$137,900
C)$155,800
D)$156,000
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/65212
Sample Questions
Q1) The highest effective rate of return you could earn on any of these investments is closest to:
A)6.250%
B)6.267%
C)6.295%
D)6.310%
Q2) The effective annual rate for a certificate of deposit that pays 3.9% APR compounded monthly is closest to:
A)3.83%
B)3.90%
C)3.97%
D)4.04%
Q3) Dagny's monthly payments are closest to:
A)$1110
B)$1800
C)$2215
D)$2245
Q4) 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?
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/65211
Sample Questions
Q1) A 3 year default free security with a face value of $1000 and an annual coupon rate of 6% will trade:
A)at a discount.
B)at a premium.
C)at par.
D)There is insufficient information provided to answer this question.
Q2) If the YTM of these bonds decreases to 7%,which bond's price would be most sensitive to this change in YTM?
A)#1
B)#2
C)#3
D)#4
E)#3 and #4
Q3) A corporate bond which receives a BBB rating from Standard and Poor's is considered:
A)a junk bond.
B)an investment grade bond.
C)a defaulted bond.
D)a high-yield bond.
Q4) Plot the zero-coupon yield curve (for the first five years).
Page 8
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Investment Decision Rules
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/65210
Sample Questions
Q1) If your new strip mall will have 16,000 square feet of retail space available to be leased,to which businesses should you lease and why?
Q2) Assuming that Dewey's cost of capital is 12% EAR,then the number of potential IRRs that exist for this problem is equal to:
A)0
B)1
C)2 D)12
Q3) Assume that your capital is constrained,so that you only have $600,000 available to invest in projects.If you invest in the optimal combination of projects given your capital constraint,then the total NPV for all the projects you invest in will be closest to:
A)$65,000
B)$80,000
C)$69,000
D)$111,000
Q4) Explain why the NPV decision rule might provide Larry with a different decision outcome than the IRR rule when evaluating Larry's three movie deal offer.
To view all questions and flashcards with answers, click on the resource link above.
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/65209
Sample Questions
Q1) The incremental EBIT in the first year for the Sisyphean Corporation's project is closest to:
A)$18,000
B)$8000
C)$11,700
D)$5200
Q2) Which of the following statements is FALSE?
A)The break-even level of an input is the level for which the investment has an IRR of zero.
B)The most difficult part of capital budgeting is deciding how to estimate the cash flows and the cost of capital.
C)When evaluating a capital budgeting project,financial managers should make the decision that maximizes NPV.
D)Sensitivity analysis reveals which aspects of the project are most critical when we are actually managing the project.
Q3) What is sensitivity analysis?
Q4) Construct a simple income statement showing the incremental EBIT and the incremental unlevered net income for all three years of the Sisyphean Companies project.
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/65208
Sample Questions
Q1) Assuming that Defenestration's dividend payout rate and expected growth rate remain constant,and Defenestration does not issue or repurchase shares,then Defenestration's stock price is closest to:
A)$50.00
B)$32.30
C)$22.25
D)$30.75
Q2) Assuming that Novartis AG (NVS)has an EPS of $3.35,based upon the P/E ratios for its competitors,the highest expected stock price for Novartis is closest to:
A)$31.86
B)$44.35
C)$51.09
D)$62.60
Q3) If DM has $500 million of debt and 14 million shares of stock outstanding,then what is the price per share for DM Corporation?
Q4) What are some common multiples used to value stocks?
Q5) Suppose you plan to hold Von Bora stock for only one year.Calculate your total return from holding Von Bora stock for the first year.
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/65237
Sample Questions
Q1) Which of the following statements is FALSE?
A)Because investors are risk averse,they will demand a risk premium to hold unsystematic risk.
B)Over any given period,the risk of holding a stock is that the dividends plus the final stock price will be higher or lower than expected,which makes the realized return risky.
C)The risk premium for diversifiable risk is zero,so investors are not compensated for holding firm-specific risk.
D)Because investors can eliminate firm-specific risk "for free" by diversifying their portfolios,they will not require a reward or risk premium for holding it.
Q2) Which of the following investments offered the highest overall return over the past eighty years?
A)Treasury Bills
B)S&P 500
C)Small stocks
D)Corporate bonds
Q3) Which pharmaceutical company faces less risk?
Q4) What is the market portfolio?
To view all questions and flashcards with answers, click on the resource link above.
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/65236
Sample Questions
Q1) The beta for Sisyphean's new project is closest to:
A)1.25
B)1.40
C)0.70
D)1.75
Q2) Which of the following statements is FALSE?
A)Because all other risk is diversifiable,it is an investment's beta with respect to the efficient portfolio that measures its sensitivity to systematic risk,and therefore determines its cost of capital.
B)If a security's expected return exceeds its required return given our current portfolio,then we can improve the performance of our portfolio by adding more of the security.
C)The appropriate risk premium for an investment can be determined from its beta with the efficient portfolio.
D)As we buy shares of a security i,its correlation with our portfolio P will increase,ultimately raising its required return until E[R<sub>i</sub>] = R<sub>p</sub>.
Q3) Assuming that the risk-free rate is 4% and the expected return on the market is 12%,then calculate the required return on Mary's portfolio.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Estimating the Cost of Capital
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/65235
Sample Questions
Q1) Which of the following statements is FALSE?
A)Because very little trading is required to maintain it,an equal-weighted portfolio is called a passive portfolio.
B)If the number of shares in a value weighted portfolio does not change,but only the prices change,the portfolio will remain value weighted.
C)The CAPM says that individual investors should hold the market portfolio,a value-weighted portfolio of all risky securities in the market.
D)A price weighted portfolio holds an equal number of shares of each stock,independent of their size.
Q2) The firm's unlevered (asset)cost of capital is:
A)the weighted average of the equity cost of capital and the debt cost of capital.
B)the weighted average of the levered cost of capital and the equity cost of capital.
C)the debt cost of capital minus the equity cost of capital.
D)the unlevered beta minus the cost of capital.
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/65234
Sample Questions
Q1) The alpha that investors in Galt's fund expect to receive is closest to:
A)-.80%
B)0.0%
C)0.80%
D)1.8%
Q2) According to study by Berk and van Binsbergen,which risk model determines mutual fund flows?
A)The CAPM risk-adjusted return
B)The absolute return
C)The excess return over T-Bills
D)Alpha-Beta factors
Q3) The alpha for the passive investors is closest to:
A)-2.4%
B)-0.9%
C)0.0%
D)3.6%
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/65233
Sample Questions
Q1) After the repurchase how many shares will Luther have outstanding?
A)0.75 billion
B)1.0 billion
C)1.1 billion
D)1.2 billion
Q2) What is Luther's enterprise value?
A)$16 billion
B)$10.5 billion
C)$24 billion
D)$20 billion
Q3) Following the borrowing of $12 million and subsequent share repurchase,the equity cost of capital for RC is closest to:
A)12%
B)9%
C)11.0%
D)10%
Q4) What is a market value balance sheet and how does it differ from a book value balance sheet?
Q5) What is the conservation of value principle?
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/65232
Sample Questions
Q1) Which of the following statements is FALSE?
A)A biotech firm might be developing drugs with tremendous potential,but it has yet to receive any revenue from these drugs.Such a firm will not have taxable earnings.In that case,a tax-optimal capital structure does not include debt.
B)No corporate tax benefit arises from incurring interest payments that regularly exceed EBIT.
C)The optimal level of leverage from a tax saving perspective is the level such that interest equals EBIT.
D)In general,as a firm's interest expense approaches its expected taxable earnings,the marginal tax advantage of debt increases,limiting the amount of equity the firm should use.
Q2) In 2005,assuming an average dividend payout ratio of 50%,the effective tax rate for equity holders was closest to:
A)30%
B)55%
C)45%
D)50%
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/65231
Sample Questions
Q1) Assume that EGI decides to wait until after the release of the new video game before they raise the $100 million through the issuance of new shares.EGI's share price following the release of the new video game will be closest to:
A)$18.00
B)$20.00
C)$16.00
D)$19.00
Q2) If its managers increase the risk of the firm,then the expected market value of Luther's assets is closest to:
A)$260
B)$240
C)$300 million
D)$280 million
Q3) If it is managed efficiently,then the expected market value of Luther's assets is closest to:
A)$300 million
B)$260
C)$240
D)$280 million
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Payout Policy
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/65230
Sample Questions
Q1) Assume that Omicron uses the entire $50 million to repurchase shares.The amount of the regular yearly dividends in the future is closest to:
A)$9.00
B)$5.00
C)$4.50
D)$4.00
Q2) The effective tax disadvantage for retaining cash in 2000 is closest to:
A)15.00%
B)13.35%
C)14.75%
D)35.00%
Q3) A method to repurchase shares is the ________,in which the firm lists different prices at which it is prepared to buy shares,and shareholders in turn indicate how many shares they are willing to sell at each price.
A)tender offer
B)Dutch auction share repurchase
C)targeted repurchase
D)open market share repurchases
To view all questions and flashcards with answers, click on the resource link above.
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/65229
Sample Questions
Q1) The unlevered cost of capital for Antelope Incorporated is closest to:
A)10.3%
B)9.9%
C)10.1%
D)9.5%
Q2) Iota's weighted average cost of capital is closest to:
A)8.40%
B)9.75%
C)10.85%
D)11.70%
Q3) Aardvark's unlevered cost of equity is closest to:
A)10.0%
B)10.4%
C)9.5%
D)9.0%
Q4) The Debt Capacity for Omicron's new project in year 0 is closest to:
A)$38.75
B)$75.50
C)$50.25
D)$10.25
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/65228
Sample Questions
Q1) The unlevered beta for Luxottica is closest to:
A)1.00
B)0.60
C)0.70
D)1.50
Q2) Ideko's Accounts Receivable Days is closest to:
A)84 days
B)95 days
C)90 days
D)75 days
Q3) Based upon the average EV/EBITDA ratio of the comparable firms,Ideko's target economic value is closest to:
A)$191 million
B)$155 million
C)$157 million
D)$193 million
Q4) What range for the market value of equity for Ideko is implied by the range of EV/EBITDA multiples for the comparable firms if Ideko holds $6.5 million of cash in excess of its working capital needs?
21
Q5) What is the purpose of the sensitivity analysis?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 20: Financial Options
Available Study Resources on Quizplus for this Chatper
57 Verified Questions
57 Flashcards
Source URL: https://quizplus.com/quiz/65226
Sample Questions
Q1) Graph the payoff at expiration of a short position in a put option with a strike price of $20.
Q2) In describing Galt's debt as a put option,the strike price of the put option is:
A)$200 million
B)$300 million
C)$500 million
D)$700 million
Q3) Which of the following statements is FALSE?
A)Because an American option cannot be worth less than its intrinsic value,it cannot have a negative time value.
B)An American option with a later exercise date cannot be worth less than an otherwise identical American option with an earlier exercise date.
C)The value of an option generally decreases with the volatility of the stock.
D)The intrinsic value is the amount by which the option is currently in-the money or 0 if the option is out-of-the-money.
Q4) You have decided to buy 10 January 2009 call options on Merck with an exercise price of $45 per share.How much will this transaction cost you and are these contracts in or out of the money?
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 21: Option Valuation
Available Study Resources on Quizplus for this Chatper
43 Verified Questions
43 Flashcards
Source URL: https://quizplus.com/quiz/65225
Sample Questions
Q1) The Black-Scholes of a one-year,at-the-money call option on Taggart stock is closest to:
A)0.2850
B)0.4840
C)0.5160
D)0.6141
Q2) Assuming the beta on Taggart stock is 0.75,then the beta for a one-year,at-the-money put option on Taggart stock is closest to:
A)-0.75
B)-2.84
C)-3.89
D)-6.41
Q3) Consider a one-year,at-the-money call option on Taggart stock.The effect on the price of this call option due to an increase in the volatility from 25% to 40% is closest to:
A)$0.70 increase
B)$1.70 decrease
C)$2.30 increase
D)$2.80 increase
To view all questions and flashcards with answers, click on the resource link above.
Chapter 22: Real Options
Available Study Resources on Quizplus for this Chatper
64 Verified Questions
64 Flashcards
Source URL: https://quizplus.com/quiz/65224
Sample Questions
Q1) Describe the two factors that affect the value of an investment timing option?
Q2) Assume DM Skateboard Company has estimated that,if all stages are successful,the present value of all future profits will be $4 million.If DM does the three stages in the correct order,what is the NPV of the project?
A)$128.13 thousand
B)-$34.50 thousand
C)$65.18 thousand
D)$3.79 million
Q3) Luther Industries is considering launching a new toy just in time for the Christmas season.They estimate that if Luther launches the new toy this year it will have an NPV of $25 million.Luther has the option to wait one year until the next Christmas season to launch the toy,however,the demand next year will depend upon what new toys Luther's competitors introduce and therefore greater uncertainty about next years demand.Launching the new today will involve a total capital expenditure of $100 million.If the risk-free rate is 5%,N(d<sub>1</sub>)is .62 and N(d<sub>2</sub>)is .65,then what is the value of the option to wait until next year to launch the new toy?
Q4) Can value can be created by waiting for uncertainty to resolve?
Q5) Do out-of-the-money real options have value?
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Raising Equity Capital
Available Study Resources on Quizplus for this Chatper
52 Verified Questions
52 Flashcards
Source URL: https://quizplus.com/quiz/65223
Sample Questions
Q1) Which of the following statements is FALSE?
A)The preferred stock issued by young companies typically does not pay regular cash dividends.
B)The preferred stock issued by young companies usually gives the owner an option to convert it into common stock on some future date,so it is often called callable preferred stock.
C)If the company runs into financial difficulties,the preferred stockholders have a senior claim on the assets of the firm relative to any common stockholders.
D)Preferred stock issued by mature companies such as banks usually has a preferential dividend and seniority in any liquidation and sometimes special voting rights.
Q2) The market value of Wyatt Oil after the IPO is closest to:
A)$329 million
B)$350 million
C)$592 million
D)$630 million
Q3) How much money did Luther raise?
Q4) What will the proceeds from the IPO be if Luther is selling 1.1 million shares?
Q5) Describe the four characteristics of IPOs that puzzle financial economists.
To view all questions and flashcards with answers, click on the resource link above. Page 25
Chapter 24: Debt Financing
Available Study Resources on Quizplus for this Chatper
54 Verified Questions
54 Flashcards
Source URL: https://quizplus.com/quiz/65222
Sample Questions
Q1) Treasury securities that are standard coupon bonds where the outstanding principal is adjusted for inflation are called:
A)Treasury notes.
B)Treasury bonds.
C)TIPS.
D)Treasury bills.
Q2) In January 2010,the U.S.Treasury issued a $1000 par,ten-year,inflation-indexed note with a coupon of 4%.On the date of issue,the consumer price index (CPI)was 200.By January 2020,the CPI had increased to 300.The principal payment that was made in January 2020 is closest to:
A)$1000
B)$1020
C)$1030
D)$1500
Q3) What kind of corporate debt can be secured by any specified assets?
A)Mortgage bonds
B)Notes
C)Asset-backed bonds
D)Debentures
Q4) What is the Yield to Call (YTC)on this bond?
To view all questions and flashcards with answers, click on the resource link above. Page 26
Chapter 25: Leasing
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/65221
Sample Questions
Q1) Assuming that Rearden's annual lease payments are $1.2 million,then the effective after-tax lease borrowing rate is closest to:
A)7.2%
B)8.0%
C)8.8%
D)9.1%
Q2) Which of the following statements is FALSE?
A)Leasing allows the party best able to bear the risk to hold it.For example,small firms with a low tolerance for risk may prefer to lease rather than purchase assets.
B)When the lessor is the manufacturer,a lease in which the lessor bears the risk of the residual value can improve incentives and lower agency costs.
C)For leases in which the lessor retains a substantial interest in the asset's residual value,the lessee has more of an incentive to take proper care of an asset that is leased rather than purchased.
D)Whether they appear on the balance sheet or not,lease commitments are a liability for the firm.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 26: Working Capital Management
Available Study Resources on Quizplus for this Chatper
48 Verified Questions
48 Flashcards
Source URL: https://quizplus.com/quiz/65220
Sample Questions
Q1) Which of the following money market investments is a short-term debt obligation of the U.S.government?
A)Treasury Bill
B)Repurchase Agreement
C)Commercial Paper
D)Certificates of Deposit (CD)
E)Banker's Acceptance
Q2) Your firm purchases goods from its supplier on terms of 1/10,net 30.The effective annual cost to your firm if it chooses not to take advantage of the trade discount offered is closest to:
A)16.8%
B)44.6%
C)20.1%
D)13.0%
Q3) Collection float is made up of all of the following EXCEPT:
A)disbursement float.
B)processing float.
C)mail float.
D)availability float.
Q4) Describe "just-in-time" inventory management.
To view all questions and flashcards with answers, click on the resource link above. Page 28
Chapter 27: Short-Term Financial Planning
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/65219
Sample Questions
Q1) Which of the following statements is FALSE?
A)When following a conservative financing policy,a firm would use long-term sources of funds to finance its fixed assets,permanent working capital,and some of its seasonal needs.
B)An aggressive financing policy also increases the possibility that managers of the firm will use excess cash nonproductively-for example,on perquisites for themselves.
C)A firm could finance its short-term needs with long-term debt,a practice known as a conservative financing policy.
D)To implement a conservative financing policy effectively,there will necessarily be periods when excess cash is available-those periods when the firm requires little or no investment in temporary working capital.
Q2) When a company analyzes its short-term financing needs,it typically examines cash flows at:
A)monthly intervals.
B)yearly intervals.
C)quarterly intervals.
D)weekly intervals.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 28: Mergers and Acquisitions
Available Study Resources on Quizplus for this Chatper
59 Verified Questions
59 Flashcards
Source URL: https://quizplus.com/quiz/65218
Sample Questions
Q1) Which of the following statements is FALSE?
A)All else being equal,larger firms,because they are more diversified,have an increased probability of bankruptcy.
B)To justify a takeover based on operating losses,management would have to argue that the tax savings are over and above what the firm would save using carryback and carryforward provisions.
C)It is possible to combine two companies with the result that the earnings per share of the merged company exceed the premerger earnings per share of either company,even when the merger itself creates no economic value.
D)When an acquirer buys a private target,it provides the target's owners with a way to reduce their risk exposure by cashing out their investment in the private target and reinvesting in a diversified portfolio.
Q2) In a ________ merger,the target and the acquirer operate in unrelated industries.
A)conglomerate
B)vertical
C)horizontal
D)diagonal
To view all questions and flashcards with answers, click on the resource link above. Page 30
Chapter 29: Corporate Governance
Available Study Resources on Quizplus for this Chatper
46 Verified Questions
46 Flashcards
Source URL: https://quizplus.com/quiz/65217
Sample Questions
Q1) Regarding board size,researchers have found that:
A)smaller boards are associated with greater firm value and performance,since small groups make better decisions than larger groups.
B)smaller boards are associated with lower firm value and performance,since small groups are more likely to be compromised by connections to management.
C)larger boards are associated with greater firm value and performance,since larger boards tend to have directors with a more diverse range of backgrounds and talents.
D)larger boards are associated with lower firm value and performance,since larger groups are more likely to be compromised by connections to management.
Q2) How does a pyramid structure work?
Q3) Directors who are not as directly connected to the firm but who have existing or potential business relationships with the firm are called:
A)gray directors.
B)independent directors.
C)advising directors.
D)inside directors.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 30: Risk Management
Available Study Resources on Quizplus for this Chatper
53 Verified Questions
53 Flashcards
Source URL: https://quizplus.com/quiz/65215
Sample Questions
Q1) Which of the following statements is FALSE?
A)The swap contract-like forward and futures contracts-is typically structured as a "zero-cost" security.
B)An interest rate swap is a contract entered into with a bank,much like a forward contract,in which the firm and the bank agree to exchange the coupons from two different types of loans.
C)In a standard interest rate swap,one party agrees to pay coupons based on a fixed interest rate in exchange for receiving coupons based on the prevailing market interest rate during each coupon period.
D)If short-term interest rates were to fall while long-term rates remained stable,then short-term securities would fall in value relative to long-term securities,despite their shorter duration.
Q2) A currency forward contract specifies all of the following EXCEPT:
A)the amount of currency to exchange.
B)the spot exchange rate.
C)the delivery date on which the exchange will take place.
D)the currencies to be exchanged.
Q3) What is the actuarially fair cost of full insurance?
Q4) What are some of the disadvantages of long-term supply contracts?
To view all questions and flashcards with answers, click on the resource link above. Page 32
Chapter 31: International Corporate Finance
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/65214
Sample Questions
Q1) Calculate the pound denominated cost of capital for Luther's project.
Q2) The present value of Rearden Metal's cash outflow computed by first converting to dollars and then discounting the cash flow at the appropriate Argentine Peso rate is closest to:
A)$469,500
B)$475,000
C)$481,000
D)$484,500
Q3) The present value of the £5 million cash inflow computed by first converting into dollars and then discounting is closest to:
A)$8,950,495
B)$8,954,615
C)$8,943,695
D)$8,961,420
Q4) Hammond's Euro WACC is closest to:
A)7.9%
B)8.7%
C)10.2% D)12.1%
Q5) What is the pound present value of the project?
To view all questions and flashcards with answers, click on the resource link above. Page 33